3 min

How Much Do I Need to Retire?

Sep 2, 2022
in a nutshell
  • One rule of thumb is that you should aim to have 10 times your income saved by the time you reach the age of 67.
  • The earlier you can get started, the better. Over time, even small contributions can add up and compound.
  • Take advantage of employer-sponsored retirement accounts, but there are other ways to save for retirement, too — like with IRAs.
Image of How much money you need to retire varies, but one rule of thumb is to have 10 times your income saved by the time you reach age 67.
in a nutshell
  • One rule of thumb is that you should aim to have 10 times your income saved by the time you reach the age of 67.
  • The earlier you can get started, the better. Over time, even small contributions can add up and compound.
  • Take advantage of employer-sponsored retirement accounts, but there are other ways to save for retirement, too — like with IRAs.

Everyone’s ideal scenario for retirement is a little different, but no matter what, you’ll likely need a significant amount of money to retire comfortably. 

How much do I need to retire? There’s no one right answer that applies to everyone, but one general rule of thumb is that you should aim to have 10 times your income saved by the time you reach the age of 67. 

If that sounds impossible, here’s what you can do to get on track. 

How much money do you need to retire?

When thinking about how much money you need to retire, there are several factors to consider: 

  • Life expectancy: It may seem morbid, but how long you expect to live after retirement greatly impacts how much money you need to save. The Centers for Disease Control reported that the average life expectancy for the total population is 77.8 years. However, there are many people that live well beyond that age, so it’s wise to plan for a longer life expectancy to ensure you don’t run out of money. 

  • Desired lifestyle: Do you want to maintain your current lifestyle in retirement? Or are you willing to scale back and downsize to live a more relaxed lifestyle with fewer expenses? What your ideal retirement situation looks like will affect how much you need to save. 

  • Health: Even though most retirees are eligible for Medicare, medical expenses can still cost them thousands of dollars every year. And if you need long-term care, healthcare expenses can be even higher. If you have a family history of health issues or already have existing conditions, you may need more money to retire comfortably. 

  • Inflation and taxes: The cost of living tends to go up over time, which means you essentially lose money as the value of the amount you have saved goes down. When planning for retirement, you need to account for inflation. And although you may be eligible for a lower tax rate in retirement, you will likely still need to pay taxes on your income and withdrawals from your retirement accounts. 

All of these factors make it difficult to pinpoint exactly how much money you need to retire. However, there are some general rules of thumb that can help give you a ballpark estimate. 

Fidelity recommends that you follow the below guidelines when saving for retirement: 


How much of your salary you should have in retirement savings











To meet those goals, the Center for Retirement Research at Boston College recommends that you invest 15% of your income for retirement, assuming you start when you’re 25. If you get a later start, you may need to invest a higher percentage. 

To help you plan for the future, you can use the FINRA retirement calculator to see how much you’d need to contribute to reach your goals. 

Consider this example: Joe is 25, and he makes $50,000 per year. In general, experts say that retirees need about 75% of their incomes in retirement to maintain their lifestyle, so Joe sets his annual retirement income goal for $37,500.

Assuming a 3.4% inflation rate, a current tax rate of 28%, and a 6% average annual return, Joe will need to save $16,742.95 in pre-tax dollars per year. If Joe is paid twice a month, that means he’d have to set aside $697.62 from every paycheck. 

If you need help figuring out how much you need for retirement, consult with a financial advisor

5 tips to save for retirement

When it comes to retirement, a lot of people get discouraged by the large numbers experts mention, and they don’t save at all. In fact, the Government Accountability Office reported that about half of the nation’s households with a worker age 55 and older had no retirement savings, and Social Security benefits are unlikely to be enough to live on. 

Unfortunately, retirement planning isn’t something you can really avoid without serious consequences. It’s important to plan ahead and take action so you can have a solid nest egg. 

If you’re overwhelmed, use these five tips to get started: 

1. Start right now

If you haven’t started saving for retirement yet, you may find the recommendation of saving three times your income by 40 to be impossible. And if you don’t have hundreds of dollars to set aside every month, it may feel downright hopeless. 

But the important thing is to start saving as soon as you can, with whatever you can. Even if you save $25 or $50 per month, that can make a big difference due to compounding. For example, this is how much you’d have at 67 if you started investing at the age of 28: 

Monthly contributions

Retirement savings at 67









*Estimates assume a $0 starting balance and a 6% average annual return. 

2. Plan for the unexpected

When thinking about your retirement, it’s important to hope for the best, but plan for the worst. You never know what’s going to happen, especially when it comes to your health. 

Consider that 34% of workers plan to retire after 70, if they intend to retire at all. But the reality is much different — only 6% of retirees said they were actually able to do that. In many cases, retiring earlier than planned is a necessity. 

Saving more aggressively while you’re young and healthy could help give you a financial cushion in case you need to retire sooner than expected. 

3. Take advantage of employer-sponsored retirement plans

If you’re employed, you may have access to an employer-sponsored retirement plan like a 401(k), 403(b), or 457(b). With these accounts, you can contribute up to $20,500 per year on a pre-tax basis in tax year 2022 for individuals younger than age 50. 

As an added benefit, your employer may match some or all of your contributions, helping you save more money faster. According to Vanguard, nearly half of its retirement plans offered matching contributions. The most common matching formula was $0.50 per dollar on the first 6% of pay.

How does that work? Consider Joe’s example. With an annual salary of $50,000, Joe contributes $3,000 per year — 6% of his salary — to retirement. His employer matches $0.50 per dollar, so an additional $1,500 is put toward his retirement fund, giving him a total of $4,500 per year of retirement contributions. 

4. Maximize other retirement accounts

If you don’t have access to an employer-sponsored account or have additional funds, you can maximize your retirement savings by opening an individual retirement account (IRA). For Traditional and Roth IRAs, the maximum you can contribute is $6,000 per year ($7,000 per year if you’re 50 or older) in 2022. 

5. Automate your contributions

One of the best things you can do for your future self is set up automatic contributions to your retirement accounts. 

With a 401(k) or another employer-sponsored plan, you can request that a portion of your paycheck be directed to the retirement plan before it even reaches your savings account. With an IRA, you can set up recurring transfers so money is deposited every week or month before you can mentally spend the cash. Over time, regular contributions can add up. 

Opening a retirement account doesn’t require thousands of dollars. With an Acorns Later account, you can easily open an IRA with a diversified portfolio in minutes. 

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Article contributors are not affiliated with Acorns Advisers, LLC. and do not provide investment advice to Acorns’ clients. Acorns is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.

Kat Tretina

Kat Tretina is a freelance writer and certified financial and student loan counselor. 

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