The question of how much to save for retirement requires an answer that is constantly changing. Year to year, inflation occurs, prices change, and retirement gets more costly. Here’s a list of things to consider when you’re saving for retirement, so you know exactly how much you’ll need to live out your golden years in financial peace. 


Start Saving Early, and Frequently

The earlier you start saving for retirement, the better off you’ll be. Saving as soon as you start working is probably your best bet, but let’s be honest; how many of us were thinking about retirement when we got our first fast-food job at 16? 

If you start saving in your twenties, you should have plenty of time to reach your savings goals; as the average retirement age is somewhere between 59-65. This gives you about forty years to save for retirement, and even if you only save $12,000 per year, you’ll still have $480,000 plus any interest you’ve accumulated after forty years of saving. 

The best thing that you can do is to take a look at a number of retirement calculators to see what you can afford, what you should save and how much money you could realistically have by the end of your working life. Retirement funds are to keep your home going and to keep your lifestyle funded after you have finished work. If you haven’t got a huge retirement fund, and you cannot find work, you’re going to struggle later on. A retirement calculator is going to show you what the reality would be from the moment that you start saving money.

It’s almost important to save as often as you can. Certain retirement plans have limits on what you can donate per year, so pay close attention to your maximums and try to reach them every year. Reaching your maximum contribution will give you a sense of completion and keep your savings on track to meet your retirement needs. 

Don’t Put Your Faith in Social Security

According to, the Social Security trust fund is in trouble; and may not be able to pay benefits in just 15-16 years. By 2020, spending will exceed the cost of the program, and by 2035, the 2.9 trillion dollar reserve fun will have been depleted. How old will you be in 2035?

Depending on Social Security to support your retirement costs is not only foolish but at this point in our economy’s life, it’s simply not possible. With the trust fund hemorrhaging money, you’ll have to depend on what you can save during your lifetime for your retirement. Besides, putting all your eggs in one basket is never a good idea; especially if you’re not the one holding the basket. 

Decide When You Want to Retire 

According to, the conventional retirement number should equal $1-1.5 million, or 10-12 times your current annual salary. There are several factors that you should account for when saving; including living expenses, where you plan to retire, and, of course, when you want to retire. 

Knowing when you’ll retire will give you a good idea of where you should be in your savings venture. The average retirement age is around 62 years old, but some push that age up to around 66/67. If you want to retire at 62, you should have at least $100,000 saved up by 40, or the equivalent of three times your annual salary. 

The type of retirement vehicle you choose will have an impact on how much you save as well. Traditional IRA accounts have a maximum contribution of $6,000 per year if you’re under 50, whereas a Roth IRA has the same contribution amounts, but your income must be less than $122,000 per year. You can also take advantage of your employer’s 401k plan, where they’ll match what you contribute up to a certain amount.  

Account for Inflation and Extra Costs 

Inflation affects what goods and services cost, as well as things like housing costs. You’ll want to account for extra costs in your retirement planning, as 20-40 years from now, things probably won’t cost the same as they do now. You wouldn’t want to run out of money quicker than you planned due to inflation or rising living costs!

Too Much is Always Better Than Not Enough

When it comes to retirement, having too much saved up is always preferable to not having enough. Save as much as you can each year, and if you’re well past your maximum contributions, you may be able to open another retirement vehicle. Alternatively, you can always open a simple high-yield savings account and start saving that way. 

The key is to save wherever you can. Cut out unnecessary expenses, boost your income, and remove debt. Debt is the ultimate detriment of savings and financial freedom. Living debt-free is the new wealthy, and you should be doing everything in your power to become debt-free as soon as possible. 

If you’re struggling to put together a monthly budget or get your finances under control, a financial advisor may be able to help. You can compare the 5 best financial advisors on the Careful Cents site if you’re in the Jersey/New York area and looking for help. 

The Bottom Line 

The bottom line is that retirement isn’t cheap. You’ll likely need at least twelve times your current annual salary to be comfortable, and you can’t depend on social security with the trust fund set to run out by 2035. Save as much as you can every year, and be sure to work on making yourself debt-free as soon as you can. The quicker you eliminate debt, the quicker you can focus those funds on maximizing your retirement savings. It’s always better to have too much than to not have enough!