How Much Money Do You Need to Retire?

By Kathryn Hauer, CFP®

First published on June 17, 2021 by

No magic amount exists for the perfect retirement pot of gold; it varies depending on your needs. At some point in your life, however, it is likely that you will not want to or maybe even be able to earn money from a job. When you hit that age, you’ll thank your younger self for planning for that day. Take a look at how much money you need to retire now.

Define Your Retirement Goal

The amount of money you feel you need in retirement will determine how long you keep a job. You may consider easing out of the full-time job market as you age rather than completely retiring all at once.

A part-time job in your later years can bring healthful interaction with others, physical movement to ease aching bones, mental stimulation, a reason to get up in the morning and needed cash flow to supplement your Social Security and retirement savings.

Consider Your Expenses

Once you’ve completely retired, money from wages is no longer coming into your household each month. You probably will have Social Security income. You may be one of the rare people who have a pension that sends monthly dollars into your home for the rest of your life. Other income could come from your investments. These income streams, however, are not likely to increase wildly, so you are living on a fixed income.

Conversely, as your income narrows, your expenses may increase, especially if you run into health issues, which is more common as you age. A common gauge for retirement expenses is 80% of your