Ben is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Ben is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Written ByBen is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Ben is the Retirement and Investing Editor for Forbes Advisor. With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for B.
Michael Adams Investing EditorMichael Adams is an investing editor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publicatio.
Michael Adams Investing EditorMichael Adams is an investing editor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publicatio.
Michael Adams Investing EditorMichael Adams is an investing editor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publicatio.
Michael Adams Investing EditorMichael Adams is an investing editor. He's researched, written about and practiced investing for nearly two decades. As a writer, Michael has covered everything from stocks to cryptocurrency and ETFs for many of the world's major financial publicatio.
Updated: Jun 20, 2023, 4:48pm
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Planning for retirement takes time and focus to get right. The sooner you start making a retirement plan, the more money you can save and invest for the long term. Use Forbes Advisor’s retirement calculator to help you understand where you are on the road to a well-funded, secure retirement.
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To get the most out of Forbes Advisor’s retirement calculator, we recommend that you input data that reflects your financial situation and your long-term retirement goals. If you don’t have this sort of information in hand, we offer default assumptions.
While your current age is obvious, you might be less sure about when to retire. The default is 67, although you can begin drawing Social Security benefits at age 62, which some consider an unofficial threshold for early retirement. Many retirement experts encourage people to keep working until age 70, to maximize your savings and your Social Security benefits.
Deciding what percentage of your annual income to save for retirement is one of the big decisions you need to make when planning. If you’re just starting out on your retirement planning journey, saving any amount is a great way to begin. Just keep in mind that you’ll need to keep increasing your contributions as you grow older.
So how much is enough? Financial services giant Fidelity suggests you should be saving at least 15% of your pre-tax salary for retirement. Many financial advisors recommend a similar rate for retirement planning purposes.
But even then, the 15% rule of thumb assumes that you begin saving early. It also assumes you’d be comfortable replacing 55% to 80% of your pre-retirement income. If you start later or expect you’ll need to replace more than those percentages, you may want to contribute a greater percentage of your income.
Understanding how much income you need to replace in retirement is a key concept for planning. Nobody aims to replace 100% of their pre-retirement income from their investments, and the 55% to 80% range cited above is very common. This is in part because Social Security benefits will cover a portion of your pre-retirement income.
That share is relatively higher for lower-income people. Fidelity suggests that a person earning $50,000 a year could expect Social Security to replace about 35% of income, with the rest coming from savings. But this share is lower for high earners. Someone who made $200,000 each year might expect to replace 16% of their pre-retirement income from Social Security.
Nobody knows how long they will live. This is one of the most challenging facts about retirement planning: How many years of retirement income will you need? Save too little and you risk spending your savings and relying solely on Social Security income.
Looking at average life expectancy is a good place to start. The Social Security Administration’s life expectancy calculator can provide you with a solid estimate, based on your date of birth and gender. Just remember: Average calculations can’t take into account your health and lifestyle—now or in retirement—or family history that could impact your life expectancy, so you’ll want to consider them in any calculations you do.
When it comes to saving for retirement, the first step is picking the best retirement account. If you’re already saving in a retirement account, make sure you’re contributing enough to get your employer’s full matching contribution and then put your contributions on autopilot.
These strategies have been proven to help people save more for retirement, but don’t stop there. Make a plan to gradually boost the amount you contribute each year, preferably each time you receive a raise. For more, see our guide on how to save for retirement.
How much you need to retire depends on how much you plan to spend in retirement. How much will you want to shell out on travel? What about saving for medical expenses? These considerations and more make planning your retirement paycheck difficult for many people, especially when they’re decades from retirement.
To retire early, you need to build a sufficient amount of wealth. Wealth can be built through minimizing debt and maximizing salaries and investments.
Some additional steps that can help you prepare for an early retirement, include:
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