There’s one obvious question that usually goes unanswered despite all of the articles, podcasts, and news segments on the importance of saving for retirement: How much money should YOU be saving for retirement?
It’s easy to find benchmark percentages, like rules saying that you should save 15% of your income. But that doesn’t factor in anything personal like your age, your current retirement savings, or your retirement goals.
It’s also easy to find calculators saying that you need something like $1,000,000 by the time you retire, but that doesn’t tell you anything about how to get there.
What you really need is a specific dollar amount you should be contributing to your retirement accounts on a monthly basis. A number that takes your personal goals and information into account and gives you a personal result.
That’s exactly what you’ll get here.
We’ve created a simple spreadsheet that you can use to calculate your personal retirement savings goal. This article will show you how to do it.
How to Get Your Personal Retirement Savings Goal
First thing’s first, you can grab the spreadsheet here:
Then all you have to do is fill each of the fields in the Inputs section. Here are some notes on each one:
- Current Age: If you are single, enter your age. If you are married or otherwise in a relationship where you’re planning for retirement together, enter the age of the oldest partner.
- Current Retirement Savings: Add up all of your retirement account balances – such as 401(k)s, 403(b)s, and IRAs – as well as any other money that’s specifically earmarked for retirement, and enter the total dollar amount here.
- Estimated Retirement Age: Enter the age at which you’d like to be able to retire. You can play around with this to see how it affects your savings target.
- Estimated Monthly Expenses in Retirement: Enter the amount of money you’d like to have available to spend each month in retirement. This is another variable you can play with to see how it affects your savings target. Your current monthly spending is a reasonable place to start.
- Estimated Monthly Social Security Income: You can either download your Social Security Statement to use your actual projected Social Security benefit, or you can get a rough estimate . Keep in mind that show that even if no changes are made to Social Security, there’s enough money to pay out 73% of projected benefits through 2091. So while you may not want to count on your full benefit, it’s reasonable to count on receiving some benefit.
- Estimated Social Security Start Age: Most people can start collecting as early as age 62 or as late as age 70. Keep in mind that the age at which you start drawing benefits will affect the monthly income you receive.
Once you’ve entered your information into each of those fields, you’ll be presented with two savings goals.
The first, and likely the most useful, is your Monthly Savings Goal. This is the amount of money you should be contributing to retirement accounts on a monthly basis in order to put yourself on track for retirement. Matching contributions from your employer do count towards this goal.
The second is your Annual Savings Goal, which is simply the monthly savings goal multiplied by 12.
These numbers will tell you one of two things:
- If you’re already saving that amount or more, you can feel good about your retirement savings pace. You could even play around with the Estimated Retirement Age and Estimated Monthly Expenses variables to see if you might be on pace to retire early or to have more disposable income in retirement.
- If you’re not already hitting those goals, they give you something specific to work towards. Whether you can immediately increase your savings or work to slowly increase them over time, you now have a concrete goal you can feel good about.
A Few Words of Caution
While this retirement calculator is a great way to get yourself on the right track, there are a few words of caution to heed before you put too much faith in the numbers.
First, there are a few big assumptions being made here, specifically around your investment return and the rate of inflation. Those are outlined in the Assumptions tab of the spreadsheet, and you’re welcome to tweak them if you’d like, but reality will almost certainly be different than what’s assumed here and those differences will affect your results for better or for worse.
Second, your goals and circumstances will change over time, which means that you should be re-visiting this calculator on a regular basis to see how your savings goal has changed. Setting a calendar reminder to re-evaluate your savings goal once per year in November or December would give you time to make those adjustments for the next year.
The bottom line is that while this calculator is a good barometer for how much you should be saving, there are too many unknown variables to ever be able to say for sure that you will meet your retirement needs, no matter how much you’re saving.
Hopefully this calculator makes the process of saving for retirement a lot clearer. With a specific dollar amount to shoot for, you know exactly what you need to do and you can plan ahead with confidence.
Matt Becker, CFP® is a fee-only financial planner and the founder of , where he helps new parents take control of their money so they can take care of their families.