The amount you need to retire depends on your desired lifestyle, current income, expected expenses, and other income sources like pensions or Social Security. Here are some general guidelines and factors to consider:
General Savings Benchmarks by Age
- Fidelity suggests aiming to save multiples of your salary by certain ages:
- 1x your salary by age 30
- 3x by 40
- 6x by 50
- 8x by 60
- 10x by 67
Saving 10 times your pre-retirement income by 67 is a common target to maintain your lifestyle in retirement
- T. Rowe Price offers similar benchmarks:
- 1 to 1.5 times your salary by 35
- 3.5 to 5.5 times by 50
- 6 to 11 times by 60
These ranges account for different incomes and situations
Total Amount Needed
- Many Americans consider around $1.26 million to $1.46 million as a minimum for a comfortable retirement, though this varies by location and lifestyle
- For example, a typical retirement lasting about 30 years might require $1.75 to $2 million saved if you want to maintain a $70,000–$75,000 annual income
- In Germany, to supplement public pension with an additional €1,000 net monthly income at age 67, you might need approximately €192,000 to €400,000 saved, depending on inflation assumptions
Factors Affecting How Much You Need
- Desired retirement income: Usually 80% to 90% of pre-retirement income is recommended to maintain lifestyle
- Inflation: Income needs increase over time; for example, €1,000 today might need to be €1,811 in 30 years at 2% inflation
- Life expectancy: Longer life means more savings needed.
- Other income sources: Social Security, pensions, or rental income can reduce how much you need to save.
- Healthcare costs: Can be significant and vary by country and individual health.
Withdrawal Rate Rule of Thumb
- A common rule is the 4% safe withdrawal rate, meaning you need about 25 times your desired annual retirement spending saved to withdraw sustainably
Summary
To retire comfortably, aim to save roughly 10 times your annual pre-retirement income by your mid to late 60s. This equates to about $1 million to $2 million for many people, depending on your lifestyle, location, and other income sources. Start saving early and increase contributions over time to stay on track with age-based milestones. This approach helps ensure you can maintain your lifestyle throughout retirement without running out of money
