How Much Should I Save for Retirement?

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How much should Americans save up for their retirement? It’s a question with many variables to consider. One big factor to answering it is future plans. That includes determining what age at which you’ll retire.

According to the Center for Retirement Research at Boston College, the average retirement age has increased slightly over the past ten years. Changes in Social Security incentives, a broad switchover to 401(k) plans, greater quality of life, longer life expectancy, and improved education have been influential in the age increase. As a result, the average retirement age has increased to 64 years for men and 62 years for women.

The definition of retirement has changed, too. Many retirees want to travel or participate in new activities. In turn, these goals – and what it will take to achieve them – have a big impact on retirement planning.

What Factors to Consider?

Retirement planning will vary from person to person. Retirees will have different needs and goals. With that said, there are some primary factors to consider:

• Expenses in retirement
• The age up to which people will plan for
• What lifestyle people will desire in retirement
• Their present health and what it’s likely to be in the future

It’s especially important to consider healthcare costs as part of retirement expenses. Unfortunately, many investors tend to underestimate them. As we’ve discussed before, a healthy couple retiring at age 65 this year may pay almost $395,000 in overall healthcare costs. That includes vision care, dental care, and other costs not covered by Medicare. The research firm HealthView Services estimates healthcare costs have been increasing 5-7% per year.

It’s also important to keep in mind how you’ll be saving up for and meeting expenses in retirement. Most Americans will rely upon four sources of retirement income: Social Security, personal savings, an investment portfolio, and a pension or other retirement vehicle.

How do I Determine How Much for Retirement?

In financial services, one rule of thumb is, in everyday terms, the “85% After-Tax Pre-Retirement Income Replacement Rule.” Over their working lives, many people increase their standard of living. They expect to maintain their lifestyle at least this level in retirement.

Simply put, in retirement most people can expect to spend around 85% of their after-tax work income. Say someone makes $55,000 and is subjected to a 15% tax rate. After tax obligations have been met, take-home pay will be $46,750. In retirement, if that person needed 85% of this after-tax working income, they would need to produce $39,738 in after-tax income per annum.

This rule of thumb may be a starting point. Another point is individualized planning. We tend to think of our financial life in 30-day cycles: monthly income, monthly mortgage payments, monthly household bills, monthly savings goals, and so on. It’s helpful to develop a personalized snapshot of monthly cost projections for your needs in retirement. Break down the projections into different categories. Some questions to consider are:

• Based on the factors you considered earlier and below, what will your spending habits likely be compared to now?
• There are standard monthly costs: food, utility, transportation, housing/rental, monthly debt payment obligations, and others.
• What will be your own monthly costs to cover? Do you currently have any expenses now which you aren’t likely to have in the future?
• Do you have any plans for travel or other plans involving miscellaneous expenses?
• As you age, costs for housing maintenace/repair and healthcare tend to increase. Have you considered these cost factors?

These are a couple ways of gauging how much income you’ll need to “replace” once your working income is unavailable (with your retirement in place). For an age to plan up to: life expectancy is now longer than what it’s been in the past. It may be advisable to plan as if you’re going to live to 100 years old. That will help decrease chances of outliving your retirement income.

Additional Notes

Other things to keep in mind include:

• What are you and your partner’s goals?
• What would you like to be your lifestyle?
• What are your current living expenses?
• What will be your future living expenses (assuming inflation of 3-5%)?
• Do you plan to travel? Engage in any getaways? Partake in new activities?
• Will you be allocating money toward funds for loved ones (like college funds)?
• What are your plans for leaving an estate?
• How will these affect your costs in retirement?
• What looks like it will be your effective tax rate in retirement?
• What is your current health? Your partner’s health?
• Do you have any chronic medical condition?
• Does your partner have a chronic medical condition?
• What will long-term care look like?
• Might there be income needing to be replaced to meet long-term care expenses?

These are just a few questions to ask. Check out our Retirement Planning Basics page for more helpful overview information. When it comes to determining your “number” for retirement, overall it’s helpful to consider your lifestyle expectations, future income, and expectations of future health.

If you’d like advice from a qualified financial professional on a local level, check out our “Find an Advisor” feature. Should you be considering an annuity or other retirement vehicle, check out our free guidebook on retirement planning and annuities for an in-depth, behind-the-scenes look. Don’t hesitate to contact us at 877.GROW.SAFE if you have any questions, too!

Frequently Asked Questions About how much should i save for retirement

How much should I save for retirement each month?

The amount you should save for retirement each month depends on various factors, including your current age, retirement goals, and expected expenses. A common guideline is to aim for saving 15% of your income, but if you're starting late, you may need to save more. Consider incorporating safe money alternatives into your plan to ensure your savings are protected.

What is a safe money alternative for retirement savings?

Safe money alternatives include fixed annuities, which provide a guaranteed return on your investment and can help protect your savings from market volatility. These options are designed to preserve capital while still allowing for some growth, making them an excellent choice for conservative investors looking to secure their retirement funds.

How do I calculate how much I need to retire comfortably?

To calculate how much you need to retire comfortably, start by estimating your annual expenses in retirement and multiplying that by the number of years you expect to be retired. Additionally, consider your sources of income, such as Social Security and any pensions, and factor in your savings in safe money alternatives to ensure you have a reliable income stream.

What are the risks of not saving enough for retirement?

Not saving enough for retirement can lead to financial insecurity and a reduced standard of living in your later years. Without adequate savings, you may struggle to cover essential expenses, healthcare costs, and unforeseen emergencies. Utilizing safe money alternatives can mitigate some risks by providing stable returns and protecting your principal.

Take the next step, run the numbers with our free retirement calculators.

Updated May 2026: For 2025, the IRS raised the 401(k) contribution limit to $23,500 annually, and workers aged 60–63 can now contribute up to $34,750 under the SECURE 2.0 Act's enhanced super catch-up provision — the largest catch-up allowance in the plan's history.