Millions of Americans are currently preparing to retire and are therefore evaluating their financial health. But this is hardly news for many. The number of Americans receiving Social Security jumped by 10 million between 2012 and 2022 alone.

If you’re counting on Social Security to cover your retirement costs, you should know that those benefits will only get you so far. In most cases, you’ll need to have hefty savings in addition to your Social Security benefits. 

So how much do you need to retire comfortably? There are several factors that should be taken into account when determining that number, according to experts. That said, there are some general rules you can follow. Below, we’ll break down how much you should have stowed away prior to retirement and how to increase that amount as you close in on your retirement date. 

Start by reviewing your investment options here to better determine an exact figure.

How much should you save for retirement?

The exact amount you should have ready for retirement varies widely depending on the lifestyle you want to have (or maintain), your location, who you’re supporting and many other details. As such, it’s impossible to determine an exact, uniform figure for everyone. It really is a personal question. As David Rosenstrock, director at Wharton Wealth Planning, explains, “There’s no ‘one size fits all’ solution as to how much you need for retirement.”

Still, there are rough guidelines you can follow. Some experts say to have at least eight to 10 times your annual salary available to you once you enter retirement. Others say you need at least 65% to 80% of your pre-retirement income available to you each year. 

There are also general savings recommendations by age, and, finally, there’s the 4% rule, too. “The 4% rule is a guideline stating that you should take out only about 4% of your retirement savings annually,” Rosenstrock says.

Learn more about saving for retirement here now.

How to determine how much you need to retire

To get a solid feel for how much you’ll need in retirement, there are a few steps you can take. First, estimate your retirement expenses. This should be relatively easy to do, although it helps to slightly overestimate than to come in too low.

“Consider your expected living costs during retirement, including housing, healthcare, food, transportation, leisure activities, and any other expenses you anticipate,” says Derek DiManno, a financial advisor at Flagship Asset Services. “Be realistic and account for inflation.”

From that number, subtract the benefits you already know are coming to you in retirement — things like Social Security benefits, pensions, investment returns, rental income and any other assets that could help make ends meet. That’s the funding gap you’ll need to make up.

“You may find out that there is a disconnect between your desired lifestyle and your ability to fund it,” Rosenstrock says. “When budgeting, it can be useful to break out your spending into needs and wants.” If you don’t want to compromise on either then plan on saving more now.

How to save more for retirement

If you don’t have enough stowed away for retirement, there are many ways to increase those funds, both early on in your career and as you inch closer to retirement age. You can do so by: 

Using employer matches

If you’re young, then maximize your use of IRAs, 401(k)s, and employer-sponsored retirement plans, especially if they offer employer-matched contributions. 

“Take advantage of employer matches,” DiManno says. “If your employer offers a retirement savings match, contribute enough to maximize the match. This effectively provides you with additional money toward retirement.”

Making catch-up contributions

If you’re on the older end — 50 or older, to be exact — you can actually start contributing more to your retirement accounts than other age groups are allowed (anywhere from $1,000 to $7,500 more). These “catch-up” contributions can help you grow your retirement funds quicker than other age ranges. “These limits will increase with inflation, allowing your savings to keep up with rising living costs,” Rosenstrock says.

Find out how much more you can invest for retirement here now.

Cutting expenses or downsizing

At any age, reducing your expenses can be a good way to pad your retirement funds. Canceling one subscription (or multiple), for example, might give you $10 per month and $120 per year to put in your retirement accounts. If invested early on, that amount could grow considerably by the time you retire.

You can also consider downsizing, particularly if you’re nearing retirement and don’t need as much space or real estate as you once did. “If your housing costs are substantial, downsizing to a smaller home or relocating to a less expensive area can free up funds that can be redirected towards retirement savings,” DiManno says. 

Getting help from a professional

Mapping out a personalized plan is critical to a successful retirement. If you want to ensure your retirement funds are adequate, consider speaking to a financial advisor or investment professional. They can help you customize savings and investing strategies that fit your specific goals so that you don’t come up short. Learn more here now.

The bottom line

While million of people are set to retire soon, the individual needs of each person will vary in their retirement years. To get to one of the figures stated above consider taking a multi-pronged approach. This involves using employer retirement matches, making catch-up contributions (for those who qualify), cutting expenses, downsizing and getting help from professional services. By being proactive and taking these steps now you’ll better be able to enjoy a financially secure retirement.