Skip to Main Content
chevron-right
chevron-left
chevron-down
chevron-up
chevron-circle-up
chevron-circle-right
chevron-circle-down
chevron-circle-left
Facebook Logo
Twitter Logo
Linkedin Logo
Youtube Logo
Instagram Logo
Google Plus Logo
Vimeo Logo
Issuu Logo
Right arrow
Left arrow
Location
Search
Phone Icon
Services
Home Care
Senior Care
Home Nursing Services
At Home Therapies
Respite Care
Home Care FAQ
Hospice
Bereavement & Grief
Hospice & Alzheimers
Hospice Costs
Hospice Pet Therapy
Special Care Programs
Your Care Team
Specialized Home Care
Patient-Centered Dementia Care
Arthritis
Congestive Heart Failure
Huntington’s Disease
Hypertension / Blood Pressure
Coronary Artery Disease
Diabetes
COPD
Joint Replacement
Mental Health and Depression
Home Care Support for Multiple Sclerosis
Palliative Care
Paraplegia and Quadriplegia
Parkinson's Disease
Pediatric Care
Traumatic Brain Injury
Ventilator Care
Wound Care
Veterans Care
Staffing
Staffing FAQ
COVID-19 Vaccination Staffing
Careers
About Us
COVID-19 Update
Our Standard of Care
Our History
Franchise Leader
Executive Team
Caring Brands International
Press Releases
Honoring Veterans
Historic Milestones
Contact Us
Education Center
Aging in Place
Questions to Ask Before Hiring a Home Health Aide
8 Dietary Tips for Improving Senior Heart Health
Talking About Substance Abuse as a Caregiver
How to Take Care of Aging Hair
4 Ways to Improve Indoor Air Quality for Seniors
Designing Outdoor Living Areas for Seniors
Getting A Grip: How and Where to Install Bathroom Grab Bars
Keeping Active: Tips for Senior Gardening
Alzheimer's and Dementia
Calculating the Cost
Certified Senior Advisors
Consumer Health Care Education
Advisor Care Giving Guide
Care in a Residential Facility
Check Your Home Care IQ
Elder Care Communities
Consumer Alert
Medicare and Home Care
Senior Care Resources
Senior Care Scams
Consumer Rights
Signs That Care At Home is Needed
Long Term Care
Fall Prevention
Mobility in Seniors
Falls FAQ's
Home Safety Checklist
Home Safety Tips
Hidden Hazards
Medications and Fall Risk
Reduce the Risk of Falling
Risk of Falling
Visiting the Doctor and Discussing Falls
What to Do If Someone Falls
Family Caregiving
Elder Care Videos
Hiring Your Own Caregivers
Family Care Giving Facts
Information for Seniors
Long Distance Caregiving
Starting the Conversation
The Stress of Family Caregiving
Taking Care Of Yourself as a Family Caregiver
Home Care Technology
Hospice Fact or Myth
In-Home Caregivers
Senior Health
Exercise and Older Adults
Senior Nutrition
Taking Medications
Tips for Lowering Blood Pressure
Seniors and Zika Virus
Savvy Senior
Stories From Home
Transitioning from a Facility
Independent Living Assessment
Blog
Facebook
Linkedin
Twitter
Youtube
Instagram
Home
>
Education Center
>
February 2016
>
How to Calculate Your Retirement Number
How to Calculate Your Retirement Number
Posted: 2/4/2016 8:03 AM by
Interim HealthCare
Dear Savvy Senior,
Can you help me calculate about how much my wife and I need to save for retirement? We are both in out late-fifties and want to see where we stand.
Looking Ahead
Dear Looking,
Calculating an approximate number of how much you’ll need to save for a comfortable retirement is actually pretty easy, and doesn’t take long to do. It’s a simple, three-step process that includes estimating your future living expenses, tallying up your retirement income and calculating the difference. There are even a host of online calculators that can help you with this too.
Living Expenses
The first step is the most difficult – estimating your living expenses when you retire. If you want a quick ballpark estimate, figure around 75 to 85 percent of your current gross income. That’s what most people find they need to maintain their current lifestyle in retirement.
If you want a more precise estimate, track your current living expenses on a worksheet and deduct any costs you expect to go away or decline when you retire, and add whatever new ones you anticipate.
Costs you can scratch off your list include work-related expenses like commuting or lunches out, as well as the amount you’re socking away for retirement. You may also be able to deduct your mortgage if you expect to have it paid off by retirement, and your kid’s college expenses. Your income taxes should also be less.
On the other hand, some costs will probably go up when you retire, like health care, and depending on your interests you may spend a lot more on travel, golf or other hobbies. And, if you’re going to be retired for 20 or 30 years you also need to factor in the occasional big budget items like a new roof, furnace or car.
Tally Income
Step two is to calculate your retirement income. If you and/or your wife contribute to Social Security, go to
ssa.gov/myaccount
to get your personalized statement that estimates what your retirement benefits will be at age 62, full retirement age and when you turn 70.
In addition to Social Security, if you or your wife has a traditional pension plan from an employer, find out from the plan administrator how much you are likely to get when you retire. And, figure in any other income from other sources you expect to have, such as rental properties, part-time work, etc.
Calculate the Difference
The final step is to do the calculations. Subtract your annual living expenses from your annual retirement income. If your income alone can cover your bills, you’re all set. If not, you’ll need to tap your savings, including your 401(k) plans, IRAs, or other investments to make up the difference.
So, let’s say for example you need around $55,000 a year to meet your living expenses and pay taxes, and you and your wife expect to receive $30,000 a year from Social Security and other income. That leaves a $25,000 shortfall that you’ll need to pull from your nest egg each year ($55,000 – $30,000 = $25,000).
Then, depending on what age you want to retire, you need to multiply your shortfall by at least 25 if you want to retire at 60, 20 to retire at 65, and 17 to retire at 70 – or in this case that would equate to $625,000, $500,000 and $425,000, respectively.
Why 25, 20 and 17? Because that would allow you to pull 4 percent a year from your savings, which is a safe withdrawal strategy that in most cases will let your money last as long as you do.
If you need some help, there’s a bevy of free online retirement calculators to assist you, like the ones offered by T. Rowe Price (
troweprice.com/retirement
) or Financial Mentor (
financialmentor.com/calculator
).