From here, you can come up with an estimate for how much of your retirement expenses will need to come from your savings. If you’ve determined that you’ll spend, say, $40,000 per year in retirement and you’ll be receiving around $18,000 per year from Social Security, you’ll need to save enough to cover roughly $22,000 per year (assuming you don’t have any other sources of income in retirement).
What’s your savings goal?
The final step is figuring out how much you’ll need to save by the time you retire. The easiest way to do this is to run your information through a retirement calculator.
Be as accurate as you can with your inputs here, because that will result in a more realistic result. It may also be helpful to run multiple calculations with different numbers to see how your results change. For example, if you’re on the fence about whether to retire at age 62 or 67, run the calculator using both ages to see how much your savings needs will differ in each scenario.
For some people, $1 million may be a realistic savings goal. Others may need significantly more or even less than that to retire comfortably. By focusing on your unique situation and financial needs, you can determine how much you need to retire comfortably.
