How Much Do I Need to Retire?

Shawn Plummer

CEO, The Annuity Expert

When it comes to retirement planning, there are a lot of variables to consider. For example, how much money do you need to retire? What will your expenses be in retirement? How long will you live? These are all important questions that need to be answered as part of your overall retirement plan. This guide will discuss some tips for retirement planning that can help answer these questions and help you achieve the retirement you desire.

How Much Money Do I Need to Retire Comfortably?

Of course, the answer is different for everyone. Your lifestyle and financial goals dictate how much you need to be saved to be comfortable. However, if you are looking for a general estimate, this personal finance-style investment strategy has excellent information on how much people should have saved by their desired retirement age.

The rule of thumb assumes a retiree will need about 80% of their annual pre-retirement income (annual salary) to maintain a similar standard of living after retirement.

Because investing involves risk, the 4% Rule withdrawal strategy does not work for everyone. You might need to adjust based on expected expenses, your desired type of retirement, and poor investment performance. A high-risk tolerance might be ok in your early and middle years, but the rule is a flawed method the closer you are to retirement or in your later retirement years because you might not be able to afford to lose money. If anything, use investments or different retirement accounts to provide additional retirement income, not as the foundation.

Instead, utilize a combination of annuities and Social Security Income for your retirement accounts to layer a monthly income stream that is guaranteed not to run out.

The key to having retirement readiness is analyzing the perfect age to retire comfortably. This includes early retirement.

Calculate How Much Income You Need For Retirement

If you follow these steps, you will receive a monthly paycheck that covers your annual expenses like you were still working earning your desired annual retirement income.

  1. Figure out how much money you need to have each month when you retire. This includes your mortgage/rent, car payment, and utilities. Exclude discretionary expenses.
  2. Find out how much money you will get from your retirement accounts, like a 401(k) and IRA. This is different from the money you will get from Social Security Income.
  3. If the guaranteed income sources do not cover your monthly expenses, find out how much monthly savings you need to save for retirement and when your Social Security Benefit will provide enough income to supplement the remaining monthly expense amount. It’s all about timing so you may need to delay retirement.

Estimate Your Payments

Take advantage of 17 different annuity calculators to generate estimates based on your life expectancy, then request a quote.

Why Use Annuities?

Annuities are the only retirement plans that can provide a fixed income for life on a guaranteed basis. After researching different types of annuities, we have determined what a retirement nest egg can buy in the future and how much retirement savings are needed to reach your retirement goals using this particular investment strategy.

Note: Our calculations below do not include Social Security Benefits.

Annuity Basics

In this video, you will get a brief overview of how annuities work. You will learn about the different types of annuities, how they are taxed, and the benefits that they can provide. You will also get a brief overview of the different types of investment options available with annuities.

YouTube video

Understanding Lifetime Income Riders

A lifetime income rider is an annuity benefit that provides you with an opportunity to receive regular payments for the rest of your life. While there are many different types of annuities, they all share the same goal – to provide you with retirement income so that you can live comfortably after you stop working.

YouTube video

To recap, annuities can offer a lifetime income stream similar to a pension plan. A pension is a type of annuity.

You purchase an annuity contract with an income benefit with either a lump sum or a series of payments, including your current savings, traditional IRA, 401(k), and other retirement plans. Then, when retirement age begins, that annuity distributes a paycheck to you for the rest of your life as if you were still working, even after the account has run out of money.

How Much Do I Need To Retire At 40

To retire at age 40 receiving $100,000 a year for life, a person will need $2.5 million of retirement savings invested in an annuity. The income is guaranteed to pay you each month for life, and any money left over in the retirement savings account when you die will pass down to beneficiaries.

How Much Do I Need To Retire At 55

According to this scenario, if you want to have $100,000 a year for the rest of your life starting when you’re 55 years old, you’ll need to save a certain amount today. This amount is guaranteed, and you’ll receive it through an annuity.

Current AgeDeposit AmountRetirement AgeAnnual Income
40$1,103,14455$100,000
45$1,225,82455$100,000
50$1,589,82555$100,000
55$2,109,70555$100,000

How Much Retirement Savings Needed To Retire At Age 60

If you want to have $100,000 a year for the rest of your life starting when you’re 60 years old, you’ll need to save a certain amount today. This amount is guaranteed, and you’ll receive it through an annuity.

Today’s AgeDeposit AmountRetirement AgeAnnual Income
40$948,94460$100,000
45$1,052,70160$100,000
50$1,127,16060$100,000
55$1,514,41460$100,000
60$1,904,76260$100,000

How Much Do I Need To Retire At 62?

According to our retirement calculator, if you want to have $100,000 a year for the rest of your life starting when you’re 62 years old, you’ll need to save a certain amount of retirement savings today. This amount is guaranteed, and you’ll receive it through an annuity.

Today’s AgeDeposit AmountRetirement AgeAnnual Payment
40$868,67662$100,000
45$891,26662$100,000
50$988,14262$100,000
55$1,196,17262$100,000
62$1,801,80262$100,000

How Much Savings Needed To Retire At Age 65

If you want to have $100,000 a year for the rest of your life, starting when you’re 65 years old, you’ll need to save a certain amount of retirement savings today. This amount is guaranteed and will come through an annuity.

Today’s AgeDeposit AmountRetirement AgeAnnual Payment
40$774,09765$100,000
45$843,31365$100,000
50$913,11365$100,000
55$1,020,16765$100,000
60$1,307,57465$100,000
65$1,739,13065$100,000

How Much Savings Needed To Retire at Age 70

According to this scenario, if you want to have $100,000 a year for the rest of your life starting when you’re 70 years old, you’ll need to save a certain amount today. This amount is guaranteed, and you’ll receive it through an annuity.

Today’s AgeDeposit AmountRetirement AgeAnnual Payments
40$654,58370$100,000
45$703,40370$100,000
50$768,94570$100,000
55$830,56270$100,000
60$900,62470$100,000
65$1,225,49070$100,000
70$1,600,00070$100,000

How Much Money Do You Need To Retire With $200,000 A Year Income?

If you want to have $200,000 a year for the rest of your life, starting immediately, you’ll need to save a certain amount today. This amount is guaranteed, and you’ll receive it through an annuity.

Today’s AgeDeposit AmountRetirement AgeAnnual Income
40$5,000,00040$200,000
55$4,219,41055$200,000
60$3,809,52460$200,000
62$3,603,60462$200,000
65$3,478,26065$200,000
70$3,200,00070$200,000

Anticipated Retirement Expenses

One of the first things you need to do when planning for retirement is to estimate your anticipated expenses. This can be a difficult task, as many people are not sure what their exact expenses will be in retirement. Will you travel more? Move to a warmer climate? Have higher healthcare costs? Make sure to consider all potential expenses when estimating your retirement budget.

  • Reduce Your Tax Bill: The IRS allows retirees to withdraw money from a Roth IRA, tax-free. A Roth IRA annuity will pay a monthly income for life, and you won’t have to pay taxes on the retirement income. Then contribute as much as possible to a non-qualified annuity because only the interest you earn will be taxable income and there are no contribution limits. Your tax advisor would approve of this!
  • Inflation: Inflation is the increased cost of goods and services over time. It’s important to factor inflation into your retirement planning, as it can eat away at the purchasing power of today’s dollars. Annuities can help combat inflation by increasing your income throughout retirement and maintaining your desired lifetyle.
  • Healthcare: Healthcare costs can be a significant expense in retirement. Make sure to factor this into your retirement planning, as you may need to budget for health insurance premiums, out-of-pocket costs, and long-term care. Annuities can help pay for these expenses at a fraction of the cost.
  • Longevity: One of the biggest unknowns in retirement planning is how long you will live. This can be a difficult question to answer, but it’s important to plan for the possibility that you may live longer than expected. This means saving as much as possible and having a plan in place for how you will cover your expenses if you live a long life. An annuity is an insurance policy that protects you from outliving your savings.
  • Death: Buy a life insurance policy now to cover any final expenses and leave a death benefit for your loved ones. The younger you are, the cheaper the premiums will be. A life insurance policy can also be used to help pay for long-term care costs in retirement.

Conclusion

Request a quote to determine how much money you need to be saved to reach your investment objectives. The sooner you start planning, the easier it will be to achieve the retirement you desire. An annuity is the only retirement plan that can provide you with a fixed income for life on a guaranteed basis, so don’t wait any longer. Act now, and let us help you secure your financial future.

How Much Do I Need To Retire

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Frequently Asked Questions

How much money do I need in my 401(k) to retire?

This is a difficult question to answer without knowing more about your specific situation. Generally speaking, you will need enough money saved in your retirement account to cover your living expenses in retirement. This includes things like housing, food, medical care, and other expenses.

How much will the average person need to save for retirement?

This is a difficult question to answer, as everyone’s retirement planning needs will be different. However, there are some general guidelines you can follow to get an idea of how much you’ll need for a comfortable retirement.

First, you’ll need to estimate your post-retirement income. This will include any sources of income, such as Social Security, pensions, rental income, and part-time work. Next, you’ll need to estimate your expenses in retirement. This includes things like housing costs, healthcare costs, and leisure travel. Finally, you’ll need to factor in inflation. Over time, the cost of goods and services will increase, so you’ll need to account for this in your retirement planning.

Once you’ve considered all of these factors, you can start to estimate how much money you’ll need to officially retire. With financial planning, a good rule of thumb for a savings goal is to replace 80% of your current annual income. However, this may not be enough if you have a high standard of living or significant health care costs. In general, it’s best to err on the side of caution and plan to replace as much of your income as possible.

How much should I have saved for retirement by age 60?

This is a difficult question to answer because it depends on many things, such as your current income, expenses, and retirement savings goals. If you want to retire at age 60 and receive $100,000 each year for the rest of your life, you will need $3.8 million saved in an annuity. This money will give you a guaranteed income every month for the rest of your life. Plus, any leftover money in the account when you die will be passed down to your beneficiaries.

Is $150,000 a good retirement income?

This is a difficult question to answer because it depends on many things, such as your pre-retirement annual income, expenses, and retirement goals. However, in general, $150,000 is a good retirement income. This will allow you to cover most of your living expenses and have some money left over for leisure activities and travel. Additionally, if you have other sources of income, such as Social Security or a pension, this will help supplement your retirement income.

How long will a million dollars last in retirement?

Because annuities are a source of guaranteed income, a million dollars could last the rest of your life in retirement. However, if you plan to rely solely on withdrawals from your portfolio, your mileage may vary.

Shawn Plummer

CEO, The Annuity Expert

I’m a licensed financial professional focusing on annuities and insurance for more than a decade. My former role was training financial advisors, including for a Fortune Global 500 insurance company. I’ve been featured in Time Magazine, Yahoo! Finance, MSN, SmartAsset, Entrepreneur, Bloomberg, The Simple Dollar, U.S. News and World Report, and Women’s Health Magazine.

The Annuity Expert is an online insurance agency servicing consumers across the United States. My goal is to help you take the guesswork out of retirement planning or find the best insurance coverage at the cheapest rates for you. 

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