Financial Planner Tim Moomey says one rule of thumb states retirees will need approximately 80 percent of their pre-retirement salary to maintain their lifestyles in retirement. However this number could be higher or lower depending on each individual situation and type of desired retirement.
Some factors to consider when determining a retirement savings goal include:
Retirement Age -- When do you want retirement to happen? Will you be forced by a company change or by health issues to move that date?
Life Expectancy -- Look at your family history and your own medical history. Consider that life spans are becoming longer with medical and technology development. When you are calculating how much you need to save, you need to factor in the number of years you expect to spend in retirement.
Future Health-Care Needs -- Another factor to consider is the cost of health care. Health-care costs have been rising much faster than general inflation. Long-term care is another consideration. These costs could severely dip into your savings and even result in your filing for bankruptcy if the need for care is prolonged.
Lifestyle -- What do you want to do? Where do you want to live? Do you have expensive tastes? Many baby boomers expect that they will work part-time in retirement. However, if this is your intention and you find that working longer becomes impossible, you will still need the appropriate funds to support your retirement lifestyle.
Inflation -- It is important for your savings to keep pace with or exceed inflation.
Social Security -- Plan for and around your Social Security. Don't just walk in to the SS Office at retirement time and ask how much your check will be. Know what it will be and figure out how to maximize it before you go to that SS Office.
After considering all these factors, you should be able to calculate your needs and have a much better idea of how much you need to save for retirement. Moomey recommends getting help from a financial planner who will be able to help assess individual situations and make the necessary calculations.