How Much Do I Need to Save for Retirement?

Retirement Income

— Dec 27, 2019

When asked, “How much do I need to save for retirement?” most Americans say they’ll need one million dollars in the bank to retire comfortably. Is that true?

This article is the second in a 7 part Retirement Income series. The topics are:

  1. Creating Retirement Income
  2. How Much Do I Need to Retire? (this blog)
  3. Jobs for Retirees
  4. Things to Do After Retirement
  5. How to Retire Early
  6. Generating Passive Income for Retirement
  7. Ideas to Boost Retirement Income

Retirement Savings

Unfortunately, almost everyone is falling way short of the $1,000,000 retirement savings goal. According to MarketWatch, the average 401 (k) balance as of September 2018 was just $106,500.

But hold on a minute. The average retirement savings account balance is misleading. It does not represent a true picture of retirement savings. The median savings balance is a much better indicator of the amount of money most have set aside.

The median retirement savings balance is only $24,800. That means half have more, and half less. Furthermore, those few with a million dollars or more are seriously skewing the numbers.

Retirement Savings by Age

Start Early

Following is the rate of savings by age of all U.S. workers with a 401 (k) retirement plan. The number reflects the value of all savings, stocks, bonds, and investments.

  • Ages 20-29
    Average 401 (k) balance: $11,600
    Median 401 (k) balance: $4,000
  • Ages 30-39
    Average 401 (k) balance: $43,600
    Median 401 (k) balance: $16,500
  • Ages 40-49
    Average 401 (k) balance: $106,200
    Median 401 (k) balance: $36,900
  • Ages 50-59
    Average 401 (k) balance: $117,100
    Median 401 (k) balance: $62,700
  • Ages 60-69
    Average 401 (k) balance: $198,600
    Median 401 (k) balance: $63,000

Rule of Thumb

First of all, according to Fidelity Investments, a good rule of thumb is to have 10X your final annual salary in savings if you are planning to retire by the age of 67.

In addition, according to The Balance, real annual median household income for all workers over 15 years old in the U.S. in 2017 was $61,372. Using the rule of thumb of ten times income suggests the average individual should have savings of $613,720 by the time they reach retirement age.

Retirement Calculator—How Much Do I Need to Retire Comfortably?

Most noteworthy, a dose of reality is essential. We’ve provided a suggested retirement savings account range of up to one million dollars. But, how much do you really need to live comfortably after you stop working? Your retirement balance depends on your annual spending.

Use this Retirement Income Calculator to determine how long your retirement savings will last.

The Inflation Factor

Especially relevant is that annual living expenses generally increase as time goes by. The average annual Social Security Administration cost of living adjustment, COLA, has been 3.68% per year since 1975. Because of inflation, it costs more to live every year. Your annual income needs to keep pace. Chances are you need a bigger nest egg than you think you do.

Personal Finance

Your current annual income is an indication of what you need to live comfortably. The amount of money you have left over after expenses and taxes is called disposable income. This is the amount available for savings. That amount has been on the rise for years and in the U.S. now averages 8.1%.

To insure you have enough money available for retirement requires developing the habit of saving as much of your disposable income as possible.

See our blog – Creating Retirement Income and read the section – Money at work. The earlier you develop the habit of saving and investing, the higher your probability of having enough money to live comfortably in retirement.

Instead of spending money on travel and entertainment, develop the pattern of setting aside a certain amount of your annual current income for your retirement nest egg.

Honest Self Assessment

Most retirement planning specialists agree that you will need an average of 80% of your annual income once you stop working to live comfortably in retirement.

Ask yourself:

  • At what age do I plan to stop working?
  • What is the annual income I desire during retirement?
  • How much retirement savings will I need by 65?
  • If I keep doing what I’m doing now, will I be able to retire comfortably?
  • Will I outlive my money?
  • Am I on track?
  • Do I need to start doing something differently?

Is One Million Enough to Retire Comfortably?

How Much Is Enough?

If you’ve been honest with yourself and have done some work with a retirement calculator it becomes clear most of us will need closer to $1.500,000 to reach our retirement lifestyle goals.

Where you live makes a big difference. MarketWatch reports that one million dollars will last 25 1/2 years in Mississippi. But only 13 years in Hawaii.

According to the Bureau of Labor Statistics households run by someone 65 or older spend an average of $45,756 annually. That means you will run out of one million dollars in a bit less than 22 years. That assumes you don’t increase the principle value of the money saved.


90 Is The New 85 – as reported in a blog from NPR. Between 1980 and 2010 the number of Americans 90 years of age and older almost tripled. The number rose from 720,000 to over 1.9 million. The Census Bureau projects that number will accelerate over the next 4 decades. It projects a 90 plus population of 7.6 million people by 2060.

For those still healthy and fit as they enter their 60’s the outlook for a longer than anticipated life expectancy rises. The moral? Good health is a blessing, but you may need to have more retirement income than you expected.

Retirement Goals

To answer the question of how much you will need to retire comfortably is a completely subjective inquiry. It all depends on you. A single individual in great health, living in a small, paid off home, in a warm climate, who never travels or entertains has a relatively small annual income requirement.

On the other hand, if you are in a relationship, love to travel first class frequently, thrive on extravagant lifestyle experiences, have toys like collector cars or a boat, your needs are radically different than the individual described above. The aforementioned one million dollars is a meaningless goal until contrasted with your desired lifestyle.


By lowering your expenses and maintaining a high balance in an investment account like an IRA or 401 (k) you have a greater probability of having enough to live comfortably in retirement. Regardless of the size of your retirement investment account it is advisable to continue to cultivate your investments. Diversification among a number of different asset classes like stocks, bonds, precious metals and income producing real estate will help to balance your retirement account.

It is rarely advisable to have all of your money in stocks as you enter into retirement age. Stocks traditionally have greater volatility than other income producing assets like bonds or a money market account.

Professional Advice for Retirement Planning

Personal finance is your responsibility. One mistake you should never make is working with a financial advisor who does not have your best interest as their top priority. Some brokers and advisors make recommendations based on the amount of commission they earn instead of what is best for you. When you’re engaging in retirement planning, make sure to choose a professional advisor who you know you can trust.

Find a fiduciary

A fiduciary advisor is willing to sign an oath to agree to make investment recommendations that are in your best interest, not theirs.

Ask How Your Advisor is Paid

Some financial advisors make more money in commissions based on a number of factors.

  • Recommending investments sponsored or underwritten by the bank or broker they work for.
  • Getting paid a percentage of the portfolio value.
  • Earning a higher commission percentage by reaching larger sales volume levels on specific recommendations.

Advisors paid by the hour or who charge a flat fee are more likely to make recommendations based on your best interest, instead of their personal reward.

What To Do If You Come Up Short

Most Don’t have Enough

Let’s get real. The ugly truth is the overwhelming majority of Americans are woefully unprepared financially. If that describes you, you’re not alone. According to the Economics Policy Institute, “nearly half of American families have no retirement savings.”

Here’s a suggestion. Develop an additional stream of income. Before you dismiss the idea, consider this. Generating multiple sources of income may be easier than you think. What do you believe? Do you assume the only way to create additional income is to have a second or third job? That’s not true. There are other, some would say better ways, for developing income.

Develop Passive Income

At the Wealth Creation Mastermind, we coach our members on how to increase the amount of income they generate, without becoming a wage slave. Passive income is a concept that we believe can help you finance the retirement you deserve.

Passive income is the opposite of active income, which is what traditional jobs offer. In most jobs, you receive payment for a service you perform. You might earn a salary or an hourly wage, and the key is that you’re trading time for money. With passive income, you earn money from work that you’ve already done.

Our favorite example of passive income, and the one that has the potential to finance your retirement, is network marketing.

With network marketing, you do the hard work once to set up and generate multiple streams of passive income, which then roll in every month.

 At the Wealth Creation Mastermind we don’t offer a “get rich quick” scheme. Our model of generating passive income involves hard work up-front. But if you could put in 1.5x more work than someone else up-front and get 10x the results, would you make that choice?

The other great benefit of passive income is that you can use it as a second income stream during your retirement. It’s not just another vehicle to earn money during your working years that you can then put into an IRA or 401 (k). It’s a tool that can help you earn money year after year while you’re retired, so you need less of a nest egg when you hit retirement age.

The Wealth Creation Mastermind offers an advanced network marketing course, for free, to help you earn passive income selling products that are scientifically proven to boost health and wellness. If you’re looking for a business that gives you the flexibility of working from home, and can generate enough passive income to fund your retirement if you’re willing to put in the work, then we can help.

If you want to make your retirement more comfortable, then we strongly recommend that you fill out the form and apply now to become a member of the Wealth Creation Mastermind.

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