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  • Writer's pictureMark Fonville, CFP®

How Much Retirement Savings Should I Have?

Updated: Nov 18, 2023

How much retirement savings should I have?

Everyone has different income needs in retirement.

Several factors influence your “retirement number,” including your age, where and when you hope to retire, and what you want to do in retirement. Someone with dreams of early retirement will likely need more saved up than someone who plans to work through their golden years.

No matter what an ideal retirement looks like for you—an encore career or taking it easy—this article will help you sort through the many considerations on your plate and ensure you set yourself up for success.

As you prepare for your retirement journey, be sure to snag our must-have retirement planning checklists. They are free and are built using the latest in retirement insights and strategies.

So, if you are wondering: "how much retirement savings should I have?", keep reading to find out.

Create a List of Your Retirement Goals

As you begin planning for retirement, the top question that likely percolates in your mind is,

How much should you have saved for retirement?

The short answer?

It depends.

Several variables work together to determine your personal savings goals, but there are good benchmarks to help zero in on the ideal amount you should target.

To start, consider the following:

  • How many years are you from retirement? Your retirement time horizon can help you take a more precise (and critical) look at how much you’ve saved. The closer you are, the more confident you’ll want to be that your savings can fully fund your retirement expenses. A 55-year-old who wants to retire may require a more aggressive plan than someone who wants to retire at 70, for example. If you still have a reasonable amount of time before you send in your retirement letter of resignation, you have time to make up for any gaps in your savings strategy.

  • Are you hoping to move when you retire? More and more retirees are looking to relocate in retirement. In fact, 30% more retirees moved out of state in 2020 compared to 2019 (and Virginia was their top destination). If you are planning a move, define what it looks like. Are you planning to go somewhere more or less expensive than your current location (think about the cost of living, insurance, taxes, and more)? If you move somewhere less costly, you’ll not only have a reduced budget but may also be able to stash away some money when you sell your current house.

  • Do you anticipate doing a lot of travel in retirement? 63% of Americans over 50 cited travel as an important retirement goal, according to an Ipsos poll. And, on average, retirees spend a little more than $11,000 per year on travel costs. Since travel is a common and costly goal, it’s critical to think through what your travel goals are. Do you hope to take a big trip every year?

  • Are you hoping to leave money to children and/or grandchildren? Estate and legacy planning should play an essential role in your overall retirement plan. Your financial team can help you craft an estate plan that lets your legacy shine and pass your wealth to heirs efficiently and effectively.

  • Are you in good health? Many pre-retirees underestimate healthcare costs in their golden years, but financially planning for health care is a must, since it could account for roughly 15% of your retirement budget.

The specific answer to these questions is less important than whether you simply can answer them. In other words, it’s okay if you plan to travel more in retirement. It’s also okay if you don’t.

The key here is to have a plan so that you know what your target is. Writing your retirement goals will help you adjust your savings strategy and ensure you’re on track to live the retirement lifestyle you desire, whatever that is for you.

While you won’t have an exact answer for everything, and things won’t always go exactly as you plan (the pandemic certainly taught us all that hard lesson), anticipating how you will spend your retirement dollars puts you on a much stronger path.

Calculate Your Current Savings and Expectations

When thinking about how much you need to save for retirement, start with where you are right now.

  • How much do you have saved in retirement-specific accounts (401k, individual retirement account (IRA), Roth IRA, etc.)?

  • What do your savings look like in other investment accounts (brokerage account, real estate, etc.)?

  • What sources of guaranteed income will be available to you? (pension, Social Security, annuity, etc.)?

Knowing how much you currently have saved is critical to figuring out how far you have left to go and what adjustments you need to make to get there.

How Much Retirement Savings Should I Have?

There are several ways to calculate how much retirements savings you should have on hand.

As a general rule of thumb, experts recommend having 6-8x your annual salary saved in your 50s and 8-10x saved in your 60s. Another way to look at it is being able to replace about 80-90% of your pre-retirement income.

Using a multiple of 6-8x your annual salary is a good place to start. But, an even more precise way to calculate your savings need is to use the "4% rule".

Here's how to do it:

First, you'll want to calculate your social security benefit by logging in to and reviewing your social security statement.

If you haven't reviewed your social security statement in awhile, it's a good idea to take a look to ensure your earnings history is accurate.

How much retirement savings should I have starts with social security.

The maximum social security benefit an individual retiree can get is $3,148 a month for someone who files in 2021 for social security at Full Retirement Age according to AARP.

Now, let’s assume your social security benefit will equal the maximum benefit and that your spouse’s benefit will equal 50% of your benefit or $1,574/month.

The combined social security benefit in this scenario will be $4,722/month or $56,664 per year.

This means that if your lifestyle costs $100,000 per year, then you will have to create an additional $43,336 per year from your portfolio above and beyond social security!

Income Need - Social Security Income = Supplemental Portfolio Income Needed

$100,000 - $56,664 = $43,336

So, how much in savings will you need at age 65 to create $43,336 per year in income without running out of money?

Let's find out using the 4% rule:

Annual Income Need/.04 = Retirement Savings Needed

$43,336 / 0.04 = $1,083,400

While nothing is guaranteed, the 4% rule of retirement income planning says that you’ll need $1,083,400 in retirement savings to supplement your social security income.

This assumes that your investment portfolio is prudently managed taking into account risk, return, taxes, and annual income needs.

But, what if you have a more extravagant lifestyle and you need $200,000 a year in income to maintain your lifestyle.

We can calculate how much retirement savings you should have as follows:

Total Annual Expenses - Combined Social Security Annual Benefit = Income needed

$200,000 - $43,336 = $156,664

Then, apply the 4% rule to your annual income needs as follows...

$156,664/.04 = $3,916,600

This means you may need approximately $3,916,600 in retirement savings to create enough income above and beyond social security for your lifestyle!

Clearly, this is just an example and many variables could change the outcome.

For example, do you have a pension? Do you plan on delaying social security? What about taxes? Do you have a comprehensive withdrawal plan (how to withdraw funds from personal savings)? Have you factored in other savings accounts like an emergency fund? How much money is in tax-free Roth IRA accounts vs. tax-deferred accounts like a 401 (k) or IRA?

All of these factors play an important role in determining how much retirement savings you should have in your nest egg.

Those are excellent places to start, but you’ll want to tailor those targets to fit your specific situation. To get an accurate estimate of the amount you’ll need to have at retirement, take variables such as your age, salary, general health and family history, and tax brackets into consideration.

You have one chance to make your retirement savings last. If you need help, contact us for a free consultation.

Be as honest and realistic as possible throughout your planning. You want to create a plan that’s sustainable and provides you with the quality of life you deserve throughout your golden years.

Since the point of saving for retirement is to replace income when you stop working, convert your savings amount into annual earnings expectation for retirement. Does the outcome seem like it will be enough, or do you need to readjust your estimate?

Once you’ve arrived at a good estimated savings target, ask yourself the following questions:

  • Are you on track or off base?

  • What needs to change for you to hit, and ideally exceed, those targets? Perhaps you need to max out your retirement accounts, concentrate on higher savings rates, redirect current spending, etc.

Comprehensive retirement planning is all about driving action now to make sure you are meeting your future goals.

Tips To Invest For Retirement More Intentionally

Once you know your goals and what they cost, the next step is setting yourself up to reach them.

One of the most essential ways to save is taking full advantage of your tax-advantaged retirement accounts. In 2021, you can stash away up to $19,500 in your 401(k). That contribution limit increases to $26,000 for those over 50. At this point in your career, you want to take full advantage of your employer match—in fact, it's likely you're saving well above the limit. If you can contribute more—don’t let those funds go to waste. Even a small savings difference of 1% can turn into tens of thousands of dollars over time.

Remember, you’ll pull money out of these accounts slowly over time. The majority of your savings will continue to compound throughout retirement, so the more you can get in there the better off you’ll be.

As you near retirement, you may also be able to divert money away from things you no longer save toward. For example, the money you were contributing annually to your children’s education? Put that same amount annually into retirement investments. You won’t notice it “missing” because you were spending it on education all those years. Now, you’re redirecting it toward your future.

When making your estimations, don’t forget about taxes. If most of your savings are in traditional 401(k)s or IRAs, you will pay current tax rates on all distributions you take from your accounts.

With that being the case, you also want to diversify your savings into other avenues that are taxed differently. This situation is where Roth conversions or holding some of your savings in taxable accounts can give you some tax diversity and flexibility in retirement.


By now, you know your goals and how much you should save—and how far off that goal you may be. It’s time to meet with a financial advisor to create a strategy for your savings and investments that will keep you on track for your retirement goals.

Various factors can influence how much retirement savings you should have on hand.

For example, how much and when will you file for social security? Will you have a pension? How much will you spend in retirement? Is most of your savings in tax-deferred accounts, like a 401 (k) or IRA, or in taxable accounts like a brokerage or trust account?

The answers to these questions can result in vastly different retirement savings needs.

Covenant Wealth Advisors is a fiduciary investment advisory and financial planning firm that specializes in retirement planning. We know how to structure a savings plan to make sure you can retire on your terms and pay as little in taxes as possible.

Need help getting on track? Contact our team of financial planners today. We help individuals all across the United States.

For more retirement reading, be sure to download our must-have retirement planning checklists.

Mark Fonville

About Mark Fonville, CFP®

Mark is a personal financial advisor and the President of Covenant Wealth Advisors. He manages investment portfolio and provides retirement income planning for individuals age 50 plus who have over $1 million in investments.

He has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine. Schedule a call.



Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. We provide investment advisory, financial planning, and tax planning services to individuals. Investments involve risk and does not guarantee that investments will appreciate. Past performance is not indicative of future results.

The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

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