Like most things related to personal finance, the amount you'll need in retirement is very specific to your personal situation. However, there are good baselines you can use to get a rough idea of how much, so you can then adjust it accordingly.

First, begin with how much you'll need annually. Generally, you should try to have around 80% of your annual income in retirement to maintain your lifestyle. You can adjust this percentage based on whether or not you plan to downgrade or upgrade your lifestyle in retirement. Plan to downgrade? Go less. Plan to upgrade? Go with more.

To get an idea of how much you'll need total in retirement, you can use the 4% rule.

The 4% rule says you should plan to withdraw 4% of your savings (adjusting for inflation each year) annually for 30 years without worrying about outliving it. With current inflation rates, it may be better to lower the starting percentage closer to 3%, but 4% is the traditional starting point.

You can find your target savings goal by multiplying your ideal yearly amount by 25. Here are examples of how much someone may need using the 80% and 4% guidelines:

Current Income Annual Amount Needed In Retirement Total Needed to Retire
$50,000 $40,000 $1 million
$100,000 $80,000 $2 million
$150,000 $120,000 $3 million

Data source: Author calculations.

Unfortunately for most people, this means that Social Security by itself won't be enough to live comfortably in retirement.

Two people sitting  at a table, reading through documents.

Image source: Getty Images

When you take benefits matters

The amount you receive from Social Security mainly depends on your lifetime earnings (higher earnings, higher benefits) and your full retirement age, which is based on your birth year.

Birth Year Full Retirement Age
1943 to 1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or after 67

Data source: Social Security Administration. Chart by author.

Your full retirement year is the baseline for calculating your benefits, but you can begin taking them once you turn 62. However, doing so will decrease your monthly payout. Conversely, if you delay your benefits past your FRA, your monthly payout will increase until you reach 70. You don't have to take benefits at 70, but they won't increase any more past that, so you might as well begin.

Even with increased monthly payments, Social Security alone may not be enough for many people.

Use all your resources

For 2022, here are the maximum monthly Social Security monthly payouts: 

  • Age 62: $2,364
  • Full Retirement Age: $3,345
  • Age 70: $4,194

Even if you receive the maximum monthly payout -- which most don't -- you'd receive around $28,000, $40,000, or $50,000 annually, respectively. The average monthly payout, $1,623, would add up to just under $20,000 annually.

If we're going by the 80% rule, those amounts may not be enough to thrive in retirement for many people.

Just because you retire doesn't mean life becomes drastically cheaper. You may cut down on some expenses (work commute), but other expenses (healthcare) will often increase. If you're working in retirement, it should be out of want and not out of necessity. That's why it's important to have multiple sources of retirement income instead of relying solely on Social Security.

By taking advantage of other retirement accounts, such as a 401(k) and IRAs, and the tax benefits that come with them, you can not only set yourself up well in retirement, but you could also be doing yourself a favor in the present.