How much do I need to retire?

Father and daughter in kitchen. Daughter is holding calculator and father is trying to figure out how much he needs to retireImage: Father and daughter in kitchen. Daughter is holding calculator and father is trying to figure out how much he needs to retire

In a Nutshell

The amount you need to retire comfortably varies from person to person, but some financial experts recommend that you put 10% to 15% of your pre-tax income into a retirement account. And some say that by age 67, you should have 10 times your salary put aside. But keep in mind that the size of the nest egg you’ll need will ultimately depend on the amount of income you have during retirement versus your expenses.
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You might be wondering, “How much money do I need to retire?”

Let’s face it: For some of us, retirement seems so far into the future that it’s easy to put it on the backburner. I’m no exception. I didn’t open my first individual retirement account, or IRA, or even contribute to my company’s 401(K) plan until I was pushing 30 years old.

Like many people, I already had a lot of catching up to do. The Federal Reserve discovered in a 2019 study that 25% of Americans have no retirement savings or pension.

The good news is that it’s never too late to start saving for retirement.

Figuring out when to retire and how much money you’ll need is personal and can be different for everyone. There’s no right or wrong answer. Some people I know saved enough to retire in their 30s. Other people (like my grandparents) plan to work for the rest of their lives. It all depends on your lifestyle.

Let’s start by looking at how much the average person has in savings when they retire, how much you might want to have saved by certain ages, and some ways to save for retirement.  

How much does the average person have in savings when they retire?

Working Americans ages 56 to 61 nearing retirement had an average of only $243,559 in retirement account savings in 2016, according to a 2019 report from the Economic Policy Institute. But those ages 50 to 55 had significantly less — an average of only $120,809 in their retirement account savings.

That might not sound like a lot, but it’s actually more than some workers approaching retirement have tucked away.

Take my parents, for example, who are in their late 50s. They live paycheck to paycheck and can barely afford to put food on the table for themselves and the foster kids they take care of. They simply can’t afford to think about retirement right now.

To set a retirement goal and put yourself in a position to retire comfortably, it helps to have a better idea of how much money you should have saved for retirement at your current age.

How much should you have saved for retirement, by age?

It depends. The rule of thumb suggests putting about 10% to 15% of each paycheck into a retirement account.

This is backed up by a 2018 study from Stanford University, which found that if you start saving 10% to 17% of your income when you’re 25 years old, you should be able to retire by age 65. But if you wait until you’re 35 to start saving, you’ll need to put away 15% to 20% of your paycheck to retire at the same age.

How can you measure your retirement savings progress?

Fidelity Investments recommends saving 10 times your annual income by age 67. Of course, if you’re planning an early retirement, you’ll need to save more. Here are some benchmarks Fidelity provides on how much you should try to have saved at different ages.

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Don’t have that much saved for retirement yet? Don’t panic. The important thing is to continue taking steps toward progress, which will put you in a better position for the future.

How long will your retirement money last?

To estimate how long your retirement savings will last, take what you expect to have saved by the time you retire and your estimated guaranteed retirement income — from things like Social Security, pensions or any other investments — and compare it with your estimated expenses in retirement.


How much will I get in Social Security when I retire?

You may not be able to maintain your standard of living in retirement if Social Security benefits are your only source of income. Let’s say you retire at age 67 with a salary of $50,000. The Social Security Administration’s Retirement Calculator shows that you’ll earn an estimated $1,952 per month. That’s $23,424 per year, which is less than half of what you were making before you retired.

If you think that’s bad, you won’t want to hear this next part. According to an annual report by the Social Security Board of Trustees, combined trust funds for retirees will be depleted by 2035. Even if the system doesn’t completely run out of money, your benefits could be reduced to about 80% of the current benefit.

Consider how much you’ll pay each year for essential and nonessential expenses in your retirement years, including …

  • Housing
  • Food
  • Clothing
  • Transportation
  • Healthcare
  • Travel and entertainment
  • Hobbies

Then consider your planned retirement age. Retirement today can last for 30 years or more. In short, experts estimate that you’ll need between 70% and 90% of your pre-retirement income to maintain your standard of living in retirement.

Best and worst states to retire

What is the best way to save for retirement?

There are a variety of ways you can save for retirement. Some of the more common are employer-sponsored plans, like 401(k) plans, and IRAs.

401(k) plans

A traditional 401(k) allows you to invest a percentage of your pre-tax income into your choice of provided investment options. In some cases, your employer may choose to match a portion of your contributions to your 401(k) account. Traditional 401(k)s save you from paying taxes on income you contribute and any earnings now — but when you make distributions down the road you’ll have to pay taxes.

A Roth 401(k) is similar, but contributions are made with after-tax dollars. Because you already pay income tax on the amounts you contribute, you generally won’t have to pay taxes on your retirement distributions later.

The IRS will allow you to contribute up to $19,500 to your 401(k) plan in 2021 and 2022. Anyone who’s at least 50 years old might be able to make an additional $6,500 “catch-up contribution” for a total of $26,000.


As their name suggests, individual retirement accounts (technically called individual retirement “arrangements”) are opened by you versus sponsored by an employer. You can set up an IRA with a bank or other financial institution, life insurance company, mutual fund or stockbroker.

Contributions to traditional IRAs may be fully or partially tax-deferred, depending on your income. If they’re fully deferred, you won’t have to pay taxes upfront on the money you contribute or earn. Instead, you’ll pay taxes when you take the money out in retirement.

Roth IRAs are the opposite. You pay taxes upfront on your contributions, but you typically don’t pay taxes when you take the money out in retirement, as long as you follow the qualified distribution rules.

In 2021, you can contribute a total of $6,000 (or $7,000, if you’re at least 50 years old) — or your taxable income for the year if it’s less than this limit — to your IRA accounts.  

Other investments

If you have some extra money sitting around after you max out your 401(k) or IRA, you might want to consider opening an additional, taxable investment account to give yourself a little more breathing room in retirement.

“Maxing out your retirement accounts is a great start, but that still doesn’t mean it’s enough to actually retire,” says Saul Cohen, founder of Round Investments, a digital investment platform for individuals.

“That’s why you want to have a taxable investment account in addition to your retirement funds. It allows you to save more and increases your odds of having enough money in retirement.”

Next steps

For many of us, retirement planning takes a back seat to today’s needs. That’s understandable. After all, it can be hard to set aside money for the future when you have bills to pay right now.

But even small contributions can start to add up. Set a monthly savings goal and evaluate your retirement savings account options. A financial adviser can help with that as well as work with you to create a retirement plan that fits your needs and goals.

Estimate your retirement savings

Use our retirement calculator to see how much money you could save by the time you retire, along with an annual breakdown of how much your estimated retirement savings could grow year over year.

About the author: Tim Devaney is a personal finance writer and credit card expert at Credit Karma. He’s a longtime journalist who prides himself on being a good storyteller who can explain complex information in an easily digestible wa… Read more.