How much money do you need before you retire? It depends.


There are a lot of numbers to consider when it comes to retirement, but what do they really mean? your number?

According to Schroeder’s 2023 U.S. Retirement Survey, working Americans think they need $1.1 million to reach retirement, but each individual is unsure of what they really need after retirement, which can last for decades. How do you know?

“For a 35-year-old, understanding what life at 65 will cost is extremely difficult,” said Robert Gilliland, managing director and senior wealth advisor at Concenture Wealth Management. It’s difficult,” he says. “I have no idea what $100 will buy me in 30 years. It’s easier to imagine when you’re nearing retirement, but you need to start planning.”

read: What’s the magic number for retirement savings? Americans say it’s over $1 million, but most will fall short of that goal.

“I get calls every week asking, ‘Do you have enough money to retire?’ Yes, but it depends on the lifestyle you want,” Gilliland said. “We sit down with them and talk about the lifestyle they are living and what they would want if working was an option.”

start with a budget

At the stage of gathering information, first make a budget. See your current spending, from housing, food, utilities, and transportation, to additional expenses like travel, gifts, and entertainment. You can keep simple logs or use more sophisticated budgeting software, but honesty is key to the process, he says, vice president of Spinnaker Trust and his adviser to clients. He says John Leonard.

“Be honest with yourself about what you’re really spending, it might surprise you,” Leonard said. “And think about your goals and what kind of lifestyle you want to lead. Would you like to travel or move to another state? What would you like to do in retirement?”

You’ll probably have paid off all or most of your debt by retirement and have no more retirement savings. Then those funds will be released. Matt Fleming, a senior wealth adviser at Vanguard, said some cuts in expenses, such as commuting and work-related clothing, would likely change the tax situation if incomes were reduced.

plan for the long term

Create a retirement plan that will last for decades and make living to 100 the norm in your budget.

“I don’t have to plan for life expectancy. I want to plan conservatively and plan my expenses until I’m 100,” Fleming says.

Now let’s see what potential sources of income you may have after retirement. This includes 401(k)s, IRAs, annuities, savings, social security, plus additional sources of income such as rental property, annuities and inheritance. Also, take this opportunity to check your insurance coverage. To check your Social Security benefits, visit the Social Security website (

“Keep track of inflows and outflows,” says Fleming.

Vanguard estimates that people should expect 75% to 85% of their pre-retirement earnings in retirement, Fleming said.

Another rule of thumb, Gilliland says, is the 4% rule, which has evolved over time and may be as low as 2.5% to 3% today. Originally, his 4% benchmark suggested that $1 million in savings and investments would allow one to live longer while minimizing the likelihood of spending $40,000 inflation-adjusted each year in retirement.

read: A 4% retirement spending rule may be too high. Can we get by with 1.9%?

Questions about Social Security

As for whether to include Social Security in the plan, experts say it depends on your age.

“People nearing retirement have more confidence in Social Security. For early wealthy people who are just starting to save for retirement, there is little confidence that Social Security exists in any meaningful way.” said Fleming. “It is better to over-fund a plan than to under-fund it.”

The Social Security General Trust Fund will be depleted in 2034, at which point 80% of benefits will be paid. The question of how to “fix” Social Security has been making headlines in recent months, with President Biden vowing to protect Social Security and Medicare and some politicians suggesting changes to the system.

read: Social Security expected to fail to pay in full a year earlier than expected

“People over the age of 45 are probably going to be on Social Security. Generally, people under the age of 35 don’t talk about Social Security,” Gilliland said. “There will always be some form of social security. Politicians will want to be re-elected.

Other factors to consider when budgeting include medical expenses, travel expenses, and assistance with grandchildren’s college tuition.

“People are spending more than they expected in the first five to 10 years of retirement, whether it’s being active, traveling, or being involved with grandchildren. After that, spending goes down a little bit until medical bills are incurred,” Gilliland said.

“People need to be aware and mindful of their spending during this time,” Leonard said. “Bucket your expenses in terms of your needs, wants, and wishes.”

Medical bills

Considering factors such as getting Medicare at age 65, the impact of long-term care costs, and an estimated $315,000 an average couple will spend in retirement on health care alone, according to Fidelity Investments’ 2022 report. There is a need to.

Gilliland said health care costs are projected to grow at about 7% annually. His family history and his own health should also determine the budget for medical expenses, he said.

If you haven’t started saving for retirement yet, don’t wait. Start now, no matter how small. Ultimately, companies should work towards the goal of spending 12% to 15% of their salary on retirement, Mr. Fleming said.

“The sooner you start, the better. Stick to the plan and review it annually. Keep checking and if you’re not on track, keep your spending in check,” Leonard said. “Be conservative and be cautious.”

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