How Much Should I Save to Avoid Running Out of Money in Retirement?

This is a financial planning question. It is mathematical, and you can figure it out. It depends on what age you are. Obviously, the younger you start saving money, the less you have to save for retirement. If you’re starting late in life, you will have to save more for retirement.

So, generally, to answer the question, it starts off by trying to figure what you will need in retirement in today’s dollars. Then, once you understand what inflation rate you’re using, you can then figure out how much you need to save.

Obviously, there are different ways to save. If you’re using a retirement plan from work to save for your retirement, this can be advantageous because it can provide a tax advantage to you. There are other methods to save as well. If you’re in a lower bracket but you have some ability to save, you might use a Roth IRA.

A good financial plan can help answer these questions, and that would probably be a good starting point as to “How much do I need to save for retirement?”

Parkshore Wealth Management is a family-owned, independent, fee-only Registered Investment Advisor serving the greater Sacramento area with an office in Roseville, CA. We partner with financially responsible individuals and families who are eager to take positive steps that will allow them to use their money to build the life they desire. The firm is led by Harold Anderson, CFP®, and Daniel Andersen, CFP®, both members of NAPFA, the country’s leading professional association of fee-only financial advisors.