Your Magic Retirement Number

One of the most frequently asked questions I get is, “What’s my magic number is to retire?” In other words, how much do I need to have saved to retire?

And, you guessed it, my answer is the preverbal – it depends.

No one is really satisfied with that answer and I hate giving it to them. But it’s not that simple and your retirement is way too important to give you a snap answer when I don’t have all of the facts. Everyone is unique and by extension so is their definition of a “comfortable” retirement. I know there are calculators online where you can plug in your numbers and they will spit out a number, but I always encourage people to take these numbers with a really big grain of salt because they often fail to take a lot of other things into consideration – things that can have a huge impact on your future retirement.

Important Factors

To give you an idea of important things to consider when developing a retirement plan to get to that magic number, here are just some of the pieces of information I consider when crafting one for my clients:

  • Your current age
  • The age you want to retire
  • Where you want to retire
  • Your marital status – if you have a partner, will you both retire at the same time? If not, what are your plans?
  • Your current income
  • Your current tax status
  • The lifestyle you are living now
  • The lifestyle you want to live in retirement (For example, will you need more money for travel, hobbies, etc., less money or about the same amount on a monthly basis.)
  • Other financial obligations that might compromise your ability to save now or continue into retirement – such as caring for children, parents, etc.
  • Your money habits – do you tend to be a spender or a saver? And, if necessary, can you stick to a budget?
  • Do you have plans to work, at least part-time, for a period of time. If so, how much income will that generate?
  • Your health status
  • The longevity of your family
  • Other sources of income such as a pension or investments
  • If you eligible for Social Security, how much will you receive and do you have a preference for at what age you want to take it?
  • Is it more important to you to retire when you want to even if it might mean cutting back on your lifestyle, or would you prefer to continue working until you have a solid financial base for your retirement?
  • How much do you have saved – personal savings and investments, 401(k)s, IRAs, etc.?
  • What’s your risk tolerance? Or, what return do you expect to get on your investments before and after retirement? (Then I review your investment returns to see if they match your expectations.)
  • Plus, more factors to consider sometimes comes up in our conversations such a wanting to leave a legacy, caring for a special needs child or family member, etc.

My point is, unless you have more money than you could ever hope to spend, or you plan on checking out from this earth really soon, giving you a magic number or telling you that you are in good shape to retire without getting to know you, would be doing you a real disservice. While there are many decisions in life that may not pose much of a hardship if you don’t get them right the first time, your retirement is not one of them. It’s uber important to take the time to get the answers you need to get it right the first time – trust me the consequences of a bad decision are not good.

If you really want to know your magic retirement number, talk to a financial advisor and get a retirement plan customized for you and your specific situation. If you don’t want to work with an advisor on an ongoing basis, look for one that will create a plan for you with no further commitment, although I do recommend that you get annual updates if you are within five years of retirement. In the meantime, set aside as much as you can for retirement without sacrificing too much today. Remember, life is short and this is not a dress rehearsal!

At PS Worth, we offer financial advice and custom financial plans, including retirement plans with no strings attached. We are a fee-only, advice-only firm so you only pay for the services you receive, and you are never required to have or move your investments over to us to us to work with us. I invite you to schedule a complimentary consultation to discuss your goals and I will share how we might help. Visit for more info.