How Much Do I Need To Save For Retirement?

How much do I need to save for retirement?

Fact of the matter is, it depends on several factors, and there is no one size fits all answer. But today we are going to review important factors when calculating how much you need to save for your retirement.

Retirement Age

The first step will be figuring out when you will retire. Keep in mind that the reality is that many people retire earlier than they expect. The reason for this is because unexpected issues such as new disabilities, work place changes or health problems may get in your way of working as long as you like. Thus, it’s best to keep that in mind when calculating how much you need to save.  And remember, the earlier you retire, the more money you will need to save.

Life Expectancy

We know you can’t know for sure how long you will live. However, you can check your family history and see how long your relatives lived and what diseases are common among your blood relatives. On the other hand, consider that with medical advances many more people are living past their seventies, eighties and even nineties.

Future Health Care Needs

Another important factor to keep in mind is the cost of health care. Costs for healthcare have been on the rise faster than general inflation and less employers are offering benefits to retirees. Consider Long Term Care Insurance.

Lifestyle

Take a few moments to imagine the retirement lifestyle you want. Was it your dream to travel in your later years? Do you plan on working part time? What are some hobbies you’d like to pursue? Would you rather live a simpler life and donate large amounts of money every now and then? Are you going to remain living in the same place you are now?

Consider the expenses needed to live the life you want, when adding up expenses for retirement.

Inflation

If your savings do not keep up with the rate of inflation, the value of your savings might not fully cover your retirement costs. This is because with inflation the purchasing power of your savings will gradually go down as the years go on. If your retirement savings are based on an investment vehicle, make sure that the interest rate is greater than the inflation rate.

Social Security

The reality is, Social Security is in a bit of a strain—more baby boomers rely on it and there are fewer people available to work to pay for their benefits. Additionally, Social Security pays about 40% of the total income of Americans aged 65 and over, which leaves around 60% to be paid in other ways.

The Grand Total

After considering all these factors you should have a much better idea of how much you should have to save for retirement.

For more information about how much you should save for retirement, click here. For a cost of retirement calculator click here. Please note that the calculator alone cannot factor in everything in your personal situation. It is only meant to illustrate a rough estimate.

If you are still unsure of the dollar amount you should have saved for retirement, feel free to call us at Federal National Funding at 201-342-3300 and set up an appointment or teleconference with our financial advisors.