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The average American's life expectancy at birth is now 78.7 years and according to recent results of a Gallup poll, retirement savings are a ‘matter of national importance.’  It’s one of the many numbers that keeps Americans up at night.  But this probably isn’t news to you.  Right?

I mean, we all know retirement is important.  You’ve probably read the headlines about how senior citizens are staying in their jobs longer and taking on part-time gigs to make ends meet.


For some, the long-awaited dream of work-free golden years and exotic beach days is delayed due to a lack of retirement funds.  According to an article from the New York Times, many baby boomers cite financial concerns as the main reason they aren’t quitting their jobs any time soon.

If you plan to retire well and want to minimize any surprises in your retirement, here are three questions to ask yourself to find out exactly how much money you need to retire.

1) How Long Does Your Money Need To Last?

When you start developing your own retirement plan, you want to think about how long you would like to work before retiring.  This is your ideal retirement age.  The average retirement age in the United States is 62, but this will vary depending on each individual.  Factors that will play a role in your ideal retirement age are health, profession, and financial situation.

Next, ponder how long you your retirement money needs to last. Essentially, this is asking yourself how long you will live in retirement.  Think about how long your parents and grandparents worked before retiring and how long they lived in retirement.

Do you remember the last time you had a physical?  Did the doctor ask you about the health of your parents and grandparents, their age of death, and any known illnesses?  This is the same type of logic you want to apply when it comes to your retirement.  Why?  Health and life expectancy are highly influenced by your family history and your lifestyle choices.

With your ideal retirement age and your family history in hand, you should be closer to your expected retirement age and life expectancy.

But here’s a word of caution - no matter what number you come up with, it’s better to save more than you need in retirement than to save too little.  If you’d like help figuring out how long you’ll live in retirement, check out this online life expectancy calculator.

2) How Much Will You Receive in Social Security Benefits?

Did you know that the average monthly social security payment is $1,251.36?  Whatever your feelings are on social security and its future, here’s one thing we can agree on: your social security retirement benefit will most likely not sustain your full retirement. 

So here’s what you should do.

Get an estimate of your retirement benefits from the Social Security website.  It’ll give you a projection of how much you can expect to receive given your current work history.  Keep in mind that the numbers projected can increase or decrease.  In other words, your forecasted payout is not etched in stone.  Per the Social Security’s website, by 2033, the payroll taxes collected will be enough to pay only about 77 cents for each dollar of scheduled benefits.

So why should you even bother with Social Security?

I think it’s good to understand your expected retirement payout from social security for two reasons.  First, a lot of people don’t understand just how small Social Security payouts can be until they actually see their own retirement report.  Social Security was never intended to serve as an answer to retirement, only a supplement.  Second, you want to have an idea of how much you’ll get from Social Security (in the best case scenario), so that you can factor that figure in to your retirement planning.

There are people who choose not to even consider social security when thinking of their retirement plan, due to its uncertainty, and that’s okay too.  Your decision will depend on your beliefs, ideals, and possibly political views.


Envision a retired version of yourself. What’s your lifestyle like? What will be important to you?


3) What Will Your Retirement Lifestyle Be Like?

Most financial planning professionals agree that retirees will need 70-80% of their pre-retirement income once they retire.  For example, if you brought home $75,000 on average during your working years, you’d want plan for a retirement salary of $52,500-$60,000.  However, I do believe that this number will vary greatly depending on the individual and her circumstances. It will depend on where you live, how you live, if you have dependents, if you own your home outright, inflation, and many more factors.  

There are people who reach retirement and the 70% - 80% calculation doesn’t work out because even though they need this amount to keep up with their pre-retirement lifestyle, they don’t save enough to make this a reality. They end up having to adjust their lifestyle to their retirement income.

How can you figure this out for yourself?

The best thing you can do is envision a retired version of yourself. What’s your lifestyle like? What will be important to you? 

With these three questions answered, you’re on a great start to figuring out how much money you need to retire.


Miranda Reiter is a certified financial planner and founder of She & Money Financial Planning. She helps women develop a game plan for financial success so that they can stop feeling broke, meet their goals, and live the life they truly deserve. Get more of her free tips here.

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