How Much Money Do I Need To Retire?

One of the most frequently asked questions I receive has to do with retirement. In particular, people are wondering how much money they need to retire. I wish there was a simple answer, but it isn't an easy question. There are a lot of media outlets out there that will throw around a lot of numbers and say you need at least a million dollars in the bank, or have to save at least 15% of your income for retirement. While these may apply to some people, the problem is that everyone's specific retirement situation is unique and it's impossible to have this magic number that works for everyone.

So, how can you determine how much money you need for retirement? The younger you are, the harder it is to calculate because so much can change in terms of your situation and with things like taxes and economic conditions over the next thirty or so years. In situations like this, you should know that you'll probably need close to as much income in retirement as you need now (adjusted for inflation of course). As you get older and retirement gets closer, you really need to sit down and start to project your expenses. You should have a rough idea of whether or not you'll be receiving a pension, what your Social Security check will be, and realistically start thinking about life expectancy and your retirement goals.