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How Much Do I Need to Save For Retirement?

What's Your Number? Retirement Number, That Is

Retirement seems so far away, and calculating how much you need for your nest egg may feel so overwhelming that you might use it as an excuse to procrastinate. But what if we made it easy for you to figure out your retirement number? Below are some quick ways to do a rough tally in your head. Keep in mind that the calculations may not be for everyone and are meant to just get you started.

11 times your salary

A popular way to calculate how much you need in retirement is to set a savings goal of 11 times your final working salary if you plan to retire at 65. If you delay retirement by a few years, for example retiring at 67, then you can lower your savings goal to 9.4 times your final pay. Likewise, if you retire earlier, you'll have to save even more than 11 times your salary.

Use your current disposable income

One Wall Street Journal article gives a simple shortcut to help you figure out your retirement needs:

Every experienced financial planner I've spoken to, when pressed, has given the same answer. At a pinch, for most people, the best guess for the income you'll need to live on in retirement comfortably is: about the same as the income you need now. Simple. Easy to remember . . . when you are dealing with the unknown, it helps to start with something familiar. In this case, try your current disposable income.

The article goes on to mention that your living costs will naturally be different from what they are now, because you'll no longer have to save for retirement and pay for your kids, and hopefully you'll be done with your mortgage payments by then. It seems pretty easy to subtract those costs since you already know what your expected cost of retirement living is. 

Age-based approach

By age 35, Fidelity says, you should have saved the equivalent of your current salary and three times that amount by 45, then five times by 55. 

Online calculators

Too lazy to do the math in your head? There are plenty of free online retirement calculators to pick from. AARP and T. Rowe Price offer some of the most popular calculators online with favorable reviews.

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