Skip to main content
No. of Recommendations: 0
As others mentioned you need to come up with a target income number then work backwards to see what you have to save to get to that number.

How much retirement income you will "need" to save has several levels like these;
1) Core needs (I think of this as my "I'm not going to eat cat food!" money)
2) How much you need to be pretty comfortable but on a tight budget.
3) Your current lifestyle and not very worried about money.
4) Better off in retirement than during your working years.

There will also be different needs at different ages. An active newly retired person may travel a lot and spend a lot more than someone who is in their mid 70's or older and has slowed down. I have had older relatives that after they slowed down and while their health remained relatively good, didn't even spend their entire social security check most months since they were living in a paid off house and their only significant expenses were things like food, utilities, property taxes, and some supplemental health insurance.

In your planning, if your retirement age target is 65, then do your financial plans as if you will retire at 62 or so. This way you have a three year margin of safety in case you are running behind financially.

Also keep in mind that many people find that their earning peak by their mid 50's so they may not be to count on saving a massive amount of money in the last few years before they retire.

When you are looking at your yearly saving, you should also calculate your net worth each year as of January 1st. This will pick up things like paying down the mortgage and reducing any other debt.

Greg
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.