How Much You Should Have Saved for Retirement

By Jessica Dosseh

In this article we’ll cover:

  • The two most important factors to consider when saving for retirement

  • Baseline goals for the amount of money you will need to retire comfortably

  • The accounts and assets you will need to utilize to maximize the money saved for retirement

  • How social security compliments your retirement savings

How much should you save for retirement? 

Retirement planning can be intimidating at any age, but there is no need to make it more complicated than it needs to be. There are two major factors you need to consider – 1) your budget, and 2) your life expectancy.

  1. What is the bare minimum you can live off of?

  2. When do you intend to stop working, and how long do you intend to live after that age?

It's that simple.

Here is a simplified table to show how much you may need depending on living costs:

The hard part is being able to reach that retirement amount when it seems so far off into the future and when there are so many other priorities to focus on in the present.

On average, you may need about $1.9 million to retire by 67 and live till 95 with a pretty conservative lifestyle. This means that if you are 20 years old and making $50,000 a year, you will need to save at least $500 a month to be on track to reach that goal as you continue to invest and gradually increase the amount you save. If you are 30 years old, you would need to save a minimum of $1,000 a month to get started.


Remember that simply saving isn't going to help you reach retirement.


If you are 20 and save $500 for about 47-odd years, you will only have about $282,000 in the bank. Not nearly enough if your goal is 1.9 million. Therefore, at a $500 a month rate, you will need to invest with a 6% or higher interest rate in order to reach the $1 million range through compound interest. Consider using this compound interest calculator to calculate your financial growth based on the amount invested, period of time, and interest rate estimation.


For more help understanding what you should be investing monthly based on your age and income, consider using this retirement calculator to see if you are on track.

Aiming for $1.9 million can be a good starting point, but the real question becomes — will $1.9 million be enough to sustain you in old age? Having a percentage or dollar amount to give you a rough idea for planning can be helpful, but you can't be focused solely on that.

In the meantime, what can you do?

Many factors determine how, when, and how much you'll need to retire. So here is some advice you've probably heard a thousand times to help you get started.

  • Make the most of tax-advantaged savings accounts like traditional 401(k)s and IRAs.

  • Take advantage of your company match in your workplace retirement plan.

  • If you are in your 20s, a 1% increase in your savings rate could add 3% more to your income in retirement.

  • If you are 50 or older, be sure to make the most of catch-up contributions to your retirement savings plans.

  • Aim to have a diversified mix of investments.

Things to consider before retiring.

How much is enough? – The idea is to budget for retirement.

Create a ballpark annual estimate based on what you live on now and what might change when you retire.

How will you spend your retirement dollars?


Here's how older Americans today spend their money based on a 2019 research from the Employee Benefit Research Institute by Zahra Ebrahimi.

One of the major categories to account for as you age is healthcare costs and housing.

Healthcare costs tend to skyrocket as you get older. You can expect to spend $300,000 or more simply on medical expenses throughout retirement, according to the annual Fidelity Investments Retiree Health Care Cost Estimate. This sum doesn't include the additional annual cost of long-term care. For long-term care, having a private room in a nursing home can cost anywhere from $100,000 or more.

Because of this, it's extremely important to understand and plan for growing medical costs so that it doesn't take you by surprise.

What can you do?

  • You can choose to enroll in a Medicare plan; however, note that Medicare does not cover long-term care.

  • Supposing you're not yet enrolled in Medicare, you can save money for retirement health care costs in a Health Savings Account (HSA), which currently has a $3,850 ($7,750 for families) contribution limit and a $1,000 per year additional contribution limit for Individuals 55 or older. HSA funds can be used to pay for Medicare and long-term care insurance premiums.

  • Plan for a long-term care insurance purchase. If the long-term care insurance is too expensive, consider buying a life insurance policy with the option of adding a long-term care insurance rider.

How much of Social Security can you rely on?

Most Americans consider Social Security as the foundation of their retirement plan. However, it's important to recognize that Social Security is only meant to supplement retirement savings.

As of 2022, Social Security only pays a maximum monthly benefit of $3,345 for those who retire at full retirement age, but on average, 51% of retirees spend more than $4,000 per month.

For some, it might be better to wait longer to claim Social Security benefits because one of the biggest retirement concerns people have is outliving their money.

Women might need to think of Social Security benefits differently. Bank of America Merrill Lynch reported the following:

"Women typically live longer than men, and those extra years can make it especially important to find ways to boost income. Waiting longer to claim Social Security benefits is one strategy that can help do that.

Take, for instance, a single woman who, instead of claiming benefits at 62, waits until 70 — the maximum age for boosting benefits — before claiming. For a person whose benefit would be $1,000 at full retirement age (age 67 in this example), waiting those extra eight years could increase her monthly benefit by 77%, or about $540 each month."


Anyone approaching retirement age should speak with their financial, tax, and legal advisors. Determining when and how to begin claiming your Social Security benefits are important and complex decisions that should be evaluated carefully.

What should you do?

For more information about your personal Social Security Statement, go to SSA.gov for "secure and convenient access to your earning history, estimates for retirement, disability, and survivors benefits you and your family may be eligible for."

When it comes to retirement.

The important thing is to make steady progress toward saving for retirement, no matter what your age, so don't feel discouraged. If you couldn't start yesterday, you can still start today.

Whatever you save and invest today for the long term can make a big difference in the future — even a 1% increase can mean a lot over time.