What Amount of Money Is Right for Retirement?

Start saving for your retirement as soon as you can.

If you were thinking of retiring on your Social Security and pensions alone, you better think again. According to MSN Money, those days were an aberration. One rule of thumb is that you'll need about 70 percent of your pre-retirement salary in order to live comfortably during retirement.

Identification

CNN Money suggests that you think about how you want to live during your retirement years. Look at your current expenses and figure what will change and what won't. You might pay off your mortgage by then, for example, but your health costs could rise. You may not choose to retire completely. You can work part-time and keep earning money.

Function

When you are in your 50s, you should estimate how much you will need to retire. You can get help with this number by using an online retirement calculator, such as one on the CNN Money website. Another way to figure what you'll need is to determine how much income you will take from your savings in your first year of retirement and multiply that by 25.

Considerations

If you are young, you don't need to know the specific amount you will need to retire, according to MSN Money. Just save as much as you can. Christine Fahlund, a financial planner with T. Rowe Price, recommends on MSN Money that a young person needs to save 15 percent of her gross salary.

References

• MSN Money: How Much Do You Need to Retire?
• CNN Money: Ultimate Guide to Retirement

Resources

• CNN Money: Retirement Planner