If you retire at age | You will need retirement savings of: $0 You will have $0. |
We place the money you indicate as your monthly savings into the retirement accounts where it would provide you with the greatest overall benefit. Below, we show you average figures of where your retirement income will come from. | |
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- About This Answer
To figure out how much you need to save for retirement we first calculate how much money we expect you will spend over the course of your retirement. This means looking at the income you will need based on your lifestyle preference, then factoring in the number of years in your retirement (we assume you live to 95).
Once we have a good idea of your total need in retirement we use our models to analyze your existing resources. This means estimating your retirement income from Social Security and the impact of current savings plans, pensions and other retirement accounts. In our analysis we include the tax impact of these items so we do not overestimate your retirement income.
We then do some fancy math to calculate the savings you will need to have built at the time of retirement, based on your needs and resources, to sustain your desired lifestyle.
- Our Assumptions
Lifespan: We assume you will live to 95. We stop the analysis there, regardless of your spouse's age.
Retirement accounts: We automatically distribute your savings optimally among different retirement accounts. We assume that the contribution limits for your retirement accounts increase with inflation.
Taxes: We calculate taxes on a federal, state and local level. The tax implications of different tax-advantaged retirement accounts, Social Security income and other sources of retirement income are all considered in our models. To better align with filing season, tax calculations are based on the tax filing calendar, therefore calculations prior to April are based on the previous years tax rules.
Social Security: We estimate your Social Security income, using your stated annual income and assuming you have worked and paid Social Security taxes for 35 years prior to retirement. Our estimate is sensitive to penalties for early retirement and credits for delaying claiming Social Security benefits.
Return on savings: We assume the return on savings is the same percentage across different savings instruments.
Retirement Calculator

For a working person, the golden years of retirement can be both easy and difficult to imagine. We may fantasize about international adventures or beachside escapes, but rarely do we lay the groundwork for realizing our retirement dreams financially. There are, after all, more immediate concerns: job, kids, mortgage payments and car payments, among other costs. Amid this daily grind, it’s easy to put retirement savings on the back burner, especially when it’s 15, 20 or 30 years off. Indeed, surveys have repeatedly shown that the average American retirement savings is too low and that significant numbers of Americans in their 30s, 40s and even 50s have no retirement savings at all.
Do you need professional help planning for retirement? Speak with a financial advisor today.
How Much Do You Need to Retire?
A sound retirement savings plan doesn’t have to be complicated. It can be boiled down to one simple question: How much do you need to save?
Common guidelines state you should replace between 70% and 80% of your pre-retirement income so that you could maintain your standard of living after you leave the workforce. So, if you earn $60,000 a year before retiring, you might aim to save between $42,000 and $48,000 annually in retirement. This amount can vary based on your lifestyle choices.
To figure out exactly what it will take to retire in comfort, it’s important to consider what kind of lifestyle you expect to lead in retirement: Do you expect to travel often? Do you want to move to a new place? Do you want to take on new activities or hobbies? How much will you have to pay in daily or monthly expenses? These questions may seem trivial now, but they can help give you an idea about the income you’ll need in the future.
Once you have a retirement estimate in mind, you will create a plan to reach that goal through a combination of retirement income sources. These typically include Social Security, investments and savings from 401(k)s, IRAs and other retirement savings accounts. You must also consider essential factors like inflation, which will increase the cost of prices over time and decrease how much you can buy with your money.
The important thing is to build a retirement plan that is realistic. Don’t shortchange your future self by assuming that you can live frugally. Independently from inflation, some costs will likely go down in retirement, but others may go up. Specifically, healthcare costs are likely to rise in retirement. So it’s best to have a cushion for unpredictable costs like that. Plus, retirement is your reward for decades of hard work, so treat yourself accordingly.
Key Concepts for Building a Retirement Plan
When building a retirement plan, there are a few key terms that you should know to help you estimate how much money you will need to save and how you could get there. Here are 10 key terms divided into three categories to help you get started.
Income and Retirement Contributions
- Annual pre-tax income: This is the total income you earn before taxes are taken out. It's important because it helps you determine how much you can afford to save for retirement each year.
- Monthly retirement contributions: This refers to the amount you regularly save for retirement, such as contributions to a 401(k), IRA, or Roth IRA. Consistent saving helps build your retirement fund over time.
- Annual income increase: This is the expected annual growth in your income, which is often based on raises or promotions. Estimating this increase will help you plan for the future and determine how much you can contribute to your retirement savings.
- Other retirement income sources: This refers to any additional income that you may receive during retirement, like a pension, Social Security benefits, annuities, or rental income. These sources can supplement your retirement savings.
Retirement Planning Targets
- Desired retirement age: This is the age you plan to retire. Knowing your target age helps set goals and estimate how much you need to save before you stop working.
- Target monthly budget in retirement: This is an estimate of how much you will need to cover your living expenses each month during retirement. It’s important to have a clear idea of your costs to determine how much you need to save.
- Estimated life expectancy: This is the age that you expect to live to, based on your health and family history. Knowing this helps you estimate how long your retirement savings should last.
Investment and Economic Assumptions
- Pre-retirement rate of return: This is the expected return on your investments before retirement. It helps you estimate how much your savings will grow as you continue working.
- Post-retirement rate of return: This is the expected return on your investments during retirement. It can be lower than the pre-retirement rate since you may be withdrawing funds.
- Inflation rate: This is the rate at which the cost of living increases over time. It’s important to account for inflation when planning your retirement, as it can eat into the purchasing power of your savings.
How to Calculate Your Target Retirement Savings
To help you estimate how much you will need to save for retirement, you can use our retirement calculator. Here are major eight steps to walk you through the process:
- Enter your location and annual income: Add the location where you live and your annual income, which is the amount of money that you make yearly before taxes. This should also exclude Social Security benefits and your spouse’s income, if applicable.
- Choose your Social Security election age: This is the target year that you expect to claim benefits. Take note that 62 is the earliest age for eligibility, and 66 or 67 is the full retirement age, depending on when you were born.
- Include your monthly savings: This is how much you are saving monthly for retirement. The calculator distributes this amount among available retirement accounts in the fifth step. You can use the sliding bar to set the amount based on a percentage of your income.
- Estimate your annual retirement expenses: Input your yearly estimate for expected retirement costs. These can include mortgage or rent, maintenance and repairs, utilities, healthcare (insurance premiums, prescription drugs, co-pays and deductibles, long-term care), food (groceries and dining out), transportation (vehicle costs or public transportation) and other personal expenses like clothing, entertainment (subscriptions, hobbies, travel and activities), taxes and debt payments, etc. The slide bar can help you break down the estimate by month.
- Add retirement account balances: First, input the corresponding balances and matches for your 401(k), 403(b) or 457(b) accounts where applicable. Next, do the same for traditional and/or Roth IRAs. And finally, add your pension amount (lump sum or annuity).
- Confirm Social Security benefits and status: This will be used to estimate additional income for any disability, retirement and death benefits. Your tax filing status will help determine the amount of taxes which are withheld every pay period.
- Enter savings details: This includes the total household cash savings and investments, which are typically held in a deposit account. And the annual rate of return on those savings, which is the interest you earn from a bank or a financial institution, or the return on an investment.
- Add the expected inflation rate: Under “Advanced,” you will find a dropdown for “Annual General Inflation.” This is the rate at which the general level of prices for goods and services are estimated to go up.
Depending on your estimates, you may want to make adjustments for more conservative or aggressive assumptions. For example, you may want to use a lower rate of return of 4% or 5% for a conservative estimate, especially post-retirement and set realistic inflation rates of 2% or 3% based on historic averages.
Examples Using Our Retirement Calculator
To help you compare different retirement paths, here are three examples using our retirement calculator:
Retiring at 65

You just turned 40 and have been able to put away some savings over the years. You’ve got $20,000 in the bank and another $22,000 stored in a traditional IRA. You live in Pittsburgh, where you earn $80,000 per year.
You’re optimistic about your investments and assume a 6% annual return. You also plan on living fairly modestly once you retire at 65% of your current salary ($52,000). Under this scenario, if save about 8% of your income, or about $533 per month, from now until your 65th birthday, you would have a shortfall of $115,695. But, if you increase your monthly savings up to $700 per month over the same period, you could end up with a surplus of $16,868.
As a Pittsburgh resident, by saving just $167 more per month over the same time period, you could turn a shortfall into a surplus.
Retiring at 67

You're 25 and have only been working a few years. You live in Tulsa, Oklahoma, where you earn $60,000 per year. You currently have $5,000 in your savings account and by saving $450 per month you manage to put another $5,400 in your 401(k). Your employer has promised to match 100% of your contributions to the retirement savings account, up to 4% of your total income.
You decide that you would be comfortable living a lifestyle at 70% of your current salary ($42,000) in retirement. Assuming a rate of return on your investments around 4%, you save about $300 per month from now until you turn 67 to retire with a shortfall of $6,155. But, if you save $350 each month over the same time period, you would be over exceed your retirement goal with a surplus of $80,711.
Getting an early start on retirement savings can make a big difference in the long run. By saving an extra $50 per month, the 25-year-old in the example above can turn a $6,155 shortfall into a surplus of $80,711
Retiring at 70

You’re 54 and have $50,000 in savings. You don’t expect to earn more than 5% on investments. As a talent agent in Los Angeles, you are self-employed and have never set up a retirement account. You make $100,000 and you’ve already decided to keep working until you hit 70.
When you retire, you expect to cut back to 70% of your salary ($70,000). To pull all of that off, you would need to save $1,750 every month from now until you retire. That's about 21% of your monthly income, and it would yield $8,412 in surplus.
If you can cut your retirement expenses down to $60,000 annually (60% of your salary), then you can end up with a similar surplus of $9,565 by saving $916 monthly. However, if your annual retirement expenses stay at $70,000, then you would end up with a shortfall of $261,618 at the same monthly savings rate.
You should note that for these examples, we only considered retirement savings options in a savings account, a 401(k) or a traditional IRA. There are many ways you can invest the money you set aside for retirement, depending on your goals. The rate of return your money earns depends on the risk that you are willing to take, the success of your particular investment strategy and, to a certain extent, luck. For example, an economic downturn can hurt your investments, at least in the short run. So too can changes in the inflation rate, and other economic events.
Rules of Thumb for Retirement Savings
In finance, there is no one-size-fits-all rule. However, there are general guidelines that can offer you a framework to help you save at your own pace. Here are five approaches to consider when building your nest egg:
- 10% to 15% rule: This rule suggests saving between 10% and 15% of your gross income each year for retirement. It helps build a strong habit early and gives your money time to grow. For example, if you make $60,000 annually, you would aim to save between $6,000 and $9,000 yearly.
- 4% rule: This approach recommends taking out 4% of your total savings in the first year of retirement, then adjusting for inflation after that. For example, if you need $40,000 per year, your goal would be to save $1 million by retirement ($40,000 ÷ 0.04).
- 25x rule: This rule can help you figure out how much to save for retirement based on your expected yearly spending. It recommends saving 25 times the amount that you expect to spend each year. For example, if you plan to spend $50,000 per year in retirement, you would aim to save $1.25 million.
- 1x income by age 30 rule: This milestone approach can help pace your retirement savings. It suggests saving one full year of your salary by age 30, and growing that amount over time—three times your salary by 40, six times by 50, and so on. As an example, if you earn $70,000, you would try to save that amount by the time you turn 30, three times as much by 40 ($210,000) and six times as much by 50 ($420,000). You can adjust the target amounts based on your needs.
- Savings rate rule (15% to 20%): This rule recommends saving between 15% and 20% of your gross income each year for retirement, including employer contributions. For example, if you earn $80,000 and your employer contributes 5%, aim to save at least 10% yourself to reach the 15% total.
Retirement Benchmarks and Adjustments

Retirement benchmarks can help you compare how your savings is pacing with others in your age group. While these alone may not be conclusive for your specific needs, they can be a good starting point to think about strategies for adjusting your retirement plan.
According to the Federal Reserve’s 2022 Survey of Consumer Finances, the average retirement account savings for those between the ages of 65 and 75 is $609,230. Those between the ages of 55 and 64 have the second-highest total ($537,560), while retirees over the age of 75 have the third-highest ($462,410) as they continue to withdraw from their nest egg. The average worker under 35 averages $49,130, while those between 35 and 44 have nearly three times as much ($141,520), and those between 45 and 54 saved roughly $313,220.
If your nest egg falls below these benchmarks, there are steps you can take. Common strategies include increasing your retirement contributions, delaying retirement to allow more time to save, cutting expected retirement expenses, or adjusting your investment strategy. A simple step like saving a little more each month or working a few years longer can make a big difference over time.
Here's are eight practical tips to help boost your nest egg:
- Contribute to a 401(k): If your job offers this employer-sponsored plan, sign up and put in money each paycheck. And, if your employer matches a percentage of your contribution, contribute the amount needed to get the full match.
- Open and fund an IRA: You can also save for retirement on your own using an IRA. For 2025, you can contribute up to $7,000 ($8,000 if you’re age 50 or older).
- Max out your contributions: Try to reach the yearly limit for retirement accounts if you can afford it. In 2025, you can contribute up to $23,500 to a 401(k), $31,000 if you’re 50 or older and $34,750 if you're between 60 and 63 years old (these are known as "super catch-up contributions").
- Automate contributions: Set up automatic transfers so saving is easy and consistent. For example, you can schedule specific amounts to go into your IRA on the first of each month.
- Convert to a Roth: Move money from a traditional IRA to a Roth IRA to pay taxes now and avoid them later. So, if you expect to be in a lower tax bracket now and convert $5,000 from your traditional IRA this year, you will pay taxes on that amount upfront at a lower tax rate.
- Diversify your portfolio: Invest in a mix of assets to spread out risk and earn steady long-term returns. Investors generally diversify their portfolios by keeping 60% in stocks and 40% in bonds to balance both growth and stability.
- Delay Social Security: Waiting past full retirement age can increase your Social Security benefit. If you claim at 62, you may get 70% of your full benefit. But, if you wait until 70, you could receive 124%.
- Use an SEP IRA or Solo 401(k): If you’re a freelancer or self-employed, you can open a Solo 401(k) or an SEP IRA. For 2025, you can contribute up to $23,500 or 100% of your compensation, whichever is less. The same catch-up contribution rules from a 401(k) apply. And, for a SEP IRA, you can contribute up to $70,000 or 25% of your compensation, depending on which amount is lower.
Finally, you may also want to talk to a financial advisor if you're close to retirement and want to fine-tune your plan, need help reviewing your investment or withdrawal strategy or want to confirm that your assets are aligned with your long-term goals. SmartAsset's free matching tool can pair you with advisors who serve your area.