How much do I need to retire at 70?

Many experts say your annual retirement income should be 70 percent to 80 percent of your final pre-retirement salary. So, if you make $80,000 when you leave the workforce, you'll need at least $56,000 for each year you plan to spend in retirement.

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Chicago Christian, Rachel. "How Much Do You Need to Retire?" RetireGuide.com. Last modified June 17, 2022. https://www.retireguide.com/retirement-planning/how-much/. MLA Christian, Rachel. "How Much Do You Need to Retire?" RetireGuide.com , 17 Jun 2022, https://www.retireguide.com/retirement-planning/how-much/. APA Christian, R. (2022, June 17). How Much Do You Need to Retire? RetireGuide.com. Retrieved December 21, 2022, from https://www.retireguide.com/retirement-planning/how-much/ A qualified expert reviewed the content on this page to ensure it is factually accurate, meets current industry standards and helps readers achieve a better understanding of retirement topics. Ebony J. Howard is a certified public accountant and freelance consultant with a background in accounting, personal finance, and income tax planning and preparation. She specializes in analyzing financial information in the health care, banking and real estate sectors. Matt Mauney is an award-winning journalist, editor, writer and content strategist with more than 15 years of professional experience working for nationally recognized newspapers and digital brands. He has contributed content for ChicagoTribune.com, LATimes.com, The Hill and the American Cancer Society, and he was part of the Orlando Sentinel digital staff that was named a Pulitzer Prize finalist in 2017. Rachel Christian is a writer and researcher for RetireGuide. She covers annuities, Medicare, life insurance and other important retirement topics. Rachel is a member of the Association for Financial Counseling & Planning Education.

Determine Your Retirement Needs

Everyone’s retirement goals are different. How much money you need to save depends on your current income and the lifestyle you want during retirement. Three Common Retirement Savings Goals $1 million to $1.5 million 10 to 12 times your current income 70 percent to 80 percent of your annual salary for each year you plan to spend in retirement Determining your needs and wants is a crucial part of retirement planning and the best way to find a savings goal that works for you. For many people, certain expenses decrease in retirement. Student loans are paid off and your children are often grown and financially independent. You may be done paying off your mortgage, or close to it. Or you may choose to downsize to a more affordable house or condo. But while some costs decrease, others may increase. For example, if you plan to travel extensively in early retirement, you may need 100 percent of your current salary for the first few years instead of 70 percent to 80 percent. Another factor to consider is your life expectancy. At age 65, the average American life expectancy is between 20 and 22 years — and half the population will live longer than that. Outliving your savings — known as longevity risk — is a real threat to your nest egg. If you’re in good health and plan to live a long life, you need to plan accordingly. Never Miss Important News or Updates Get money-saving tips, hard-to-find info and tactics for a successful retirement in our free weekly newsletter. Subscribe Now

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Saving vs. Investing

Simply saving money during your working years makes it much more difficult to reach your retirement goals. Interest rates remain low, so money in a savings account will likely just sit there. It won’t grow unless you add more money. In the early and middle years of your career, you have time to recover from market volatility and losses. That’s why it’s important to invest when you’re young. You can invest for retirement by opening a brokerage account or a retirement account, such as a 401(k) plan at work. The average yearly return on stock investments is 7 percent, while savings account interest rates often hover around 0.08 percent. You need to actively manage these accounts to grow your money. If this isn’t a priority for you, consider hiring a professional. As you near retirement, experts recommend cutting back on risky investments. While stock-heavy portfolios do well in the long term, they can bottom out during market downturns. If you need to access money within the next five years, add low-risk investments to your portfolio, such as bonds or certificates of deposit (CDs).

Determine Your Retirement Age

Deciding when you should retire can feel like a balancing act. If you retire too early, you may run out of money. If you delay retirement, you could miss out on other experiences such as traveling or spending time with family. Yet, delaying retirement comes with financial perks. First, your monthly Social Security benefits increase the longer you wait. The maximum benefit caps out at age 70. If you’re lagging behind on savings and investments, delaying retirement lets you earn more money and contribute to your accounts longer. It also gives your money more time to enjoy the effect of compounding interest. Finally, retiring later creates a shorter window to depend on your savings, reducing your longevity risk. But life doesn’t always go according to plan. A 2019 study by the Society of Actuaries found a persistent difference between expectations about retirement age and the reality. People tend to retire much earlier than they plan to. According to the study — which surveyed more than 2,300 people age 45 to 80 — pre-retirees plan to retire at a median age of 65. In contrast, actual retirees reported leaving the workforce at a median age of 60. That number has held steady since 2013. Income, gender and marital status didn’t greatly impact median retirement age, the study found. Delaying retirement might make sense financially, but your health may not agree. According to research by the Urban Institute, while life spans have increased since Social Security was first introduced, there is little evidence of people’s ability to work at older ages. In addition to health limitations, finding and keeping a job can become more difficult as you age.

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