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One of the first things people do once they get serious about planning and saving for retirement is to look at a retirement calculator to find out how much they need to save. There’s nothing wrong with that. However, every person’s situation is completely different. What might be the right amount for one person will not be right for everyone. For example, someone who is happy staying home and fishing at their local lake during retirement will need less than someone who plans to travel frequently and fish in the Florida Keys. These are the types of things a retirement calculator might not take into consideration before giving you the lump sum amount you’ll need for retirement.

You may have heard some financial advisors try to answer this question very broadly. For instance, one popular notion is that you’ll need one million dollars in savings to retire more comfortably. Another is that you’ll need to be able to generate 80% of your current income after you retire. So, if you brought home $100,000 per year during your working years, you would need to get $80,000 per year from your investments during retirement. But again, taking a broad approach to this question is pointless in a way because each person’s situation is different based on their retirement timeline, goals, health, and a variety of other issues, such as: Are you debt-free? Do you have a history of longevity in your family? Do you have other sources of income like a pension that can help to supplement your savings?

Where to Begin
One good way to begin calculating the answer for yourself is to perform a budget analysis. This involves identifying all the expenses you will have once you retire, as well as those you expect to go away, such as your FICA tax, commuting costs, and perhaps your mortgage payments. Next, you’ll need to determine how much income you will have coming in the door once you stop working. For example, an important source of retirement income will be your Social Security benefits. You can use the benefits calculator on to estimate how much your benefits will be based on claiming them at the optimal time. The right age will vary from person to person, and it will, again, be determined by considering many factors such as your age, earnings, and retirement goals.