Money guide · Retirement accounts and planning
How much should I save for retirement? Build scenarios
Estimate a retirement savings goal from spending, expected income, time, contributions, and inflation rather than one universal target.
How it works
A fixed percentage of salary can be a convenient starting point, but it cannot represent every household’s pensions, assets, debt, retirement age, or spending needs. Separate today’s purchasing-power goal from future nominal dollars. Account types also affect how much of a balance can be spent after taxes.
A worked example
Suppose the goal is $45,000 of annual spending in today’s dollars and expected income covers $25,000 on a comparable basis. Savings must help cover a $20,000 gap. With illustrative 3% inflation for 20 years, the $45,000 spending goal becomes about $81,275 in future dollars. Income sources may adjust differently, so do not automatically inflate every figure identically.
What to compare
Model current balances, future contributions, employer contributions you expect to keep, and a range of after-fee returns. Test an earlier or later retirement, longer life, and higher essential costs. Keep assumptions visible. Annual contribution limits, benefit estimates, and tax treatment require current official information, especially when your circumstances change.
A common mistake to avoid
Avoid treating a constant-return projection as a forecast or counting an employer match twice. A portfolio can lose value near retirement even if its long-run average looks adequate. Review the plan periodically and distinguish a goal estimate from a personalized recommendation about contributions or investments.
Is saving one fixed percentage enough?
Not necessarily. A percentage can begin the habit, but adequacy depends on your starting assets, time horizon, spending gap, and future outcomes.
Sources and further reading
Connect this to inflation
Inflation changes the spending power of money over time. Read the related inflation explainer, or adjust a retirement goal for inflation using your own assumptions.