Five Steps to Answer Your Million-Dollar Retirement Question
Are you saving enough to live comfortably in retirement? Here are the steps you can take now to find out if you're on track or need to adjust your savings.


When it comes to retirement, most people aren’t confident they’re saving enough. In fact, studies show that the majority of Americans have no concrete savings goal for their future. Whether you want to live modestly or plan for more travel and comfort, getting a sense of your “retirement number” is crucial. Let’s walk through how to find that number and take charge of your future.
1. Assess your retirement lifestyle
Think about the life you envision in retirement. Do you want to keep things simple, or are you planning for travel, hobbies and support for your family? Every retirement looks different, but a few things will impact your costs no matter what:
- Housing. Whether you plan to stay put, downsize or buy a second home, housing will be one of your biggest expenses.
- Health care. Costs for medical care rise with age, so it’s essential to plan for this even if you’re healthy now.
- Activities. Hobbies, travel and leisure pursuits can add up quickly, depending on how often you indulge.
- Family support. If you plan to help with your grandchildren’s education or support your aging parents, factor those expenses in.
Having a good estimate of these costs will get you closer to your retirement target.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Determine how much you should save
Now that you’ve pictured your lifestyle, it’s time to talk numbers. Here are two popular retirement saving guidelines:
- The 80% rule. Aim to replace about 80% of your pre-retirement income each year. So, if you’re making $100,000, your goal should be $80,000 annually.
- The 4% rule. To avoid running out of money, plan to withdraw no more than 4% of your savings each year in retirement. This rule offers a way to extend your savings, but it might need adjustments based on the market or your health.
These aren’t one-size-fits-all rules, but they’re useful starting points. A retirement calculator that factors in inflation can help.
Age-based milestones can help keep you on track. Here’s a general road map for savings goals:
- By 30: Aim to have saved the amount of your annual income.
- By 40: Try to reach three times your income.
- By 50: Six times your income.
- By 60: Eight times your income.
Let’s say your salary is $75,000. By age 40, your target should be around $225,000. These benchmarks aren’t set in stone, but they’re a practical gauge to ensure you’re moving in the right direction. Saving is hard, so you could find that you’re sometimes behind your target, but remember that compounding returns from your investments can help you get to your ultimate goal faster in your older years.
3. Refine your savings target
Your ideal retirement savings may need tweaking based on several factors:
- Health care costs. Medical expenses can be unpredictable, especially long-term care. Consider budgeting extra for this category. Consider using a health care calculator to help you get a handle on it.
- Housing. Are you planning to pay off your mortgage, downsize or rent? Each scenario changes how much you’ll need.
- Longevity. If you have a family history of longevity, plan for a longer retirement.
Every few years, check in on your goals, your savings and any life changes that might impact your target.
4. Plan for unexpected events
Try not to withdraw from your retirement savings if you can help it, but life isn’t immune to surprises. Having a plan can help. From unexpected medical bills to market downturns, it’s wise to have a safety net.
Consider an emergency fund where you keep six to 12 months of expenses set aside in an easily accessible account. This cushion can prevent you from tapping into retirement savings too early or during a market dip.
5. Check your progress along the way
Are you on track? Here’s a quick way to check:
Take your current retirement savings and divide it by your target number.
Your “target number” is the total amount of money you’ll need to comfortably live the retirement lifestyle you want. To estimate this, consider using the 80% rule as a starting point (reminder: You aim to replace about 80% of your pre-retirement income each year. Multiply that by the number of years you expect to live in retirement).
For example:
- Estimate your annual need. If you currently earn $100,000, aim for $80,000 per year in retirement.
- Calculate total retirement years. If you plan to retire at 65 and expect to live until 95, you’re planning for a 30-year retirement.
- Total target number. Multiply your annual need ($80,000) by 30 years, resulting in a target number of $2.4 million.
If you’re behind, it’s OK. Your account will keep growing through retirement if invested appropriately. You can make small changes now to close the gap, whether it’s saving a little more each month or cutting unnecessary expenses.
Whatever your stage, the key is to keep moving forward. Retirement planning doesn’t need to be perfect — it just needs to be proactive. Regularly review your goals, adjust your savings as needed and stay on top of unexpected events. A little preparation now can make all the difference when it comes to achieving the retirement you deserve.
Want more guidance on retirement savings? Sign up for Kiplinger's six-week series, Invest for Retirement.
Related Content
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Romi Savova is the founder and CEO of Pension Bee, a leading online retirement provider she launched in 2014 after experiencing firsthand the complexity of workplace retirement account transfers. Driven by her vision to simplify retirement saving for the mass market, Romi has transformed Pension Bee into a trusted brand with over $7 billion in assets under management and more than 260,000 customers.
-
Stagflation: What It Is and Why Retirees Should Care
Stagflation — the economic bogeyman of the 1970's — may return to the US. Here's what it could mean to your retirement.
By Donna Fuscaldo Published
-
Why Losing Your Job Could Be the Best Opportunity to Plan Your Future
Amid this uncertainty lies an opportunity for strategic reassessment and personal growth.
By Mario Hernandez Published
-
Stagflation: What It Is and Why Retirees Should Care
Stagflation — the economic bogeyman of the 1970's — may return to the US. Here's what it could mean to your retirement.
By Donna Fuscaldo Published
-
Can a New Manager Cure Vanguard Health Care Fund?
Vanguard Health Care Fund has assets of $40.5 billion but has been ailing in recent years. With a new manager in charge, what's the prognosis?
By Nellie S. Huang Published
-
Retirement Savings On Track? How Much Should You Have Between 61 and 65
JPMorgan’s guide can help baby boomers determine whether they have saved enough for a retirement pegged to their income level.
By Donna Fuscaldo Published
-
Family Caregivers Need Help. These Are the Policies They Say Would Make the Biggest Difference
There are millions of people across the country caring for elderly or disabled family members. New research shows the key changes that would improve their lives and the lives of those they care for.
By Christy Bieber Published
-
What You Don't Know About Annuities Can Hurt You
Lack of awareness leads many to overlook these potent financial tools, and with the possibility of running out of money in retirement, that could really hurt.
By Ken Nuss Published
-
Three Keys to Logical Investing When Markets Are Volatile
Focusing on these market fundamentals can help investors stay grounded rather than being swayed by emotion or market hysteria.
By Dennis D. Coughlin, CFP, AIF Published
-
Yes, the Markets Are Spooked, But You Don't Have to Be
It's human nature for investors to freak out in a downturn. But with a little discipline, you can overcome the urge to sell and stay focused on long-term goals.
By Jimmy Lee, IAR Published
-
Remembering Bogle: A New Standard for Municipal Investing
Improvements in technology, data, systematic trading and risk analytics have led to more successful municipal indexing.
By Paul Malloy Published