How Much do You Really Need to Retire? How Much do You Really Need to Retire?

It seems everywhere you look these days, we see apocalyptic headlines about Baby Boomers being unable to afford to retire. Between the Great Recession hurting 401(k)s and fears over inflation and insurance, it’s hard to know where you are in the grand scheme. The truth is, that a third of Baby Boomers (which were born between 1946-1964) do not have anything saved for retirement. Boomers hold less wealth than previous generations and more debt.

Combining all that with the rising expenses of retirement and health care costs will be a challenge. But, it doesn’t have to be all gloom and doom, and whether you feel prepared for retirement or falling behind, there are some options. In this article, we will discuss how to come up with a realistic number to have saved based on your budget, lifestyle, and location. 

How Much Should You Have?

The standard wisdom is that you should have 10-12 times your yearly salary put away for retirement. Or, that you should be saving 10-15% of your annual income. If you are closer to retirement and haven’t been doing that, the good news is that there are options to save more than that to make up for lost time. If you have employer match options of access to HSA, a Health Savings Account, a good rule is to be maxing out your contributions on any account you have. There are catch up contribution allowances for those 50 and over to take advantage of as well. Unfortunately, only 40% of workers age 55 to 64 are making a contribution to their employer match savings accounts. Seeking counsel from a financial advisor is also a good idea, as they can help design a strategy to get you to your goals. In fact, working with an advisor can add 4-6% in returns to your portfolio.  

When You Aren’t Where You Need To Be…

If you are nowhere near that, the best advice is to first make a budget. Look realistically at your expenses and how much you would need to live comfortably. That is the number to strive for when creating that number and looking ahead, it may be a good time to think about downsizing and streamlining to help lighten the load. First order should be creating an emergency fund to address any unforeseen expenses. The next step is addressing any outstanding and high-interest debts and working to pay off what you owe. A lot of Boomers helped fund their children’s education, or are still working through paying off their own. The good news is, as children grow up and houses get paid off, you may have more income able to funnel into savings later in your working career. You may be able to recoup lost savings by doubling how much you are investing and putting into savings. Open a Roth IRA and roll any investments that would be taxed heavily upon retirement in. Look into term life insurance, especially if you have dependents.  

You May Not Need As Much As You Think

If your house and car are paid off and you don’t plan to pick up sailing or dog breeding or traveling the world, then you may not need as much money as you fear. This is where budgeting in advance comes in handy to look at a realistic day to day expense list, from utilities to food, to gas, to medications. Understanding how you plan to live your day to day retired life and how much it will cost can help you come up with a much more realistic financial goal for savings. Factoring in money for travel, unforeseen expenses (like home repairs etc.), expenses for household and pets, and extra cash for living expenses (Birthday gifts for example) you may be surprised at how much you will really need to live.

On the flip side, if those numbers add up to be wildly out of the budget, then you may want to consider working longer, or pursuing a part-time job into retirement, or perhaps making some drastic downsizing decisions before you are on a fixed income. 

Big Picture

Whether you have twenty years or two before you retire, there are still options. Ideally, you have been saving 10-15% of your income all along and have no outstanding debt and you are nearly done paying your mortgage etc. But life is messy, and big expenses come up, and things derail us, jobs are lost, health issues crop up, divorces happen.

Those bumps do not have to be the end of the world and whether your nest egg is full up or needs some improvement, being proactive and looking at your lifestyle and budget is the first step. Any money put aside for retirement should be seen as a success and the simple act of crunching numbers and making a realistic plan will help you get closer to your goal. 


Diversification and asset allocation strategies do not assure profit or protect against loss. Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.


[1] https://www.cnbc.com/2018/11/07/one-third-of-baby-boomers-had-nothing-saved-for-retirement-at-age-58-.html

[1] https://www.cbsnews.com/news/baby-boomers-tough-retirement-realities/

[1] https://www.forbes.com/sites/robertlawton/2018/08/26/this-is-how-much-money-you-need-to-retire/#52edfb5547cf

[1] https://www.fool.com/retirement/2018/07/20/how-much-money-do-i-need-to-retire.aspx [1] https://www.thebalance.com/saving-for-retirement-with-a-late-start-453986


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About the Author

Bob Hanna

Bob Hanna

Bob feels strongly that you only retire once leaving no room for mistakes. He is dedicated to building and more importantly preserving investors assets. Bob is a Financial Advisor with Cambridge, an independent broker-dealer, honored to be among the most respected firms in the industry.

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