How Much Money Should You Save Each Year for a Comfortable Retirement?

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By Jacob Maslow

How much do I need to have before I retire? This is a question that is in the mind of most people. However, the answer to this question varies; this is because people earn different salaries and have different lives they have for themselves after retirement.

While working, it’s a plus on your side if you know the right amount to put for savings at a particular age. This way, you will pattern your saving plan to reach your goal.

How Much Money Should You Save Each Year for a Comfortable Retirement?

Financial experts recommend that individuals replace about 80% of their yearly income if they want to live a comfortable lifestyle after retirement. Take this as an example – if you earn $120,000. Then, when you retire, you should live on at least $96,000 to remain comfortable.

Remember that the amount you are to save can vary depending on various factors. These factors include the lifestyle you want after retirement, your health, and other factors. For example, your savings amount will need to be increased for someone who wants to travel worldwide. Below are some methods you can use to know much you should save for a comfortable retirement.

Rule of Thumb

There are a variety of techniques that one can use to calculate savings for retirement. One of the simplest is the rule of thumb method. The rule of thumb is also known as the 4% rule. It divides your desired yearly income to be used after retirement by 4%.

For example, let’s look at the $96,000 above. You will need to have a retirement amount of more than $2.5 million ($96,000 dividends by 0.04). This method helps know the right amount to save per year.

This rule of thumb is very much dependent on your lifestyle after retirement. So using the 4% rule may not work for an extravagant lifestyle, but it is suitable for living a comfortable life. The rule is, however, a good plan for the future because it expects that you should still live for another 30 years after retirement.

The 4% rule involves strict adherence each year. Not following it can destroy your saving plan.

Saving for Retirement as you Get Older

Another helpful method used to know how much you should save for retirement is by age. It helps to know how much to set aside for retirement while you grow. You can use different strategies to know how much to save while growing. Let’s take a look at them.

Your Salary Percent

This strategy involves taking a part of your salary and saving it while growing in life. This process helps you figure out how much you need in the future. As we grow, our lifestyle may change; this is why saving while growing is practical. suggests that individuals should save up to 15% of their salary. This process should start when they turn 20 and last through the working lives of the individuals. The process should not be restricted to one account but across as many as possible. Saving across different retirement accounts can be very useful to you.

Saving in line with your age

When it comes to saving, gives calculations you can use to start saving for your retirement. According to them, they suggest that by multiplying your annual salary by particular figures. The estimate is given like this:

  1. 30 years = 1×yearly Salary
  2. 40 years = 3×yearly salary
  3. 50 years = 6×yearly salary
  4. 60 years = 8×yearly salary
  5. 67 years = 10×yearly salary

Not everyone may see the planning above as feasible, especially if you started your retirement plan a little late. But, not to worry, because below is a breakdown of how you can confidently kick off your saving plan at every stage of your life.

Saving in your 20s

Since you just started working and your paycheck might not be so much, you should have two forms of savings. One for emergency funds and your retirement savings. This way, you are sure that the two are not in one account. Make sure you save with an employer’s plan for your retirement account because it comes with benefits.

Saving in your 30s

Saving in your 30s doesn’t get easier, although since you’ve gained working experience and finished college, your paycheck should have increased. So it would help if you still had savings for emergencies, another for additional expenses or investments, and another for a retirement account. Saving for your retirement should be done with an employer’s retirement plan.

Saving in your 40s to 60s

A lot can happen in your life during this time. In your 40s, you may have a career change. In your 50s, you may already have kids, and you’re paying for college fees; in your 60s, you’re planning to stop working. Your investments during these ages should be paramount and your retirement scheme too. Since you have been saving with an employer’s retirement plan, you should have additional advantages with the method.

1.    Using Retirement Calculator

Aside from knowing retirement savings with age and using the 4% rule, you can use online retirement calculators. These calculators help you to estimate your savings and how much you should have in the year you want to retire. One thing to note is that online calculators differ; some provide more accurate figures than others.

2.    Time

Things are changing daily with the market, economy, and life. As you grow older, you will notice that even your taste in life changes. These things can affect you, so it can affect your choice of how much to save for retirement. For this fact, you should continuously visit your retirement savings, which will help to know how much you want to save.

How much Should We Save as a Couple?

The amount for saving as a couple is not different from that of an individual. As a couple, experts still advise that both of you should have 80% of what you earn right now while working. This will enable you to maintain living in comfort.


Saving for retirement is not an easy thing, and as a result, your savings may rise or fall. This should not shake you or distract you from saving. You aim to get to something close to your saving goal. If you can afford a financial advisor, you may also book one, as they have a proper plan you can follow for your retirement plan.

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