Retirement: How much do you really need for your golden years?

There’s a joke that goes something like this: “I’m Gen X, my retirement plan is to just die”. Unfortunately, it’s only barely a joke– the majority of Gen X'ers estimate that they will need to save $1 million for retirement, but on average only have about $70K

So how much SHOULD you save for retirement? There are a few different ways to get a target number, and that number is going to feel like a lot. Try not to get discouraged if you aren’t on the road to achieving that number yet. Knowledge is power, right? So let’s just get an idea of what kind of savings we are looking at and then come up with a plan to get there.

25 Times Rule: Starting simple, the 25x rule. You take what you think you will need annually to live in retirement, and then multiply that by 25. So, if you think you’ll need $80,000 a year, that’s 2 million in retirement savings.

The 4% Rule: This rule says that you should be able to comfortably live on 4% of your retirement savings per year. If you have one million put away, that’s $40K a year.

The 80% Rule: When you retire, you will likely have slightly reduced expenses–like no longer having to save for retirement, and work related expenses–and that’s where the 80% rule applies. This assumes you will need approximately 80% of your current income per year.

Keep in mind that you may have special circumstances that means you may need more or less, and you have to account for inflation, so be sure to check with a financial advisor to help you nail down a figure that is appropriate for your situation, and to develop a plan to make that money grow! Don’t have one? Go here https://www.missoulabookkeeper.com/resources for a downloadable list of financial professionals we trust.

On a scale of 1-10, how prepared are YOU for your golden years? Let us know in the comments!