How Much Do I Need to Retire? Four Questions to Help You Decide.

How Much Do I Need to Retire?  

The question is normally asked as, “When can I hang up the work cleats?"  "How much more of this?" or "When can I go down to part time?" 

We hear this question all the time.  And like most things, because your situation is unique, the answer is "it depends."  

In order to answer the "How Much Do I Need to Retire" question, you need to think about these four additional questions:

1. What Does Retirement Look Like to You? 

Do you see retirement as working part time or stopping work entirely?

Do you want to live in the same place and maintain the same lifestyle you have now, or do you have other goals, such as a new home or second home, travel, or philanthropy?  

Generally, the assumption is that your bills will be lower when you retire because things like the house, cars, and kids’ education will be paid for, and you're no longer dedicating a portion of your income to saving. 

The general rule of thumb is that your income needs in retirement will be approximately 60-70% of what they are in your working years.  However, this is not true for everyone, and the amount you need in retirement depends on what retirement looks like to you.  

2. How Important is Leaving Money to Your Kids or a Cause?  

Do you have a desire to leave a legacy to your heirs? If so, are you willing to live more frugally in retirement, or do you want to have enough saved to live the retirement you imagined and be able to leave something to your kids or a cause you care about? 

3. How Much Income Can I Safely Assume My Retirement Savings Will Give Me? 

This, of course, is the million dollar question.  What can I expect the return on my retirement investments to be?  Should I count on Social Security?  Will my pension be enough?  These questions are hard to answer and should be addressed with a financial advisor who knows your unique situation.  

4. What Extra Expenses Should I Expect in Retirement?  

Retirement can be expensive.  More free time means more hobbies, vacations, and opportunities to do the things you never got a chance to do while you were working.  Of course, this is the goal, but it can also be expensive.  For many, it's important to factor in a larger entertainment and travel budget.  

Healthcare is a major concern and expense for retirees and takes up a large portion of their income.  It's critical to plan for increased healthcare costs when considering your retirement plan.  

Your timeline for retirement is an exciting and difficult choice.  Thinking about your idea of retirement before you're ready to retire can help make sure you have the options available to make your golden years look how you've imagined them.

Ray Janish

About the Author

Ray Janish is the LPL registered principal and manager of Custer Financial Advisors in the Greater Grand Rapids area.  He brings 23 years of financial planning experience and specializes in helping retirees and business owners.  To get in touch with Ray, feel free to email him at 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

DaveRamsey and Smart Vestor Zeeland, Michigan