What's your magic number? That is to say, how much savings do you need to retire comfortably? According to a 2024 survey of 4,588 Americans performed by insurer Northwestern Mutual, $1.46 million would do the trick. It's not a bad guess.
However, this figure generalizes something that will differ for everyone. Your number could be less, or more, depending on how you intend to live during your golden years.
Here's a closer look at how you might want to determine the amount of savings you'll need once you reach 67 years of age.
Finding your number
That's not exactly a random number, by the way. The age of 67 is not only right around when most people reach their so-called full retirement age (or FRA) for Social Security purposes, it's also the point when most people simply want or even need to stop working. If you've not saved enough by then, it's going to be difficult to save enough beyond that point. That's why you'll want to make a point of tucking money away as early and as much as possible over the course of your working years.
The question remains, however: How much do you need to have saved by then? At 67 years of age, you'll want to have saved up roughly 11 times your most recent annual salary. For example, if you're earning $100,000 at your job now, you'd ideally have $1.1 million saved up when you're 67.
That's the recommendation from fund company T. Rowe Price, anyway, although it jibes with advice from mutual fund giant Fidelity and brokerage firm Charles Schwab. All of these outfits agree that, on average, you'll need roughly 11 times your late-career annual earnings to maintain your standard of living after you retire. More specifically, that's the amount of money that can generate the 75% to 80% of your work-based income you'll likely need in retirement.
Image source: Getty Images.
Just bear in mind that this salary-based multiple is in the middle of a fairly wide range of workable possibilities. if your goal is to simply relax and enjoy the view of your backyard, as little as 8 times your salary could possibly be enough. If your retirement plan is to do some extravagant and expensive traveling, a stash on the order of 14 times your final year's salary might be necessary.
It all starts with a plan
There's no way you can reach any such target in time? That's OK. Most people actually don't.
Retirement plan administrator Empower reports that as of the end of last year the average 60-something American's total retirement savings was nearly $1.2 million. However, that number is skewed sharply higher by a small handful of quite wealthy people. Empower's median figure for people in their 60s is a measurably lower $591,000, meaning half of this crowd held even less in retirement savings... a number that's already likely far less than 11 times most of these workers' annual job-based wages, anyway. For perspective, the Bureau of Labor Statistics says that last year's typical pay for full-time workers in the U.S. was right around $62,000 per year.
The thing is, it doesn't exactly matter. Not being able to reach this suggested target doesn't mean there's no point in saving anything, just as reaching this target doesn't guarantee you won't outspend your money in retirement.
The proverbial "trick," therefore, isn't a trick at all. It's a matter of making a budget that builds in steady retirement savings over the course of your career. For people nearer retirement age, it means mapping out a spending plan that works with the savings you have, and what you're likely to have when the time comes to start living off those savings rather than off a paycheck. You might find you need to continue working longer than you intended. It could also mean dialing back plans to do some (or all) of the more expensive activities you had envisioned for yourself later in life. That stinks, to be sure. But it doesn't stink nearly as much as running out of money in retirement, which can really crimp your lifestyle!
Perhaps the most important takeaway here, however, is to make a plan... any plan. As legendary investor Warren Buffett explains, even "an idiot with a plan can beat a genius without a plan."
That's not to suggest you even might be an idiot, because you're not. Indeed, just by virtue of reading to this point, you've proven you're a more disciplined and intelligent investor than most people are, simply because you know there's always something new to learn. Now do the genius thing and crunch some numbers.
It also wouldn't hurt to plug some numbers into a retirement savings growth forecast calculator, just to give you an idea of where your savings might be at a specific point in the future.
