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How much will I need to retire (part 1)

Updated on December 4, 2012

Saving money for retirement

How much do I need for retirement (part 1)

As you plan for retirement, the first question you should ask is "how much money will I need each year to live off of?" When you go to a financial planner, the standard response is 80% of your current take home pay. I respectfully disagree with that.

When you retire you should be debt free, consequently no more house payments. You will also no longer have various business expenses like work clothes, eating out for lunches and other things. You will most likely have more health issues so your health cost will increase. You will also be more active, traveling more, maybe playing golf more often and other various activities. That is why I say that you need at least the same amount as your current take home pay.

Ideally you should have a monthly budget that you follow so you will know exactly how much you will need in retirement, however, most Americans don't do that. If you don't already have a budget and resist making one, then you should at least sit down every year or two and figure out how much you would need if you retired that year. At least that will give you a target figure, but again I stress that it is important to have a budget every month.

Now that I have lectured you on a budget, I will tell you that the last report I saw said the average household income in the United States is $50,000 per year, so for these articles that is the figure I will use. In the next article I will talk about how much money you need to have so you can get that $50,000 per year for the rest of your life.

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    • Kimberly Bunch profile image

      Kimberly Bunch 8 years ago from EAST WENATCHEE

    • Art West profile image
      Author

      Art West 9 years ago from Indiana

      Thanks for reading my Hub and for your responses.

    • sean.rutger profile image

      sean.rutger 9 years ago from USA

      Retirement is something we all hope we will get to enjoy... and we don't want to be working past age 70. I hope to retire in my 50's, honestly. I agree with you that we will need at least as much as we currently make in retirement, because the cost of living, cost of healthcare, and effects of inflation will all be on the rise. You don't know how long you will live, so it's hard to give your savings a timeframe over which you can spend the funds. I look forward to your next hub.

    • christine almaraz profile image

      christine almaraz 9 years ago from colorado springs

      How much money will you need to retire? Alot! LOL. Seriously, I think it depends on your circumstances. Someone who lives in Manhattan may require more than someone who lives in let's say Colorado. The cost is living is the main factor I think and it will depend on where you live, the cost of food, the cost of your everyday necessities that reqire you to live comfortably; not beyound your means. Great advice. I'll be waiting for the next hub on how to obtain that amount of money ($50,000). I don't make that much now and I live pretty well. If I can retire on $50,000 it'll be a plus! Great hub.

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