Create Retirement Savings Plan
Here's a general guideline about how much you need to save for retirement: You'll need at least 70% of your preretirement income.1 You can start creating a retirement savings plan by:
- Estimating your retirement expenses.
- Calculating the amount you'll need based on your estimated expenses.
Consider these general guidelines as you estimate your expenses:
- While you'll likely have fewer expenses in retirement - for example, no dependents to support, no commuting expenses - other expenses, such as health care and health insurance, will probably increase.
- Most basic expenses - housing, food, utilities and transportation — will generally stay the same.
- If your plans include moving to a new place, traveling extensively or having expensive hobbies, you may have higher expenses in retirement.
- Expenses are generally higher for retirees in their 60s and early 70s, who are more active than older retirees.
- Account for inflation and taxes in your estimate.
As you approach retirement, you'll be able to estimate your financial needs more accurately as you make decisions about where you want to live and what you want to do.
1 ssa.gov, "Understanding the Benefits," 2011
Define your goals based on your current lifestyle and expectations for retirement.
Complete the Retirement Income Worksheet to get an inflation-adjusted estimate of the amount you'll need to save.
Use the Retirement Planner Calculator to help you with your savings strategy.
Work with your financial advisor to make sure you include all important factors, including taxes and inflation, when you estimate your retirement expenses.