How Much Money do You Need to Retire?

How much money will you need for retirement?

This amount is important because it will give you a target to base your monthly savings and investment allocation on. Here are a few steps that will help you get a rough idea of how much you will need for retirement.

Determine Income Needed in Retirement

First, you need to figure out the total amount of income you will need in retirement for one month. This includes basic living expenses to cover you needs, additional lifestyle expenses or goals, and taxes (depending on whether you have Roth or pre-tax accounts).

Determine other income sources in retirement

Once you know how much income you need, the next step is to figure out how much you will already have. In step two, you will add up any fixed income sources you will have in retirement. This includes pensions, social security, rental or business income, annuities, or salary if you expect to be working in some capacity during retirement.

Find the gap

Once you know how much you need, and how much you will have, the final step is to calculate the difference. If you need $4k per month in retirement and will have $2k per month in income from other sources, you will need $2k in additional income to fill the gap. That is the amount that you want your investments to provide.

Multiply by 300

You can then take that monthly gap and multiply it by 300. This will give you a rough estimate of how much you will need in investments to fill the income gap.


There are many other factors that are involved if you want a more precise target, but this 4-step process will give you a good starting point.




Limitations: Planning for retirement, or any financial goal, involves a multitude factors and unknowns including future tax rates, inflation, investment returns, life expectancy, health, Social Security & Medicare, and many more. Because of this, even the most intricate planning approaches cannot give you absolute certainty about what needs to be done. So, your best bet is to have a reasonable plan, act in accordance with your plan, and adjust as necessary.


Josh Roberts

Josh grew up in Tyler and after graduating from Baylor with a degree in financial planning, moved back to Tyler to pursue a master’s degree in accounting at UT Tyler and a career in financial planning. Josh holds the Certified Financial Planner designation and is a licensed Certified Public Accountant in the state of Texas.
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