How Much Money Do You Need to Retire?

Shawn Plummer

CEO, The Annuity Expert

Of course, the answer to how much money do you need to retire is different for everyone. You have your lifestyle and goals that will dictate how much you need to be comfortable. However, if you are looking for a general estimate, this guide has some great information on how much money people should have saved by their desired retirement age.

How Much Money Do You Need to Retire Comfortably?

Assume you will need about 80% of your current income to maintain a similar standard of living after retirement.

The 4% Rule withdrawal strategy does not work for everyone, and you might need to adjust based on expected expenses and your desired type of retirement. The rule is a flawed method.

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

The key to this strategy is analyzing the perfect age to retire comfortably.

Steps To Retiring Comfortably

  1. Calculate your monthly expenses when you will retire. (mortgage/rent, car payment, utilities, etc.)
  2. Calculate the guaranteed income that can be generated from all retirement savings plans such as a 401(k) and IRA, separate from Social Security Income. Request a quote here.
  3. If the guaranteed income does not fulfill your monthly expenses requirement, find out which age Social Security will provide the income to supplement the remaining expense amount.
  4. Now you have a monthly paycheck covering your expenses as if you were still working.

Why Use Annuities To Determine How Much Money Do You Need to Retire?

Since annuities are the only retirement plans that can provide you a fixed income for life on a guaranteed basis, I’ve researched various annuity types to find out what you’re money can buy in the future.

Annuity Basics

YouTube video

Understanding Lifetime Income Riders

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. 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.

Make sense?

In these scenarios, I have used an income rider on a fixed index annuity contract for future income planning and an immediate annuity with a single life payout to determine immediate income planning.

Our retirement income calculator results are guaranteed values based on zero growth from now until the target retirement start date—no hypothetical growth.

Annuity Calculations

Annuity rates change all the time, so please use these calculations as a reference point.

My goal is to illustrate a clear path to when full retirement age is appropriate for you and achieve your desired retirement income goals starting today.

I’ve chosen the income rider as my measurement stick because fixed indexed annuities offer flexibility and liquidity where deferred income annuities do not.

I utilized the single premium immediate annuity (which does not offer liquidity nor flexibility) simply because of the higher annuity income payout amount. You could use an income rider for a lesser but similar payout as well.

Finally, I want to disclose that annuities aren’t necessarily the fastest way to a rich and rewarding retirement. Still, they are the only guaranteed and straightforward path to achieve your retirement income goals.

Estimate Your Retirement Income Payments

Take advantage of 17 different annuity calculators to generate estimates, then request a quote.

How Much Money Do You Need to Retire?

How much money do I need to be saved today to generate $100,000 a year for life in retirement in the future? The average retirement age is 60, 65, and 70, so I’ve used those metrics to solve for $100,000 annually starting at age 40.

How Much Money to Retire at Age 60

In this scenario, I’ve solved how much retirement funds you would need to have saved up as of today to generate $100,000 a year for the rest of your life starting at age 60, guaranteed, with an annuity.

Current AgeDeposit AmountRetirement AgeAnnual Income
40$1.1 Million60$100,000
45$1.3 Million60$100,000
50$1.4 Million60$100,000
55$2 Million60$100,000
60$1.95 Million60$100,000

How Much Money to Retire at Age 65

In this scenario, I’ve solved how much retirement funds you would need to have saved up as of today to generate $100,000 a year for the rest of your life starting at age 65, guaranteed, with an annuity.

Current AgeDeposit AmountRetirement AgeAnnual Income
40$850,00065$100,000
45$875,00065$100,000
50$950,00065$100,000
55$1.1 Million65$100,000
60$1.6 Million65$100,000
65$1.7 Million65$100,000

How Much Money to Retire at Age 70

In this scenario, I’ve solved how much retirement funds you would need to have saved up as of today to generate $100,000 a year for the rest of your life starting at age 70, guaranteed, with an annuity.

Current AgeDeposit AmountRetirement AgeAnnual Income
40$730,00070$100,000
45$750,00070$100,000
50$760,00070$100,000
55$830,00070$100,000
60$955,00070$100,000
65$1.35 Million70$100,000

Retirement Planning Savings Tip

When using an annuity to save for retirement, open up two separate annuity contracts. Ensure one of the contracts is a Roth IRA, and contribute the annual maximum amount every year.

Why? Because when you eventually retire, all of your income from the Roth IRA retirement account will be tax-free.

There’s a high probability that taxes will continue to increase each year so pay the taxes now and reduce your tax bill in the future.

How Much Money Do I Need to Retire?

Now that you have a good idea of what’s needed to reach your retirement savings goals, there are a few more items to consider when planning to retire.

Anticipated Retirement Expenses

If you’re closer to retirement, you want to figure out now what your monthly or annual retirement expenses will be, such as mortgage payments and housing costs.

Most people want to maintain the desired lifestyle, so look at your current monthly expenses that you can not live without and use that figure as a milestone.

You should also include future expenses that will be added to your retirement spending level, such as:

Inflation

Now that you’ve calculated your annual retirement expenses, the next step is calculating inflation into your estimating retirement spending.

Currently, the inflation rate hovers around 2.1% annually, which means your retirement spending level needs the ability to keep up with the cost of living each year to maintain a healthy retirement.

If you don’t, your lifestyle goes down over time, and with medical expenses and taxes only increasing, you’re headed for financial trouble.

What Age to Retire with Social Security

Choosing what retirement age to turn on your Social Security Benefits is a critical decision to make.

When choosing a target retirement age, you must consider how much Social Security income you will receive now versus later, and if the amount is dramatically different, decide later.

One should consider what expenses will arise as you get older instead of the monthly income you will receive today.

Example

You’re 66 years old, and if you turn on Social Security Benefits today, your income is $1,900 a month.

If you wait four more years at age 70, your monthly income will be roughly $3,000 a month.

Which retirement age will benefit you the most at age 80 when you may need to go into a nursing home?

What is the quality of your nursing home earning $1,900 a month versus $3,000 a month?

We didn’t even consider inflation, increasing taxes, and the consistently increasing cost of care between today and 20 years from now.

The Golden Years have often been overlooked factors in deciding when to collect your Social Security Benefits.

Is it worth it to retire early and collect SSI prematurely?

ElderCare

Believe it or not, there’s about a 70% chance you will need some long-term care when you get older such as home health care, assisted living, and nursing homes.

You don’t want to give up your retirement lifestyle due to these expensive costs.

Conclusion

Now you can solve for how much money do you need to retire comfortably.

Annuities are the only retirement vehicle that can tell you today how much guaranteed income you can receive in the future and exactly how to get there.

We also found when retirement age is appropriate for taking Social Security Income (SSI) and considerations to retire smarter.

The next step is solving the following questions:

I can provide you custom quotes for retirement to meet those annual expenses in the future.

Figure out today how much money do you need for retirement to maintain your desired lifestyle.

Frequently Asked Questions

How are the annual income amounts calculated?

I use an annuity with an income rider. The annuity illustrates the guaranteed income amount in the future. So, yes, I can tell you today what your retirement income will be in the future on a guaranteed basis.

How much money to retire at age 40, 55, and 60?

Calculate your current mandatory monthly expenses and inquiry via the form above. You will be subject to a 10% penalty on any money withdrawn from a deferred retirement plan such as an IRA before age 59.5.

Can I retire with $1 Million at age 55?

At age 55, you can generate up to $5,000 a month for the rest of your life, guaranteed if you choose a fixed income amount. The income does not include any additional income such as Social Security Benefits.

Can I retire with $2 Million?

That depends on your age and the amount of money you need to maintain your lifestyle. Typically you can generate at least $10,000 a month in retirement income for the rest of your life. This does not include Social Security Benefits.

Can you retire with $500,000?

Yes, you can retire with $500,000, but know you’ll retire on a fixed income. You can generate roughly $2,500 or more a month for the rest of your life, guaranteed. Once again, this all depends on your retirement age.

Can I retire with $1 Million?

That depends on your age and the amount of money you need to maintain your lifestyle. Typically, you can generate at least $5,000 a month in retirement income, guaranteed for the rest of your life. This does not include Social Security Benefits.

How can I retire with no money?

Contact us to figure out a fixed income plan for your retirement.

How to retire in 10 years with no savings?

Contact us to figure out a fixed income plan for your retirement.

What to do with 401(k) when you retire?

You have a few different options, such as making withdrawals from the 401k and letting the account grow or possibly converting your retirement account into an income stream for the rest of your life.

How much money do you need to retire with a $100,000 a year income?

The premium amount depends on your age and when you’re ready to start taking income. To give you a rough idea, you could generate $100,000 a year for the rest of your life with as little as $800,000 to $2 Million.

Once again, it all depends on how long before you start the income stream.

The 6 Payouts of Annuitization

Annuitization is converting your retirement savings into a guaranteed stream of annuity payments for a fixed period of time, the rest of your life, or …
Read More

The Pros and Cons of Annuities

An annuity is an investment for retirement sold by insurance companies. The money in these long-term investments comes with various pros and cons. This guide …
Read More

Shawn Plummer

CEO, The Annuity Expert

I’ve sold 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. 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. 

Scroll to Top