Broker Check

How Much Do You Need to Retire?

April 17, 2023

If you want to live comfortably during retirement, it pays to start planning at the earliest opportunity—and for many, setting a reasonable savings target is a challenge in its own right. How much do you need to retire without compromising your goals or way of life? The truth is that there isn't a one-size-fits-all answer to this question; it all depends on the intentions that you've set for your golden years.

With that said, most experts agree that savings of 10 to 15 times your annual income will be sufficient to help you weather any storm. In order to reach this goal, it's important to set clear milestones for yourself, and to develop an understanding of the factors that can impact your rate of savings.

How to Save for Retirement

  1. Set Your Intentions

    Some retirees want to plan extensive vacations with their loved ones. Others plan to focus on their favorite hobbies, or to spend the days at home with grandkids and family. It's important to have a clear idea of how you want to spend your retirement—and to adjust your savings goals accordingly.

  2. Check Your Progress Against Milestones

    Saving 10 to 15 times your annual income is no easy task, but it becomes much easier when you break it down into smaller, more manageable steps. Most experts recommend that you save the equivalent of your annual income by the time you reach age 30. From there, you should aim to save roughly three times your annual income by age 40. After this point, you should aim to double your savings each decade.

    Depending on where you start from, saving roughly 15% of your income each month is the best way to set yourself up for success—assuming that you continue to invest a significant portion of the money that you save. It's also worth noting that, during retirement, you may receive money from multiple sources. It's unlikely that you'll have to rely on savings alone. However, your savings will determine how much freedom you have during your final years.

  3. Consider Your Cost of Living

    Do you intend to maintain your current standard of living, or are there sacrifices that you'd be willing to make? Most retirees move to more affordable areas in the years that follow the end of their careers, but also face rising healthcare costs as time goes on.

    No matter what your next steps are, our pre-retirement checklist can help you move forward with confidence.

Retirement Savings: Factors to Consider

  • Rate of Return on Investments: Most retirement calculators assume that you'll receive a return of roughly 6% on your investments every year. However, this rate can vary depending on multiple factors, including the investment strategy that you adopt. Work with an advisor to determine the most sensible path toward your goals.
  • Rate of Inflation: For the past 50 years, inflation has tended to remain below 4% per year. Most retirement savings plans assume that the rate of inflation will remain more or less constant—but as we've seen over the past year, accelerated inflation is a real risk. It may be worth it to pad your savings plan in order to ward off the impact of a rising cost of living.
  • Age of Retirement & Post-Retirement Work: Most retirement savings plans assume that you'll spend roughly 20 to 30 years in retirement, and that you'll retire at or around age 67. But what if you want to retire early? What if you plan to embark on a second, post-retirement career? Each of these decisions can have a major impact on how much you need to save prior to retirement.

IntentGen is Here for You

Securing a comfortable retirement is one of the most significant challenges that you'll face during your working years, but you don't have to assume that you're in this alone. Our team of advisors is here to help you make the most of your retirement, whether you're coming from behind or you're starting from a place of strength. Contact us today to learn more about what we can do for you.

IMPORTANT: Advisory Person(s) may use proprietary financial planning tools, calculators and third-party tools and materials ("Third-Party Materials") to develop your financial planning recommendations. The projections or other information generated by Third-Party Materials regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time. Thrivent Advisor Network, LLC and its advisors do not provide legal, accounting or tax advice. Consult your attorney and or tax professional regarding these situations. The return assumptions in Third-Party Materials are not reflective of any specific product, and do not include any fees or expenses that may be incurred by investing in specific products. The actual returns of a specific product may be more or less than the returns used. It is not possible to directly invest in an index. Financial forecasts, rates of return, risk, inflation, and other assumptions may be used as the basis for illustrations. They should not be considered a guarantee of future performance or a guarantee of achieving overall financial objectives. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment. Investing involves risks, including the possible loss of principal. Investment advisory services are offered through Thrivent Advisor Network, LLC, a registered investment adviser. This material, in and of itself, does not create an investment advisory relationship subject to the Investment Advisers Act of 1940. The purpose of the report is to illustrate how accepted financial and estate planning principles may improve your current situation. The term "plan" or "planning," when used within this report, does not imply that a recommendation has been made to implement one or more financial plans or make a particular investment. You should use this Report to help you focus on the factors that are most important to you. Review the Financial Planning Disclosure Document and the Financial Planning Agreement for a full description of the services offered and fees. Investment advisory services offered through Thrivent Advisor Network, LLC., (herein referred to as “Thrivent”), a registered investment adviser. Clients will separately engage an unaffiliated broker-dealer or custodian to safeguard their investment advisory assets. Review the Thrivent Advisor Network Client Relationship Summary, Financial Planning and Consulting Services, Investment Management Services (Non-Wrap) and Wrap-Fee Program brochures for a full description of services, fees and expenses, available Thrivent Advisor Network, LLC’s Advisory Persons may also be registered representatives of a broker-dealer to offer securities products. Certain Thrivent Advisor Network LLC advisors may also be registered representatives of a broker-dealer to offer securities products. Advisory Persons of Thrivent provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser. Please visit our website for important disclosures.