How Much Is Enough: A Guide On How Much Money to save for Retirement

Retirement is one of those things that looms in the background of every career. For many, they see it as a time in their lives when they can pursue dreams that might have been impractical at a younger age. Traveling is a popular dream, but some want to start a business or pursue serious hobbies.

Of course, much of this dreaming hinges on having the financial resources in place to make it happen. That leaves you with the pressing question of how much to save for retirement.

Keep reading for a quick guide on how much you should really save with some key considerations.


One of the common refrains you hear is that you need a million dollars in savings to retire. It’s a good goal that will provide you with a fairly comfortable retirement income. Of course, that number also makes some assumptions.

One of the biggest assumptions it makes is that your lifestyle won’t change in any meaningful ways. In other words, that number is based on the idea that your expenses will remain more or less the same as they are now.

If you plan on living a more frugal lifestyle, though, you can reasonably adjust that number down.

When You Start

Another key consideration for how much you should save is when you start saving money for retirement. If you start saving in your 20s, the total percentage of income you should save annually will prove lower than if you start later. Of course, that assumes you want a roughly equal amount in savings.

If you feel comfortable with the idea of less income in retirement, again, you can adjust your percentage down.

Retirement Accounts

You must also consider your retirement accounts. Many employers offer 401k with contribution matching. The matching percentage from your employer can reduce the overall amount you must save.

If your employer maintains a pension program, you can read more here.

Changes to the Social Security system that reduce benefits or increase retirement age are highly likely in the next few years. Even so, you can also factor in some Social Security income in evaluating how much you should save.

How Much Should You Save for Retirement?

Differences in lifestyle expectations, needs, and wants make it profoundly difficult to arrive at a specific number. If you need a goal, though, you should aim for around 15 percent of your yearly income. If you’re starting late, aim for 20 to 25 percent.

Retirement Savings and You

Knowing how much you should save for retirement is one of those financial uncertainties that give people fits. The reality is that there is no exact right number for everyone.

Someone who plans on scaling back their lifestyle in retirement can likely get away with saving less. People who want a very similar lifestyle must save more. For general purposes, the wisdom is that 15 percent of yearly income is about right for most people.

Looking for more finance tips? Check out some of the Finance posts in our Business section.