No two retirements are the same. As part of determining how much money you’ll need, visualize what you want your retirement to look like. A retirement filled with travel and hobbies may require a bigger nest egg than a post-work life spent closer to home.
How Much Should You Save?
As Much as You Can!
No matter how you add it up, retirement won't be cheap. If you are 10 or more years away, using the 80% rule is probably fine. However, if you're within five to seven years of retirement, you'll want to develop a more specific savings plan. With your estimate in hand, consider these tips:
Make It a Priority
Lots of expenses compete for your income. It will be the same in retirement, but without the steady paycheck. The more you save now, the easier it may be to cover those expenses.
Find ways to make saving a priority. Figure out where your money goes and you'll likely find places to stop spending and put it toward retirement.
Increase Retirement Savings, Not Risk
Avoid putting money in aggressive investments as a way to compensate for too little in savings. That strategy could work if you're in your 20s or 30s while you still have the luxury of time. But as you get older, adding more risk—or the wrong kind of risk—can backfire. It's better to:
- Save enough, after determining how much you may need.
- Put investments in the right risk category for your age, time horizon and comfort level with risk.