The theme this week on the Retirement Quick Tips Podcast is: How Much Is Enough?

Today, I’m talking in more concrete terms about how much you need for a comfortable retirement. 

According to a Fidelity study, you should aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.

So if you get to retirement age with somewhere between 8-10x your household income saved for retirement, that is ideal according to Fidelity research. 

Of course other factors influence this and may require less or more than this amount. If you’ll have significant sources of income like a pension or rental income, then you may need much less than this amount. 

Fidelity study limitations - But it's important to remember that the total dollar amount isn't the end goal. It's all about the income that your assets can generate with some additional cushion for when you need to buy a new car, or a new roof, or if you need to pay for long-term care. 

If you read the footnotes of the Fidelity study, you see that they came up with the 10x figure by age 67, by analyzing the household consumption data for working individuals age 50 to 65 from Consumer Expenditure Survey, US Bureau of Labor Statistics. 

The average income replacement target of 45% is based on the objective of maintaining a similar lifestyle to before retirement. It assumes your other income comes from social security. 

Social security replaces anywhere from 25% to 40% of your income for most people. So this leaves you with a total income replacement of your income in retirement of abou70-85% whicic is ideal for maintaining lifestyle.

And I think that’s the key. Rather than getting too focused on that final number or dollar amount of assets you need to retire, it’s best to look at how much is enough from an income and lifestyle based benchmark to help you see if you are on track to retire. And that’s what we’ll look closer at tomorrow. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.  

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance