One rule of thumb is that your savings at retirement should be at least 10 times your annual income at your retirement age. So, if you’re retiring from a $100,000-a-year job, you need $1 million in savings to maintain your lifestyle without outliving your money. But this is a very rough estimate. The AARP Retirement Calculator helps you refine that estimate. The tool bases its answer on three big variables: How long you plan to save, how long you need your savings to last and what kind of returns you expect to earn on them.
Follow these precepts to help reach your goal:
Save as much as you can.You can’t control how long you’ll live in retirement or what your returns will be. But you can control how much you save. In the long run, that’s the biggest determinant of how much you will have when you retire. The more you save, the more you’ll have when you retire. The AARP Retirement Calculator will help you find the best amount to save to reach your goal.
The earlier you start, the better.If you start putting $5,000 a year into an IRA at age 30, you’ll have about $669,400 at age 70, assuming you earn 5 percent a year. If you start at age 50, you’ll have $186,860. Although it’snever too late to start saving, it’s a lot easier if you start early. The AARP Retirement Calculator lets you adjust the age when you retire to see how you’ll fare at various ages.
