Retirement is one of life’s biggest milestones, and planning for it can feel overwhelming. Fortunately, determining how much money you need to retire doesn’t have to be complicated. With a thoughtful approach and application of some proven savings tactics, you can build a solid financial foundation for your future.

Read on to learn how to save for retirement, set financial goals, and strategize for investment growth.

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What’s a good retirement income?

A stable retirement income should let you maintain your lifestyle after you stop working. Many experts suggest aiming for about 70–80% of your pre-retirement income. So if you're earning $100,000 a year now, you may need around $70,000–80,000 yearly in retirement to stay comfortable.

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When you stop working, some expenses may decrease, such as commuting costs and retirement contributions. Paying off debts like mortgages or your children’s college loans can further ease financial strain. Healthcare and leisure expenses may also increase, so everyone’s average retirement income needs are unique.

Financial experts often use the 4% rule as a guideline for retirement planning. This rule suggests that to safely withdraw $40,000–50,000 per year in retirement, you should aim to save around $1,000,000 in assets. This target may seem high, but your income in retirement will likely come from multiple sources — such as Social Security, personal savings, and possibly part-time work or other investments.

A good first step is consistently setting aside a portion of your income. Explore savings strategies like annuities to determine if they align with your goals.

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How to calculate ideal retirement savings

To calculate your retirement savings needs, start with the widely used “25x rule.” This method suggests multiplying your expected annual retirement expenses by 25 to determine your target savings.

Begin by examining your current monthly budget and multiply it by 12 to determine your yearly expenses. To establish your retirement savings goal and estimate how long your retirement savings will last, multiply your annual expenses by 25. For instance, if your spending budget is $50,000 a year, you should aim to save $1,250,000 for retirement.

Here are some more specific tips to set yourself up for success.

Set age-based goals

Setting retirement savings goals by age provides a structured approach to long-term financial planning. Your objectives should account for lifespan, investment growth, and cost of living.

Here are some general age-based savings milestones, although these can vary greatly depending on your salary and career progressions:

• By 30: Save one year’s salary. If you earn $100,000, aim for $100,000 saved.
• By 40: Save three times your salary. Target $300,000 if you currently earn $100,000.
• By 50: Save six times your salary. With a $100,000 income, aim for $600,000.
• By 60: Save eight times your salary. If you earn $100,000, save $800,000.
• By 67: Save 10 times your salary. If you make $100,000, aim for $1,000,000.

Follow the 4% withdrawal rule

The 4% rule suggests withdrawing 4% of your total retirement savings, like tax-deferred accounts such as 401(k)s and IRAs, during your first year of retirement. It assumes you'll keep a balanced portfolio of about 50% stocks and 50% bonds and plan for a 30-year retirement. In the following years, you adjust your withdrawal amount to keep up with inflation, helping maintain your purchasing power.

For example, if you have $500,000 in retirement savings, your first-year withdrawal would be $500,000 × 0.04 (4%) = $20,000. If inflation is 3% in the second year, you'd withdraw $20,600.

Calculate your income multiple

An income multiple is a measure of how your income compares to a financial goal or asset, helping you figure out what to save so you can afford to retire.

Think of it as a comparison tool: If a retirement goal suggests saving 7–10 times your salary and you earn $100,000 annually, your target is between $700,000 and $1,000,000.

To estimate your total retirement savings goal, multiply your estimated annual expenses by the number of years you expect to be in retirement. If you expect to need 75% of your $70,000 salary, that’s $52,500 annually. Over 25 years, you’d need around $1,312,500.

Saving 15% of your income annually, starting at 25, helps you build toward this goal. If you start later, you can increase the percentage to help you catch up.

Additionally, keeping at least 50% of your portfolio in stocks may allow your savings to grow faster than bonds or cash, helping your money outpace inflation.

If you’re considering buying an annuity, set aside a portion of your savings that aligns with your income multiple goal. Just be aware that some annuities include fees, which may impact your returns.

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Three factors that influence retirement needs

There are numerous considerations when determining how much money you'll need to save for retirement, and understanding these can help you set realistic savings goals. Here are three factors to guide a retirement plan that will accommodate your lifestyle and dreams.

1. Retirement age

Your retirement age affects how much you need to save — if you plan to retire early, you’ll need to set more money aside.

Delaying Social Security benefits beyond full retirement age increases your payout by 8% per year until age 70. Additionally, staying in the workforce longer also gives you more time to save and reduces the number of years you'll rely on your retirement funds.

2. Preferred lifestyle

Consider your desired lifestyle and aspirations — whether you want to travel the world, pick up new hobbies, or work part-time. By factoring in Social Security and other income streams, you can build a personalized savings strategy that keeps you financially secure and lets you enjoy life on your terms.

Where you live also plays a role in lifestyle costs, so it affects your financial needs. The average retiree household income ranges from $20,542 in Indiana to $43,080 in Washington, D.C. States with a higher cost of living — such as those on the Northeast and West Coast — require higher income levels.

Relocating to a more affordable area can also extend your savings. For example, reducing rent or housing costs by $1,000 per month saves $12,000 annually, which boosts your financial security.

3. Investment growth

Think about your investment portfolio's performance when strategizing for retirement. Historically, a balanced portfolio of stocks and bonds delivers average annual returns of around 6.8%. Market downturns early in retirement can deplete savings faster, so keeping a diversified portfolio helps manage risk¹.

As you approach retirement, shifting toward conservative strategies can protect your savings while allowing continued growth.

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This communication is for informational purposes only. It is not intended to provide, and should not be interpreted as, individualized investment, legal, or tax advice.

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¹ Diversification does not guarantee a profit or protection against a loss in declining markets.