The magic number to save for your retirement, and it’s not $1 million

Successfully saving for retirement doesn’t mean having a million dollars in the bank.

Successfully saving for retirement doesn’t mean having a million dollars in the bank. Experts say you need to plan for a retirement that will last several decades, and base your budget on living until age 100.

According to the 2023 Schroders US Retirement Survey, American workers believe they need $1.1 million for retirement, but MarketWatch said it’s not as simple as getting a standard amount for each person. Not everyone will live the average life expectancy, which is about 77 years in the United States. According to the Bureau of Labor Statistics.

“It is not a good idea to plan for your life expectancy. You want to plan conservatively and plan expenses until you are 100 years old.Matt Fleming, executive wealth advisor at Vanguard, told MarketWatch.

Vanguard estimates people should take home between 75% and 85% of their income during their retirement years, Fleming said. Look at potential income sources (401k, IRAs, pensions, savings, Social Security) and additional income sources such as rental properties, annuities, or inheritance. It’s also important to check insurance policies, according to MarketWatch.

a TIAA study George Washington University found that participants with strong knowledge about longevity were more likely to save more for retirement. They also find it easier to cover their expenses in retirement and are more likely to try to estimate how much they need to save.

Using the original benchmark of 4%, MarketWatch reported that $1 million in savings and investments would allow you to spend $40,000 (inflation-adjusted) each year in retirement, with little chance of outliving your money.