How much money do you have to spend? Here’s what the experts recommend

More Americans are entering — or preparing to enter — retirement as the baby boomer generation ages. In fact, according to data from the Social Security Administration, the number of Americans receiving Social Security has increased by 10 million 2012 And 2022 alone

unfortunately, Social security will only get you so far. In addition to those benefits, how much do you need to retire comfortably? This varies from person to person – but according to experts there are some general rules you can follow. Below, we’ll break it down How much should you have saved before retirement? – and how to increase that amount as your retirement date approaches.

Start by reviewing your investment options here to determine an accurate picture.

How much should you save for retirement?

The exact amount you should have ready for retirement varies widely. It depends on the lifestyle you are looking for, your location, who you are supporting and many other details.

“There is no ‘one size fits all’ solution to how much you need for retirement,” explains David Rosenströk, director of Wharton Wealth Planning.

Still, there are rough guidelines you can follow. Some experts say that you should have at least eight to 10 times your salary available after you retire. Others say that at least 65% to 80% of your pre-retirement income is available to you each year.

There are also common ones Savings recommendations by ageAnd, finally, there’s also the 4% rule.

“The 4% rule is a guideline that says you should take away about 4% of your retirement savings annually,” says Rosenströk.

Learn more about saving for retirement now here.

How to determine what you need

To get a solid sense of how much you need in retirement, there are a few steps you can take. First, estimate your retirement expenses.

“Consider your expected living expenses in retirement, including housing, health care, food, transportation, leisure activities and any other expenses you anticipate,” says Derek DiManno, 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 — Social Security benefits, pensions, investment returns, Rental income and other resources. This is the funding gap you need to make up.

“You may find that there’s a disconnect between the lifestyle you want and your ability to finance it,” says Rosenströk. “Once you start planning for retirement, you may have to make some compromises. When budgeting, it can be helpful to divide your spending into needs and wants.”

How to Save More for Retirement

If you don’t have enough money for retirement, there are many ways to increase those funds—both early in your career and as you approach retirement age.

Use employer matching

If you’re young, maximize your use IRA, 401Ksand employer-sponsored retirement plans, especially if they offer employer matching contributions.

“Take advantage of employer matches,” says DiMano. “If your employer offers a retirement savings match, contribute enough to max out the match. This effectively gives you extra money for retirement.”

Contribute catch up

If you’re on the older end — 50 or older, to be exact — you can start contributing more to your retirement account than other age groups are allowed ($1,000 to $7,500 more). These “catch-up” contributions can help you grow your retirement fund faster than other age groups.

“These limits will increase with inflation, allowing your savings to keep pace with rising living costs,” says Rosenströk.

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

Cut or minimize expenses

At any age, cutting your expenses can be a good way to pad your retirement fund. Canceling a subscription, for example, could cost you $10 per month and $120 per year to put toward your retirement accounts. If invested early, this amount can grow substantially by the time you retire.

You might also consider downsizing, especially if you’re nearing retirement.

“If your housing costs are substantial, downsizing to a smaller home or moving to a less expensive area can free up funds that can be redirected toward retirement savings,” says DiManno.

Get help from a professional

Mapping out a personalized plan is critical to a successful retirement. If you want to make sure your retirement funds are adequate, consider talking to a financial advisor or investment professional. They can help you customize savings and investment strategies that fit your specific goals. Learn more here.