Having enough money in retirement is essential to enjoy your later years. To make sure you're financially comfortable, it helps to estimate how much income you'll need your retirement savings to produce. For example, say you're hoping to have $50,000 in annual retirement income. Here's the amount you'd need to save to meet that milestone. 

How to get $50,000 in income as a retiree

If you're like most retirees, chances are you'll get your income from two sources: your Social Security benefits and your investments. If you receive a Social Security benefit of $1,514 per month (the average as of June 2020), that would mean you'd need your investment accounts to produce $31,832 in income in order to have $50,000 as a retiree. 

Older couple using calculator and looking at financial paperwork.

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You'll want to make sure taking this much out of your retirement accounts won't drain your nest egg too quickly. That means adopting a safe withdrawal rate. If you follow the 4% rule, which allows you to withdraw 4% of your investment account balance the first year you retire and adjust withdrawals up by inflation annually, you'd need $795,800 saved by the time of your retirement in order for your investment balance to produce the $31,832 that combines with your Social Security to give you $50,000. 

The amount you'll have to save in order to build a $795,800 nest egg varies depending on how young you are when you start investing. The chart below shows the amount you'd need to save each month to hit this target by age 66 if you earn an 8% average annual return, depending upon how old you are when you first begin putting money into a tax-advantaged account such as a 401(k) or IRA. 

Age You Start Investing Annual Amount to Invest to Save $795,800


25 $2,835
30 $4,250
35 $6,450
40 $9,955

If you hit these savings targets, you should be able to withdraw enough from your retirement account to add to your Social Security benefits and give you the $50,000 in retirement money you're looking for. 

Of course, you may be on track to receive less from Social Security. If so, you'd need to save more to account for the shortfall or would need to take steps to raise your retirement benefits. This could include delaying your benefits claim to earn delayed-retirement credits. On the other hand, if your Social Security benefit is expected to be larger than average, you may be able to get away with saving less. 

You'll also need to save more than the above amounts if you hope to retire sooner than 66, or if you're getting started investing late in life. But as the table shows, if you start early, investing enough to end up with $50,000 in annual retirement income should be well within reach for most Americans.