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How Much Do I Need to Retire?

By Vast Bank on 08.10.2021

In order to secure the golden years you’ve dreamed of, you need to answer the question: “How much do I need to retire?” There’s no one-size-fits-all solution. The answer depends on individual factors, such as the income you earn today and what kind of lifestyle you’d like in retirement. 

The 80% Rule

Many experts agree that you’ll need about 80% of your current income to retire comfortably. 

For example, if you make $60,000 per year now, you’ll need $48,000 per year in retirement. The idea behind this is that some expenses will drop off in retirement, such as commuting costs and the portion of your income that you previously invested in your retirement savings.

The 4% Rule

To try the 4% Rule, determine how much you’ll need annually in retirement and divide that number by .04. The answer will tell you what size of nest egg you’ll want to have at retirement. *this number does NOT account for other income sources like social security..

For example: Say you’ve used the 80% Rule to determine that you’ll need $60,000 annually in retirement.

 $60,000  ÷.04= $1,500,000 required for your nest egg.

“Multiples of Income” Formula

This method requires saving 15% of your gross salary every year beginning at age 25, and investing that money in at least 50% in stocks. The formula is intended to leave you with eight times your annual salary, enough to get by in retirement. Here’s what you’ll have as you age if you stick to this strategy:

  • Age 40: you’ll have two times annual salary
  • Age 50: you’ll have four times annual salary
  • Age 60: you’ll have six times annual salary
  • Age 67: you’ll have eight times annual salary

Other Considerations

You’ll most likely have other sources of income in retirement. Make sure you factor in the following:

  • How much social security you’ll receive: you earned it, now you get to enjoy it!
  • Defined-benefit plans: if you’re fortunate enough to have a pension, you’ll need to rely less on your savings.
  • Plans for the future: Maybe you’ll move somewhere with a lower cost of living, or sell it all and travel the world. Account for your big plans!
  • Health expenses later in life: Most people require greater medical care as they age. 

The bottom line? Life is unpredictable. Sometimes you’ll be able to save more, sometimes less. The key is to check your progress regularly and make adjustments as needed. If you’re wondering how to save for retirement when you’re not quite on track to meet these numbers, don’t stress: there are strategies you can implement at any age. 


For in-depth advice on how to save for retirement, ask a trusted financial advisor: how much do I need to retire? A personalized overview of your finances can be a game-changer. 

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This information and recommendations contained herein is compiled from sources deemed reliable, but is not represented to be accurate or complete. In providing this information, neither Vast Bank, N.A. nor its affiliates are acting as your agent or is offering any tax, accounting, or legal advice.

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