Retirement Calculator: How Much Do You Need?

Most of us understand the importance of saving for retirement, but knowing how much to save is a different story. Part of the problem is that it’s difficult to plan for goals that may be decades in the future, but ensuring a stable and comfortable retirement relies on us to get the numbers right.

Even without a specific goal, many people know they’re falling behind. Although the average American family holds $333,940 in retirement accounts, per 2022 data from the Federal Reserve, almost half of U.S. adults between the ages of 55 and 66 had no personal retirement savings whatsoever in 2017, according to the U.S. Census Bureau.

Fortunately, knowledge is the first step toward achieving savings goals and relieving retirement-related worries—and with a retirement calculator, figuring out exactly how much you need to save is easy.

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How much do you need to save for retirement?

While there’s no one-size-fits-all answer, some rules of thumb can help you figure out how much you need to save for retirement. According to Fidelity Investments, hopeful retirees should aim to save at least 10 times their current salary by age 67. (The Social Security Administration sets this as the normal retirement age for Americans born during or after 1960 to receive full Social Security benefits.) Taking it a step further, Fidelity suggests the following savings milestones as you move through your working years:

• One times your current income by 30.
• Two times your current income by 35.
• Three times your current income by 40.
• Four times your current income by 45.
• Six times your current income by 50.
• Seven times your current income by 55.
• Eight times your current income by 60.
• Ten times your current income by 67.

Of course, these guidelines are just that—guidelines. A more precise retirement goal will include more personal financial factors, such as your intended retirement age (which might not be 67), how much income you make each year, the lifestyle you plan to lead in retirement, and more.

That’s where a retirement calculator comes in.

Retirement calculator: Key definitions

Using a retirement calculator should be as simple as plugging in the pertinent details and clicking “calculate”. Here’s an explanation of the various fields you will need to complete in our retirement calculator.

Location

Our retirement calculator includes a location field to help estimate any state and local taxes that may affect the bottom line of your nest egg. If you plan to retire somewhere other than where you live, consider plugging that location into the calculator instead.

Annual income

Your annual income refers to your current net annual income, not counting your spouse’s income or any Social Security benefits you may receive.

Social Security election age (i.e. retirement age)

This field in the calculator allows you to choose what age you’ll retire and begin taking Social Security benefits.

While, as stated above, the Social Security Administration's official retirement age is 67, workers can choose to retire as early as 62—though doing so will reduce the Social Security benefit they’re eligible to receive.

Monthly savings

Monthly savings is the amount you put away each month specifically for retirement. The calculator will tell you what percentage of your income this amounts to. By playing around with this number, you can determine how much more you must set aside each month to reach different retirement savings goals.

Annual retirement expenses

Annual retirement expenses is how much you expect to spend each year during your retirement. The calculator can also break this down into per-month expenses, which may be easier to compare and contrast with your budget.

Account details and existing savings

The calculator will allow you to input any existing retirement accounts and savings you have, including 401(k)s, 403(b)s, 457(b)s, IRAs, and pensions. You can input the account balances and how much you contribute annually.

In a separate field, you can also include any balances in regular savings accounts and the rate of return on those savings.

Marital Status

Don’t worry, the calculator isn’t being nosy—but it does need to know for tax purposes.

How to use this retirement calculator

Start by inputting the fixed numbers: your birth year, annual income, and existing savings balances. Depending on your plans and circumstances, your location may also be fairly set in stone.

From there, you can play with factors that are more changeable: How much money you might need each year during retirement, what age you plan to retire, and how much you can afford to sock away every month in the meantime.

TIME Stamp: Save for retirement the smart way

While it’s almost always a good idea to stash some cash for the future, having a specific idea of what your retirement will look like can help make the transition smooth and easy—financially and otherwise.

Frequently asked questions (FAQs)

How do I start saving for retirement?

Automating your savings will go a long way toward ensuring it actually happens. If you have access to an employer-sponsored retirement account like a 401(k) or 403(b), you can set up automatic contributions to your retirement account each pay period. Even with an IRA, most providers allow for automatic transfers.

How should I invest for retirement?

This is a big question that only you can answer, ideally with the help of a qualified financial advisor. Still, here are some helpful guidelines.

By utilizing tax-sheltered retirement accounts, you can lower your tax burden either in the year the deferrals are made (for traditional accounts) or when you take withdrawals in retirement (Roth accounts). And by diversifying your investments across a wide array of stocks, bonds, and other assets, you can help ensure your portfolio withstands any short-term market setbacks. And don’t forget to maintain an active savings account. Choose a bank that pays a competitive APY on savings, such as Axos or Quontic, will make it easier.

When is the best time to retire?

Again, this question can only be answered by the individual; some people attempt to retire as early as 35 or 40. However, most workers need more working years to save the money they’ll need for retirement—and the lowest age at which most people are eligible to take Social Security benefits is 62. (The full Social Security retirement age, the point at which you can take full Social Security retirement benefits without penalty, is 67 for those born in or after 1960.)

What is a good monthly retirement income for a couple?

It depends. To determine how much money you’ll need each month in retirement, figure out how much monthly income you need today, keeping in mind that your circumstances will likely change by the time you reach retirement age. (For example, you may have paid off your house by that point, which means you won’t owe a monthly mortgage payment, and young children should be old enough to support themselves.) A retirement calculator can help you better understand your specific needs, as can online financial advisors and apps such as SmartAsset, Empower, or Beagle.