How much money do I need to retire comfortably?

It’s one of the most important questions you can ask as you approach retirement: How much money do I need to retire comfortably? The answer isn’t one-size-fits-all. It depends on your lifestyle goals, health care needs, income sources, and how long you expect your retirement to last.

In this article, we’ll walk through how to calculate your retirement number, what expenses you need to plan for, and how working with a financial advisor can help make your retirement dreams a reality.

What does “comfortable” mean to you?

Before calculating a specific dollar amount, you need to define what a “comfortable retirement” looks like for you. Everyone’s idea of comfort is different. Some people want to travel the world. Others are happy living close to family, gardening, and enjoying a quiet life.

Ask yourself:

• Where do you want to live?
• What kind of lifestyle do you want to maintain?
• Will you still carry any debt into retirement?
• How much do you plan to spend on hobbies, travel, or helping family?

Your answers to these questions will directly influence how much money you need to retire comfortably.

The 80% Rule: A Simple Starting Point

A common rule of thumb in retirement planning is that you’ll need about 80% of your pre-retirement income each year to maintain your current lifestyle in retirement.

For example:
If you’re earning $100,000 a year before retirement, you’ll want to aim for at least $80,000 per year during retirement.

But remember, this is just a starting point. Depending on your personal goals and expenses, you may need more or less.

Don’t Forget These Retirement Expenses

When estimating how much you need to retire, it’s easy to overlook some key costs. Here are a few common ones:

• Health care: Medicare doesn’t cover everything, and out-of-pocket costs can add up quickly.
• Inflation: A dollar today won’t be worth the same in 10 or 20 years.
  Long-term care: If you need assistance later in life, the cost can be significant.
• Taxes: Depending on where you live and how your retirement accounts are structured, you may still owe taxes on withdrawals.
• Lifestyle costs: Travel, hobbies, home upgrades, or even helping kids or grandkids can increase spending.

Building a realistic retirement savings goal means accounting for these factors—not just your monthly bills.

How Long Will You Need Your Money to Last?

With advances in health care, many people are living 20 to 30 years in retirement. That means your retirement savings need to last potentially three decades or more.

A longer retirement means:

• More years of expenses
• Greater exposure to inflation
  Higher likelihood of medical costs down the line

It’s essential to plan conservatively and ensure your money can last through all phases of retirement.

Saving money for retirement plan. Retirement Conceptual

What Savings Should You Aim For?

To determine how much you need in total retirement savings, many advisors use the 25x rule. 

This rule says:

• You should save 25 times the amount you expect to spend annually in retirement.

Example:
If you want to spend $80,000 per year:

• $80,000 x 25 = $2 million
  That’s your target retirement savings goal.

This isn’t a hard rule, but it gives you a rough idea. A personalized retirement plan can help fine-tune this number based on your income sources, risk tolerance, and future goals.

Feeling overwhelmed by these numbers?

You’re not alone—and you don’t have to do this on your own. Our team can walk you through your specific retirement income needs and create a plan that works for you.

Income Sources to Consider

Your retirement income will likely come from multiple sources. Here are the most common:

• Social Security: Estimate your benefit using your earnings history.
• 401(k)s and IRAs: Your personal and employer-sponsored retirement accounts.
• Pensions: If available, these can provide guaranteed income.
• Savings and Investments: Non-retirement accounts, rental income, or other investments.
• Annuities: These can provide lifetime income if structured properly.
  

The key is making sure all of these sources come together to generate enough income for you to retire comfortably.

Why Working With a Financial Advisor Matters

When asking, How much money do I need to retire comfortably? it’s not just about reaching a number. It’s about understanding the full picture—what you have, what you need, and how to bridge the gap.

A financial advisor can help you:

• Create a personalized retirement plan
  Project future expenses and income
  Optimize your investment strategy
• Adjust for market changes and inflation
• Minimize taxes on retirement withdrawals

So, how much money do you really need to retire comfortably?

Here’s a quick recap:

• Use the 80% rule as a starting point
• Don’t forget hidden expenses like health care and inflation
• Plan for at least 25x your annual spending
• Consider all your income sources, not just your savings
• Work with a trusted advisor to create a personalized plan

Your retirement should be a time of freedom, peace of mind, and enjoyment. With the right plan in place, it can be all that—and more.

Let’s find your retirement number together.

If you’re wondering how much money you need to retire comfortably, let’s talk. Book a complimentary consultation with Guerra Wealth Advisors and take the first step toward retiring on your terms.