How Much Do I Need to Retire?

Shawn Plummer

CEO, The Annuity Expert

How much do you need to retire? 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 critical questions to be answered as part of your overall retirement plan. This guide will discern if your retirement plan is headed in the right direction.

“Several experts on retirement have given various estimates about how much you need to save: close to $1 million, 80% to 90% of your yearly income before quitting work, and 12 times what you used to make annually.”

But is this true?

How Much Money Do I Need to Retire Comfortably?

Of course, the answer is different for everyone. Your desired lifestyle and financial goals dictate how much money you need to save 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.

How Much Money Do You Need To Retire?

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 and earning your desired annual retirement income.

  1. Figure out how much money you need 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), Roth IRA, 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.

How Much Do I Need To Retire Calculator

Most people have a general idea of how much they need to save for retirement, but they don’t always know how to calculate their potential annual salary in retirement. That’s where our retirement calculator comes in. Simply enter your current savings, age, and desired retirement age into the calculator, which will estimate your potential annual salary in retirement.

Once you have an estimate of your potential annual salary in retirement, you can request a quote below. We’ll consider your current salary, age, and desired retirement age to give you an accurate estimate of your potential annual salary in retirement. Then we’ll provide you with a personalized quote based on your specific situation. Requesting a quote is quick and easy, so don’t wait any longer to start planning for your retirement!

Disclaimer: Not all annuity products are quoted with this calculator. Contact us for a quote to compare the highest lifetime income amounts.

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.

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.

Retirement Savings Account Comparison

The table below compares how much income can be withdrawn from your nest egg.

FeaturesAnnuity401(k)IRARoth IRA
Withdrawal Percentage5.20% – 6.55%4%4%4%
Can Income Increase?YesYesYesYes
Can Income Decrease?NoYesYesYes
How Long Will Money Last?Lifetime30 Years+30 Years+30 Years+
Annual Fees0 – 1.50%1% – 4%1% – 4%1% – 4%
TaxationTaxable/Tax-FreeTaxableTaxableTax-Free
Death BenefitAccount BalanceAccount BalanceAccount BalanceAccount Balance

Example: A 60-year-old retiree starts withdrawing immediately from their $1 million portfolio, they would receive:

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; any money left over in the retirement savings account when you die will be passed 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, 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$846,27255$100,000
45$934,35355$100,000
50$1,322,77155$100,000
55$1,777,77855$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, 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$746,91360$100,000
45$824,65260$100,000
50$910,48260$100,000
55$1,195,19560$100,000
60$1,639,34460$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, 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$716,82762$100,000
45$760,70262$100,000
50$814,93562$100,000
55$1,019,34062$100,000
62$1,574,80362$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, 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$675,42665$100,000
45$675,42665$100,000
50$676,76265$100,000
55$823,34165$100,000
60$1,078,41265$100,000
65$1,485,88465$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, 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$609,99770$100,000
45$609,99770$100,000
50$609,99770$100,000
55$673,48670$100,000
60$749,35870$100,000
65$1,043,61170$100,000
70$1,454,54570$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$3,555,55655$200,000
60$3,368,42160$200,000
62$3,603,60462$200,000
65$3,076,92365$200,000
70$2,909,09170$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 difficult, as many people are unsure what their 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 retirement lifestyle.
  • 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 essential to plan for the possibility that you may live longer than expected. This means saving as much as possible and having a plan to cover your expenses if you live a long life. For example, an annuity is an insurance policy that protects you from outliving your savings.
  • Death: Buy a life insurance policy to cover 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 help pay for retirement’s long-term care costs.

Next Steps

Use our free retirement calculator to get estimates. Then 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 your desired retirement. 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. Instead, act now and help us 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 isn’t easy to answer without knowing more about your specific situation. But, generally speaking, you will need enough money saved in your retirement account to cover your living expenses. This includes housing, food, medical care, and other expenses.

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

This is a difficult question, as everyone’s retirement planning needs will differ. However, you can follow some general guidelines 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 estimate how much money you’ll need to retire officially. 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 high health care costs. In general, it’s best to avoid 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 because it depends on many things, such as your current income, expenses, life expectancy, and retirement savings goals. For example, 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 monthly income for the rest of your life. Plus, any leftover money in the account will be passed down to your beneficiaries when you die.

Is $150,000 a good retirement income?

This is a difficult question 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 leave some money 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 income in retirement.

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. A retiree can live a comfortable retirement. Based on our research, a $1,000,000 annuity will provide between $61,000 and $178,105 each year for the rest of your life, depending on age and timing. This does not include Social Security.

How much do I need to retire?

Retirement experts have offered various rules of thumb about how much you need to save. For example, workers commonly need around $1 million, 80% to 90% of their annual pre-retirement income, or 12 times their pre-retirement salary.

Can you retire $1.5 million comfortably?

A retiree can live a comfortable retirement. Based on our research, a $1,500,000 annuity will provide between $91,500 and $267,158 each year for the rest of your life, depending on age and timing. This does not include Social Security.

Can you retire on $500K?

A retiree can live a modest retirement. Based on our research, a $1,500,000 annuity will provide between $30,500 and $89,053 each year for the rest of your life, depending on age and timing. This does not include Social Security.

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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