When the time finally comes to retire, the first question asked is, “Will I have enough to retire?” A 2018 Bankrate survey found 61 percent of Americans don’t have a clue about how much they need to save for their future. How much you need is based on what type of standard of living you want. Do you plan to maintain your current lifestyle and spending? Some expenses increase and decrease due to the lifestyle change. For instance, entertainment, eating out, travel, vacation, hobbies, home maintenance and other spending may increase while clothing costs, eating out costs, parking, gas, and automobile insurance may decrease. On the other hand, some personal expenses such as health-related expenses may increase.
The first step to take is to look at your current financial situation and figure out how much you are spending now. Create a budget and track expenditures. There is no magic number that can calculate what is needed to retire. A basic rule of thumb says you will need approximately 70%–80% of your preretirement income to retire to maintain the same lifestyle. Studies suggest that consumption and spending usually declines as people get older, especially after age 80.
As one Florida Master Money Mentor suggested, it is best to start saving early and spend frugally in order to achieve a satisfactory retirement. Fidelity Bank says individuals should save at least one times their salary by age 30, three times by age 40, six times by age 50 and 10 times by age 67. These savings factors are based on a variety of assumptions, including someone saving 15 percent of their income annually starting at age 25.