This article will:
- Estimate how much to save for retirement based on your income, goals, and timeline to support effective retirement planning.
- Use a retirement calculator and key benchmarks to track progress and adjust your strategy.
- Build savings consistently in a retirement account to stay on track toward long-term financial goals.
When it comes to retirement planning, one of the most common questions is how much you actually need to save. Without a clear target, it can be difficult to know whether you are on track or how much progress you are making.
You may have heard general rules of thumb, such as saving 10 to 12 times your income or targeting 70 to 80 percent of your pre retirement income. While these guidelines can be helpful, the reality is that every person’s retirement goals and financial situation are unique.
To build a more personalized approach, start with these three key questions. Once you have your answers, our retirement calculator can help you estimate your future income based on your current savings strategy and contributions to your retirement account.
1. How much will you spend?
Your expected spending is one of the most important factors in retirement planning. Some expenses may decrease over time. For example, you may pay off your mortgage or no longer support children financially.
However, other costs, especially health care, may increase. On average, individuals ages 65 to 74 spend around 6,500 per year on out-of-pocket health care expenses, while those 75 and older may spend significantly more1.
Understanding these trade offs can help you determine how much you should contribute to your retirement account today.
2. How expensive will things be?
Inflation plays a meaningful role in long term retirement planning. Even a modest inflation rate can significantly reduce your purchasing power over time.
For example, at roughly 2 percent inflation, the cost of living could increase substantially over a 20 year period2.
This means the amount you are saving now needs to account not only for your future expenses, but also for rising costs. Our retirement calculator can help you model these changes and adjust contributions to your retirement account accordingly.
3. How long do you think your retirement will be?
Another key variable is the length of your retirement. This depends on factors such as your health, family history, and life expectancy.
On average, men live about 18 years past age 65, while women live over 20 years beyond that milestone3.
Planning for a longer retirement can help ensure your retirement account supports you throughout your lifetime. Many individuals choose to add a few extra years as a precaution when building their retirement plan.
4. What other sources of income will you have?
In addition to your primary retirement account, consider all potential income sources. These may include:
- Social Security benefits
- Employer pensions
- Individual retirement accounts
- Personal savings or investments
- Spousal retirement benefits
Factoring in these income streams provides a more complete picture of your retirement readiness and helps refine your overall retirement planning strategy.
Take the next step
Once you have considered these questions, the next step is putting your plan into action.
Our retirement calculator can help you:
- Estimate future retirement income
- Evaluate how your current retirement account contributions are performing
- Explore how increasing contributions may improve your outcomes
- Align your savings strategy with your long term retirement planning goals
By taking a more personalized and informed approach, you can feel more confident that your retirement account is working toward the future you envision.
1 Source: https://www.rbcwealthmanagement.com/en-us/insights/the-real-cost-of-health-care-in-retirement
2 Source: https://www.vertex42.com/Calculators/inflation-calculator.html
3 U.S. Department of Health and Human Services, National Vital Statistics Reports, Vol. 74, No. 6 (July 1, 2023).
Important Note: Equitable believes that education is a key step toward addressing your financial goals, and we’ve designed this material to serve simply as an informational and educational resource. Accordingly, this article does not offer or constitute investment advice and makes no direct or indirect recommendation of any particular product or of the appropriateness of any particular investment-related option. Investing involves risk, including loss of principal invested. Your needs, goals and circumstances are unique, and they require the individualized attention of your financial professional. But for now, take some time just to learn more.
This article is provided for your informational purposes only. Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.
Equitable Financial Life Insurance Company (New York, NY) issues life insurance and annuity products. Securities offered through Equitable Advisors, LLC, member FINRA, SIPC. Equitable Financial Life Insurance Company and Equitable Advisors are affiliated and do not provide tax or legal advice.
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