How Much Do I Need to Retire? Retirement Planning 101


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Having enough for retirement doesn’t just happen – it’s a coordinated effort. And that effort is easier if you have a goal in mind – so how much money do you need to retire?

The real answer is that it’s different for everyone. But let’s start with a general rule and break down how that can vary per person.

Most studies agree that, in order to retire, you will need about 12 times your annual salary at retirement age. If that sounds like a lot, that’s because it is. But that’s why it’s so important to save – or as I like to think of it: paying your future self. But if that number sounds intimidating, let’s look at all the ways you can build up to that.

First of all, that total amount you need for retirement does include Social Security. Most people have been paying into Social Security a little bit with each paycheck, every year that they work. If that’s you, you can expect to receive a monthly benefit check in retirement. To maximize your monthly check, there’s a couple things you can do:

1. Make as high a salary as you possibly can
2. Work a full 35 years
3. Delay retirement

For more details on calculating your expected monthly Social Security benefit and how to optimize that check, check out the link in the description below.

But even then, Social Security will not cover all that you need in retirement. In its benefit overview document, the Social Security Administration makes it clear:

“Social Security was never meant to be the only source of income for people when they retire.”

It is designed to replace a percentage of your income, depending on how much you earn. For very low earners, Social Security can provide up to 75% of your retirement needs; for medium earners, about 40%; for high earners, about 27%.

The rest of your retirement funds will come from whatever you have saved – so it’s important to make sure you are saving. The best place to start, if it’s available to you, is an Employee Savings Plan. Most commonly this is a 401(k).

If your employer offers oneIf this is an opportunity your Employer provides, make sure you are using it. This is a tax-advantaged account for saving – meaning you don’t have to pay any taxes now on the money you contribute to this account. Plus, according to the Bureau of Labor Statistics, roughly half of companies offer a 401(k) match, up to an average of 3%. That means, as an example, that if you contributed 3% of your paycheck to this account, your employer will match it with another 3%. That’s free money! So make sure to check what’s available to you, and try to save at least enough to get the match.

If you don’t have a workplace plan, you can still open an individual retirement account, an IRA. There is a maximum amount you can contribute to this type of account, so be sure to check that each year.

The beauty of these retirement accounts is that your money grows in two ways. First, it will grow as you steadily contribute to it each month. But second, all the money in your account will be invested and will grow all on its own through the magic of compounding interest. For a quick example, investing $3,000 per year for 40 years at an annual return of 8% yields over $750,000 come retirement time. That may be enough for people with a relatively low cost of living, but it might not be close to enough for folks that head into retirement with a lot of expenses. That’s why it’s also important to think about the money you have going out when you’re making your retirement plans.

Now, there are two ways to have a successful retirement: save enough to cover the high expenses of the retirement of your dreams, OR reduce your expenses in retirement in line with what you realistically have saved. Maybe you had children who have since moved out of your home – consider downsizing. If you live in an expensive area, consider moving somewhere with a lower cost-of-living. Maybe even move to a state with no state income tax – that means fewer taxes on Social Security benefits, 401(k) withdrawals, and other retirement income.

There’s a reason Florida is such a popular retirement destination.

There isn’t a one-size fits all answer to how much you money you need to comfortably retire, but understanding the 12x income rule, realizing that social security is just a part of the retirement picture, and adjusting expenses will put you on the path to finding the right figure for yourself.

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Robert Dunfee


  1. Zackary Fry
    July 14, 2021 at 7:27 am

    70 is the new 65. Why the f would anybody want to work longer than they have to?

  2. cmargo10
    July 14, 2021 at 7:27 am

    Really tired of all retirement advice being "Work til 70". In 20 years they'll be saying "work til 80". Yeah work til your to tired to enjoy life. I say Dont be a cog in the wealth leaders labor machine/dogma

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    July 14, 2021 at 7:27 am

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  4. Shannon Shuntel
    July 14, 2021 at 7:27 am

    I'm not close to retirement age but my mind is, passive income has been my fortification for me to retire before 40, I make sure I don't miss out on dividend paying stocks my first millions and I'm not even retired.

  5. WholeWorker
    July 14, 2021 at 7:27 am

    We have a culture that feels that retirement is "coming" and we have to prepare for it. Then we are told that the way to prepare for it is to get your finances in order. Something is wrong on both accounts, here. Retirement isn't "coming." It's a way of life I choose or don't choose. And finances are not the only thing that we need to prepare for in our advancing years. These figures outlined in the video will tell you that most people are not sufficiently funded for a classical retirement. So a lot of people are going to be forced to extend their working years. We need to prepare for that. The data on those who pursue a classical (read: full stop) retirement are not good. For example: there is a 40% increase in the incidence of clinical depression for those that make a full stop. We get a large part of our identity, socialization, and mental agility from our work. There's a lot more at stake here than just how much you have in the bank. Hard stops can lead to heart stops.

  6. Lori Mata
    July 14, 2021 at 7:27 am

    Starting early is the best way of getting ahead to build wealth, investing remains a priority. The stock market has plenty of opportunities to earn a decent payouts, with the right skills and proper understanding of how the market works

  7. Fred Wills
    July 14, 2021 at 7:27 am

    Delay your social security to age 70. Die at age 68 so I get your SS contributions.

  8. Sheila Maxwell
    July 14, 2021 at 7:27 am

    I was at a retirement seminar and the speaker spoke on how he quit his job after he made well over $950,000 PROFIT within 3months he invested $120,000. I just began investing and i will really appreciate any tips or helpful guide.

  9. Brock Johnson
    July 14, 2021 at 7:27 am

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  10. Simp Simps
    July 14, 2021 at 7:27 am

    That person looks like a man

  11. sha yan
    July 14, 2021 at 7:27 am

    This calculation is wrong. 12x your salary doesnt matter. tell me how you going to retire by saving up 12x salary from min wage.

  12. HappyBoca By An Pe
    July 14, 2021 at 7:27 am

    This info. is NOT to be analyzed as adults,, it should be A MUST at school….. uffff

  13. A G
    July 14, 2021 at 7:27 am

    12x. Misinformation !

  14. Pamela Brown
    July 14, 2021 at 7:27 am

    I’m 42 retired with $2 million in net worth and no debt! Currently living smart and frugal lifei get with my family. Saving and investing lifestyle in (Bitcoin) made it possible for me this early. Thanks to FIRE movement

  15. T C
    July 14, 2021 at 7:27 am

    she suspiciously looks like a dude

  16. John Mitchell
    July 14, 2021 at 7:27 am

    Annual rate of 7% HA The only way your gonna get to retire is by not having a bunch of kids and EX wives and new cars and trucks and boats ,campers big houses money sucking girlfriends YOU GET THE PICTURE!!!!

  17. John Mitchell
    July 14, 2021 at 7:27 am

    So what your saying is you will not get to retire

  18. Kelly Green
    July 14, 2021 at 7:27 am

    This retirement quote always strikes me as relevant because I’ve seen far too many people retire at s specific target age and then following a few months or years of retirement, wonder why they’re so bored

  19. thifty bill
    July 14, 2021 at 7:27 am

    Your salary x 25 minimum. Based on 4% spend rule. Assumes early retirement well before social security. Better be debt free too. In addition, early retirees can underestimate the cost of medical insurance. 12 times is way low if you retire early, but if you retire in your 60s, OK.

  20. Tbob tbob
    July 14, 2021 at 7:27 am

    Terrible advice. How is your current salary relevant at all to how much you need to retire? Work as long as you can? This video is for consumerist drones.

  21. Heal the world For a better place
    July 14, 2021 at 7:27 am

    Retiring at 30’s is the new trend

  22. A Ana
    July 14, 2021 at 7:27 am

    Hi I like 👍🏾
    One personal question, if somebody never worked will they be eligible for social security and Medicare?

  23. David Austin
    July 14, 2021 at 7:27 am

    Retire at 70? The average lifespan for a man in the US is 76. Kind of sad to think you only have 6 years after retirement to live. Sure many will live past 76 but many will die in their 60’s working right until death.

  24. 1V0ah
    July 14, 2021 at 7:27 am


  25. edcar61
    July 14, 2021 at 7:27 am

    When the time comes you retire with what you have.

  26. Kai man
    July 14, 2021 at 7:27 am

    You must have to live in a perfect world to obtain 12 time salary

  27. Richard T
    July 14, 2021 at 7:27 am

    400,000 + 325,000 + 200,000 paid off home and only 50 guess its time to retire

  28. Turning Point
    July 14, 2021 at 7:27 am

    Advice from the rich to the majority that are trying to keep their heads above the water. Pay your mortgage off, all the bills and then save 15% for your retirement from 20. Whilst expecting a 8% return, as they invest your cash in zombie industries such as fossil fuels. I gave up with putting my money in a retirement fund and went it alone. I'm averaging about 500% return per year and expect my small investment to become around $2 million in ten years. I invest in technology I know with the view we are heading into a disruption thats going to end many companies that seem to think this is still the 20th century. Good luck people as we are going to need it.

  29. garrdc
    July 14, 2021 at 7:27 am

    You're way too quiet. Good video otherwise

  30. Tim Wolffe
    July 14, 2021 at 7:27 am

    I found the easiest formula to calculate retirement is: Yearly living expenses / .06 = How much you need to retire.

  31. Phil
    July 14, 2021 at 7:27 am

    I'm 61 and close to retirement. I keep watching these videos and rarely hear them factor in debt. I paid off my mortgage last year and have zero debt. I have one million in 401K and think I should be ready to pull the plug at 62. Why don't they ever mention debt and lifestyle?

  32. K S
    July 14, 2021 at 7:27 am

    Paying your future self … nice.

  33. The Advocate
    July 14, 2021 at 7:27 am

    LOL! Delay to 70. There is two problems with that. One, you have to make it to 70. Two, you won't have many years to enjoy retirement. I retired at 53 with 1.4 million and my last 5 years salary being close to $70k. Not big income these days but if I could do it, anyone can.

  34. Edward Thompson
    July 14, 2021 at 7:27 am

    Retirement is a good thing… But the hardship that follows if not properly planned makes it horrible.

  35. Solly206
    July 14, 2021 at 7:27 am

    Work until 70 and retire and die 2 years later

  36. iupab
    July 14, 2021 at 7:27 am

    It’s simply how much you will need to cover your fixed expenses and any discretionary spending. Social security,+ any pension and then savings ,investments,401 to cover any difference. 12 times your current income in savings/investment is very misleading ! Ie. if you make $100M but only need $75,000 to live comfortably now then why would you use 12 x $100M

  37. Rodolfo Vitangcol
    July 14, 2021 at 7:27 am

    Million Dollar Potential in Ruvol

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  38. brettyboy1974
    July 14, 2021 at 7:27 am

    Only receive advice from licensed financial planners who have your best interest at heart.

  39. John Lee
    July 14, 2021 at 7:27 am

    Delay retirement til 70?….Why not 75? lol people should be shooing to retire no later than 65, and pref 59.5(you should know why ;)…..or even earlier if you can. Enjoy life while you still can go hiking and traveling

  40. Andrew James
    July 14, 2021 at 7:27 am

    Well spoken, I really i loved the way he talked in details that's the most interesting part i really love that idea. But he should have just expanciated more on highlighting the citizens have a great knowledge on investing and trading. Cause as a human begin, Making money should be your main priority and number aim in life. Honestly at my early stage of life as when i just got married, Making money was so tough for i and wife cause i lost my job and i wasn't able to satisfy my wife needs anymore. She later made her way by running, and leaving three tenders kids behind. It was so terrible if i may say cause i had to hustle up by cleaning the streets so i could put food on the table for my kids and had to also shelter and cloth them. Early these year before the covid19 out break, I went for a church seminar which i saw on a platform so decided to go. Unknowingly the guest of honor was a woman named Mrs Lyra Holt Dean which i have been hearing for about 7 years now. She talked about Blockchain and Forex which i have always kept saying it is scam and forever it is. So as time went on, i kept on hearing testimony about this same woman how she has made a lot of people rich. As time went on the covid19 issue became serious that the Government had to put the whole country on a total lockdown. Things became more worst cause there was no cashflow due to the governments lockdown, Then i gained interest and decided to sacrifice with a very little amount cause i didn't have much. I reached her at contact@lyraholtdean. com

    Truly speaking just that first investment made me a very wealthy man and also got me a well nice positioned crib and a brand new car .I was so grateful cause that impacted a lot into my life, I became a very happy man by making a facial smile for my beloved kid. So anywhere i go i feel so glad telling people my story and also getting my fellow citizens motivated.

  41. commentatron2000
    July 14, 2021 at 7:27 am

    I accidentally voted for Biden before watching the 2nd debate, seeing the Trump rallies, learning of Hunter Biden and accidentally discovering all the positive news I wasn't getting on my Google news feed (vaccines around the corner, energy independence, middle-east peace etc.). If Sleepy gets into office, should I just burn my money rather than give it to the radicals?

  42. Wolfpackflt670
    July 14, 2021 at 7:27 am

    More like 24x your annual salary IF you want the same lifestyle you currently have at a 4% yearly draw from the savings.

  43. Ari GSD
    July 14, 2021 at 7:27 am

    This is a very simplistic treatment of the subject and not really worth your time.

    July 14, 2021 at 7:27 am

    I got into the trade market with 5k capital, so far I can boast of more than five figures saved in eight months for retirement!

  45. larriveeman
    July 14, 2021 at 7:27 am

    If you can manage about 84k in retirement and zero debt that’s enough

  46. larriveeman
    July 14, 2021 at 7:27 am

    It’s simple, how much do you need to live on net, then factor in Social security, pension( if u have one) and investments, are you debt free?

  47. Steph Liveright
    July 14, 2021 at 7:27 am

    Decent guidance, but a little bit of a false premise… You're retirement needs to be based on your retirement expenses, not your pre-retirement income. Investment companies want you to over-invest as they get commissions and fees. She even suggested retirement at age 70… Are you kidding me??? No one taking the time to watch an educational retirement video is going to work to 70. No One.
    Set your retirement expenses and then do the multiplier math. Its a fact that people spend about 4% less year to year once they retire. They spend less each year. NOT MORE. Use expenses as your basis.

  48. wake up
    July 14, 2021 at 7:27 am

    Been working 40 yrs, now I'm working on my 2nd million,, gave up on the first