Determining How Much To Save For Retirement – A Choice That Will Certainly Affect Your Future

By Melissa Cook Reviewed by Nima Vahdat Updated Oct 12, 2023
Determining How Much To Save For Retirement – A Choice That Will Certainly Affect Your Future

Saving for retirement is incredibly important, but how do you know if you’re really putting enough aside? 

People often think they know how much to save for retirement. 

But the fact of the matter is that they either don’t have an understanding of how much they’ll really need to retire in comfort or grossly underestimate how much they should be saving. 


  • You should save between 10% and 15% of your pre-tax income for retirement.
  • You should aim to have 80% of your pre-retirement annual income saved when you retire.
  • Lowering your debt now can help you save more for the future.

Generally, it’s recommended that you save between 10% and 15% from your pre-tax income, with higher earners striving to hit the top of the range and lower earners staying near the bottom. 

Although these are general guidelines, the formula isn’t perfect. How much you save depends on your individual goals for the future and variables, including:

  • Your current savings and spending levels
  • Approximate life expectancy
  • Desired retirement lifestyle

If you need help figuring out how much money you should save for retirement, consider the following tips.

Tips for saving for retirement

Utilize a retirement calculator

Retirement calculators are a free tool that will help you determine how well you’re doing with your savings. Simply answer a few questions about your current financial situation, including spending estimates, and it will tell you if you’re making good progress. 

These calculators are surprisingly accurate since they stay up to date with the current economic climate and include defaults for market returns, life expectancy, and inflation. You will want to ensure you provide the most accurate information possible to receive precise results.

Once done, you can see if your investment strategy is working and any adjustments you should integrate into your daily routine to help you meet your savings goals. 

Aim for 80%

The common rule of thumb is to aim to replace 80% of your income pre-retirement, with some experts saying to go lower at 70% or higher at 90%. This number is dependent on the factors mentioned at the beginning of this article. 

Unfortunately, due to the economic climate, fewer Americans are feeling prepared for their retirements, with 64% feeling confident in the amount of money they’ve saved, a decrease from 73%, according to a 2023 Employee Benefit Research Institute survey.

To determine your ideal income replacement percentage, you’ll want to consider your current savings allotment. If you’re saving 10% now, you know you can comfortably live on 90% of your income. 

Keep in mind additional deductions like payroll taxes and Social Security, which can eat up another 7% of your income, and you can deduce that you need around an 83% income replacement to maintain your current lifestyle post-retirement. 

Estimate future retirement income requirements

While this tip is the most labor-intensive, it’s also one of the most important. Fortunately, if you already maintain a budget, you’re a step ahead. 

To make the process easier, you’ll want to use a spreadsheet, but a pen and piece of paper works well too. 

Begin by entering your average monthly expenses in the first column. Once you can look at everything you spend, you’ll want to determine if they will stay the same, increase, decrease, or disappear in retirement. Write the answer in the second column.

Calculate all of the expenses that you will have during your retirement and add any additional costs, like travel, that you may not spend money on now but will in the future. The total will be a rough estimate of your future monthly retirement expenses. You may also want to add an extra 10% as an additional buffer.

Now multiply that number by 12 to determine your annual financial needs during retirement. Once done, compare that to your current income to determine your replacement ratio or the amount of income you need to have replaced for a financially comfortable retirement. 

Check-in regularly

Retirement planning isn’t a one-and-done thing; you will want to revisit your plan regularly to ensure you stay on target. As your life changes, your retirement needs will as well, whether it’s a new baby, a job change, or a new hobby. 

It’s always better to stay ahead of the game and adjust your budget as you go than fall behind and have to play catch up. 

Overcoming Debt

One of the biggest hindrances to saving for retirement is debt. While not all debt is bad (think mortgages), many types can put a chokehold on your retirement dreams. 

According to Experian, the average American debt is a whopping $90,460, which includes everything from loans and credit cards to student debt and mortgages. 

With the current economic climate, debt is rising, with people ages 24 to 39 seeing a 58% debt increase and those 40 to 55 holding the highest overall average debt percentage.

While these statistics can feel disheartening if you fall into these categories, there are ways you can lower your debt and save more for the future. Let’s take a closer look at some of the most effective debt reduction methods.

Debt consolidation can be a smart option

There are many debt relief programs that allow you to consolidate your debt into a single payment. Not only can this save you money each month, but it may reduce your interest charges, which can equal substantial savings in the future. 

Checking your credit report

Keeping an eye on your credit report will give you greater insight into your financial health. It will also alert you to any fraudulent activity, which can have devastating consequences if you don’t catch it early. 

Re-evaluate your spending

Thanks to advances in technology, most people use cards or mobile devices as their primary forms of payment. While convenient, these methods make it easy to lose track of your spending, which can make saving all but impossible. 

If possible, try to use cash instead of credit cards, as it’s much easier to stick to a budget with paper money. You can also sit down and create a monthly budget, seeing where you can cut back so you can invest in your future.

Stop borrowing from your future with credit cards

One of the worst things you can do when trying to reduce your spending is to fall into the credit card debt cycle. The more you use these cards, the more you have to pay; since you are charged interest every month, you don’t pay off your balance. 

It may be challenging at first, but limiting your credit card use is an excellent way to stay within your financial means. 

At Americor, we understand the importance of managing your finances wisely. 

If high-interest debts are negatively impacting your plans to retire and financial well-being, explore our debt relief solutions, including debt settlement and debt consolidation, to regain control of your financial future.

If your debt has become unmanageable and you have difficulty making your debt payments each month, then you should consider negotiating a debt settlement and an affordable payment plan that suits your budget.

Talk to one of our certified Debt Consultants, for free, who can provide personalized advice tailored to your specific needs.

By taking proactive steps, you can put an end to your financial stress and work towards a brighter financial future. Remember, there is always hope for debt relief, and our team of experienced professionals are ready to guide you on your journey to regaining control of your finances.

For more information on Americor’s debt relief services, contact us today to see how we can help you eliminate your debts, and get on the fast-track to becoming completely debt-free!


Melissa Cook

Melissa has a degree in English and marketing from University of California Irvine. She is a creative and accomplished content writer and editor with comprehensive experience developing rich, compelling content for a variety of websites. With her expertise in writing a broad range of content, combined with outstanding interpersonal skills and commitment to exploring innovative ideas, Melissa has done an excellent job developing content for blogs, articles, social media, and the company website. When she is not writing, Melissa spends most of her time cooking, traveling the world, and catching her favorite Broadway shows.