How much do I need to save for retirement?

How much is “enough” for retirement is a very personal question – it varies greatly from one person or family to another. Here are just a few of the things you ought to consider when trying to determine how much is enough for you.

What age do you plan to retire?

This will probably be a balance between how healthy you are, how much you enjoy (or dislike) your job and how much you have saved.

For many people, this will be tied to the amount they expect to receive from Social Security, since you can choose to receive ‘early’ social security payments at a reduced amount, standard social security payments at your official full Social Security retirement age or late Social Security payments at a higher amount.

How will you cover medical expenses?

Beginning at age 65, you may qualify for Medicare. But it isn’t free. You’ll still likely need some additional coverage for prescriptions. You’ll also still have copays, so you’ll need a way to cover those expenses. Texas Financial & Retirement points out that it’s estimated a typical couple retiring at 65 in 2017 would need $275,000 for medical expenses alone over the years of their retirement. That amount is only going to increase for those retiring in future years.

What will your housing expenses be after you retire?

Will you live in your own house? If so, you’ll need money for insurance, maintenance expenses, utilities and property taxes and, of course, your mortgage payment if the house isn’t fully paid off before you retire.

Will you rent an apartment or townhome? How stable will the rental costs be over the remaining years of your life? Will you also need to pay for utilities separately? Will there be any HOA fees?

How do you wish to live during retirement?

Do you expect to travel? If so, will it be overseas flights and upscale resort hotels? Or will it be overnight driving trips to nearby cities and standard motels? Or something in-between?

Do you have hobbies? How much will you need to be able to pursue them?

Do you expect to reside in an area with higher- or lower-than-average cost of living? The amount you’ll need will vary according to where you live.

How much can you afford to save for your retirement?

Nearly everyone would be delighted to have multiple millions of dollars set aside for their retirement years. However, not everyone can afford to save enough to reach that goal. You may not make enough while working to be able to save millions for retirement. Or maybe you earn enough but began saving too late to reach that goal.

Be realistic. Base the amount you save on how much you earn (if you earn more, you can afford to save a larger percentage, etc.). Adjust the savings percentage as your current financial situation changes – hopefully increasing over time.

The more you save now, whatever your age, the more you will have for your retirement years. But you also need to live now. You still need food, shelter, clothing and the ability to do some of what you enjoy in the present.

What other income do you expect to have during retirement?

Most pensions and similar retirement plans are gone, though some still exist. Do you expect to have income from such a plan?

For most Americans, Social Security is the only ‘other income’ they expect to have to supplement what they spend from their personal savings and retirement plans (401Ks, IRAs, etc.) after they retire.

But the amount you can expect to receive from Social Security varies quite a bit. It depends upon how much you’ve earned (and therefore contributed to Social Security) during your working years, the age at which you begin receiving payments and the total of other Social Security payments made to the same household (i.e. if your spouse or any dependents in your household also worked enough to qualify for Social Security).

You can create (or login to) your personal account with Social Security at . That will provide you with up-to-date estimates of how much you can expect to receive as your personal benefits at various retirement ages.

These are only a few of the things you need to consider. Financial professionals like those at Texas Financial & Retirement can help you make good decisions based on your personal answers to these and other questions.