How much do you need to save to
retire comfortably?

Confused about how to save for retirement? Concerned about how much you should have put away? Having a plan can make it easier. Here are some things you may wish to consider today.


Jump to learn more about retirement planning:

Start saving | Prevent outliving your savings
Decide when to retire | Manage inflation

Or jump to explore common retirement expenses:

Health care | Taxes | Living expenses | Family member support

How do I start saving for retirement?

A trick to building savings is to invest early and often. From 401(k)s and individual retirement accounts (IRAs) to Social Security, get familiar with the tools and automatic savings features that can help you grow your savings. And if you didn’t start early – start now!


Pay Your Future Self First

When it comes to taking action to save for your retirement, the more you focus on things you can control, the better.

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    If you are in mid-career or later, than you have some idea of how much retirement has changed over the last decades.

    In the past, retirees could rely on a traditional company pension and a generous social security income. Today, we're really on our own when it comes to building a secure retirement.

    At the same time, we're living longer and we expect to be more active in retirement than ever before. And that's really good news. But that increases the challenge: how do we pay for longer retirements in today's new world?

    Here's what you need to do. You need to understand that it's a new world of retirement, you need to define what retirement means to you, and, most important of all, you need to take action.

    The new world of retirement means living longer, being more active and relying on yourself to build a secure retirement. With that in mind, spend some time defining your retirement.

    Having a vision is about more than inspiration – it's the first step in forming a realistic financial plan, including how you plan to turn your savings into retirement income down the road.

    When it comes to taking action, the more you focus on things you can control, the better.

    You can't control the markets; but you can invest in a well-diversified portfolio that gives you age-appropriate risk exposure.

    You can't control the return on your investment, but you can control how much you save – and saving more may be the single biggest action you can take to improve your retirement security.

    Take a look at your savings rate. Are you stopping at the company match in your employer's 401(k) plan? Or are you saving the 10% or more that many retirement experts agree should be your target? Are you exploring all the retirement savings vehicles available to you, including IRAs and Roth IRAs?

    It's not enough to say you are going to save more – you need to take action. Research from a Harvard economist shows that out of every 100 employees surveyed, 68 say they aren't saving enough. But only 24 say they will raise their savings rate within the next two years...and only 3 actually follow through.

    That's why you need to do what you can to lock in your intention to save more by making it automatic. If you have a 401(k), ask your employer about using auto escalation to increase savings annually. If you use an IRA, set up an automatic transfer from your checking account each payday to "pay yourself first". In many ways retirement is about paying your future self so you can meet your future needs.

How do I prevent outliving my retirement savings?

Having a plan in place to stretch your money can help ease worries of workers in retirement plans who are married with dependents who fear outliving their money. Investing early, working longer and maximizing your Social Security benefits are all strategies that can help you build savings to last throughout your retirement.


7 essential retirement planning habits

Listen to Chip Castille, Chief Retirement Strategist at BlackRock, describe the seven essential habits that current workers can emulate to build confidence in their retirement planning.

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    Recently my daughter came up to me trying to figure out her new 401(k) plan. She said, "You know, you really had it easier back then. The whole retirement thing was figured out for you." And I told her, anyone who says the past was easier really wasn't around back then. People built their retirement by building good habits and you can do this as well.

    I said there are seven essential habits that everyone can follow. Now she could sense a lecture coming on, but she asked me anyway, "What are they?" and I said, Let me tell you:

    The first is to start early and if it's too late to start early then just go ahead and start now. Time is your best friend when it comes to saving. Time smooths out, investing is ups and downs, and it really lets the market work for you.

    The next thing to do is to max out your savings rate. Save as much as the IRS allows, and if you can't save that much right now, figure out what you can save, don't just go with the minimum.

    Third, increase savings when you can if you got a raise, great, save more. You got a bonus, great, save it. Don't spend it. The more you save now, the more flexibility and choice you'll have later.

    Fourth, pay attention to what's going on. Read your statement, go to the website, don't get obsessed with what the market does every day. Your plan is there to pay for food, shelter and expenses in retirement. It's not about proving that you were some market genius.
    Next, you should review your strategy every year. Things change. You'll get married, you'll have kids, you'll change jobs, even your 401(k) changes and will add new choices over time. Every year, when you reenroll in your benefits, take a look at your plan and your strategy.

    Number six. I've told you this for a long time, but act your age. When you're young, you can take risks in your investment but you should tone it down as you get older. Start hanging on to what you have. Don't go too conservative, but add more fixed income securities and get more diversified.

    Finally, number seven: estimate your retirement income. When you get into that home stretch, look at everything. Look at social security, look at your 401(k) and figure out how much income it will give you and for how long. Figure it out when there's still time to make some smart changes.

    So my daughter says, "That's pretty good, how did you figure all of that out?" And I said, I had years of experience but you have more resources than I did.

When will I be able to retire?

The definition of retiring “on time” has changed from 65 to whenever you’re ready. In fact, 33% of workers believe they will retire in their late 60s or early 70s.To determine when you can reasonably expect to retire, you may wish to consider both your sources of income and your monthly expenses.


Common retirement expenses:

Health care

Though you are eligible for Medicare beginning at age 65, it’s important to factor in the cost of Medicare’s monthly premiums, deductibles and co-pays. And, if you require prescription drugs later in life, you’ll incur additional costs. If you're transitioning from an employer that helped cover part of your health insurance to shouldering all the costs on your own, the added expense could take a chunk out of your savings. And there are services that Medicare won’t cover.

A long-term care insurance policy, while carrying a premium cost, can help defray future health related spending. Should you opt for a high-deductible insurance plan, you could benefit from a health savings plan (HSA) feature. HSAs allow you to save money today that you can withdraw without owing taxes—today or in retirement—if used for an approved medical expense.


Withdrawals from your traditional 401(k) and IRA, as well as Social Security claims, all contribute to your retirement income. Which means these withdrawals may be subject to income taxes.

Here’s how it works: Even if you don't need the cash, you must take required minimum distributions (RMDs) from traditional IRAs when you turn 70 ½ years old. Such withdrawals generally are taxed as ordinary income. Depending on the size of your RMDs, you might even find yourself bumped in a higher tax bracket.

(Note: Roth IRAs don't have withdrawal requirements, and you may not have to make
401(k) withdrawals if you are still working.)

As for Social Security, individuals with incomes of more than $34,000 and married couples filing joint federal tax returns with more than $44,000 in income generally owe federal income tax on up to 85% of their benefits.

But there are strategies to help reduce your taxable income in retirement. For example, if you have the option of saving in a Roth 401(k), all withdrawals in retirement are tax free (and Roth 401(k) assets rolled over to an IRA are generally exempt from the RMD rule). Or you might consider converting some traditional retirement plan assets into Roth IRAs today. In this case, you’ll owe taxes today. But converted money is generally tax free in retirement, and there are no required withdrawals.

Living expenses

About one in four American homeowners aged 65 and older are still making mortgage payments. What’s more: Housing-related costs account for about 40% of older Americans' spending (see the chart below).

Household expenses vary by age

Health care costs tend to increase steadily after age 85*


*Average share of different categories in total household expenditures, 2003-2011, across different ages.

Downsizing can be one way to reduce your housing expenses—especially if it means being able to pay off a mortgage.

Supporting family members

With average lifespans increasing, some pre-retirees (often referred to as “the sandwich generation”) are in the unique position of providing financial support to their parents, their children and their grandchildren. For example, one in five middle-aged Americans provide financial support for a parent who is at least 65 years old. And, 48% of parents with adult children provide them with some amount of financial support on an annual basis. Meanwhile, it’s not at all uncommon for grandparents to contribute to a 529 college savings plan or to help pay for other education costs.

If you find yourself in this position, you might consider using our retirement expense worksheet, which is designed to help you think through these and other expenses that you may face in retirement.


How can I manage inflation?

You may be on a fixed income, but, thanks to inflation, there's nothing fixed about the expenses you'll pay throughout what can be a very long retirement.

How far will your current savings really go? Let’s take a simple example: If you wanted to buy a cup of coffee each morning every day of your retirement, how much money would you need? The following graphic shows the calculation for a $1.95 cup of coffee over a 30-year retirement.

The real cost of coffee

For illustrative purposes only

As you can see, we’re left with a lump sum of $21,352.50. But that assumes that the cost of a cup of coffee will stay the same over the next 30 years. Does that seem likely? Probably not. But how can you predict how the cost of a cup of coffee will rise or fall in the future?

If you're 55 to 74, you can estimate how much retirement income your current savings may provide by using our CoRI™ Retirement Indexes retirement calculator.