One of the biggest problems with offering retirement advice is that everyone’s needs are different. Given all the variables in lifestyle, cost of living, and personal goals, it’s difficult to find universal standards.

We may not be able to give you exact savings numbers for your specific situation. However, we can offer some guidelines that will steer most people in the right direction.

Fitting Retirement in Your Budget

In general, most financial experts will say you should be saving anywhere from 10 to 15% of your gross (before taxes) annual income for retirement. The good news is that this percentage includes any contributions to a 401(k) or IRA account. While 10-15% should be your target for savings, any amount is better than nothing.

How Much Money Do I Need to Retire?

Although it depends on your goals and needs, most people should be able to retire comfortably if their investments can generate or support annual withdrawals of 80% of their annual income prior to retirement. This is because most retirees have paid off their mortgages and outstanding debt, are no longer saving for retirement, and have no dependents living at home. Because some of the bigger expenses are reduced, it’s possible to maintain a similar lifestyle with less money.

While 80% gives you a good starting point, it does not take into account additional spending that can come as part of retirement. If you plan on traveling, moving to a new house, or if you have medical conditions that increase your health care expenses (as many retirees will, sooner or later), you will need to set aside more money.

Detailed Expenses

If you want a more accurate number for your financial situation in retirement, you should project what your monthly expenses and income will be.

Start with your expenses. Some questions to ask include:

  • How much do your utilities cost?
  • What are your recurring expenses? (This is for items like gym memberships, insurance premiums, internet, and subscription services.)
  • What is the range of your variable expenses? (This is for any expenses that happen monthly, but aren’t fixed costs, like groceries, entertainment, travel, shopping, and charitable giving.)
  • How much should you have as a buffer in case of surprises? (These are for those unexpected costs, like car repair and maintenance.)

Other less common questions for retirees who still have outstanding debt include:

  • How much will your credit card payments be?
  • How much will you need to pay toward loan payments, including car loans and mortgages?
  • Is there any other outstanding debt that you will have to pay on? How much will that be?

If you add up those expenses, you should have a good idea of how much you can expect to spend every month of your retirement.

Detailed Income

Next, determine your income in retirement. To do this, ask questions like:

  • What is your estimated Social Security benefit?
  • Do you have a pension, and how much will you be receiving from it?
  • Do you have a 401(k) or IRA, and how much will you be receiving from it?
  • How much do you have in investments?
  • Do you have any non-liquid assets that you intend to cash out? How do you plan on liquidating them, and how much do you expect to earn from them?

Once you have both your income and expenses calculated, you can compare them and see if there are any deficits in your retirement plan. Just like any other budget, your expenses should not outweigh your income. Online calculators can give you a general idea of how much you need to save.

What Can You Do?

If you’re like most Americans and you don’t have enough saved for retirement, what can you do?

  • Start now. The sooner you start investing and saving for your retirement, the longer your money has to earn interest. No matter if you’re just out of college or you are a year away from retirement, the more money you save for retirement now, the more money you will have later.
  • Use 401(k) matching programs. Many companies have matching offers for their 401(k) accounts. Use them up to the full amount. If you do not, you are passing up free money. If you are over 50, consider putting more money in your 401(k) because the maximum contribution amount for you is higher.
  • Delay Retirement. Delaying your retirement and choosing to be in the workforce even a year or two more will give your investments more time to mature and will increase your Social Security benefits. Currently, for every year that you delay your retirement, your Social Security benefits are increased by up to 8%.
  • Consult a professional. If you’ve been saving for retirement for some time, but aren’t sure that your approach is right for your savings goals, it may be time to speak to a professional. A financial adviser can help you navigate and prioritize your responsibilities to secure an enjoyable life for you and your family in both the short term and long term future. Be sure to research potential advisors beforehand. Independent reviews, like this example about Fisher Investments, can help you understand what a particular advisor specializes in and to expect when working with them.

Make sure you know how much money you need in your retirement so you can ensure you are on the right path to financial security during retirement.