Planning for retirement goes beyond 401(k) and IRA contributions – it requires thoughtful planning and consideration to properly prepare. In retirement, you will be living off retirement accounts, meaning that you will likely have no other source of income. It’s about answering one big question:
“How much money will Future Me actually need to live comfortably?”
In retirement, your paycheck stops but your bills don’t. Your lifestyle, health, and goals all shape how much you’ll need saved. The good news? You don’t need a finance degree to estimate it. You just need a plan.
Let’s break it down.
Understand What Retirement Spending Really Looks Like
While your spending patterns will ebb and flow throughout your life, that will be especially true as you enter retirement. According to The Balance, while you may have to pay for things like a mortgage, child care, and work attire early in your career, there will be a shift when you retire because you’ll no longer be paying for many of those things. You will, however, pay for increased medical expenses or outsource tasks you may not be able to do easily anymore, such as raking leaves or cleaning out a gutter.
Retirement isn’t “cheaper life.” It’s different life, and your savings need to reflect that.
Consider costs such as prescriptions and medical care, children or grandchildren’s wedding or higher education, taxes and social security. Combined, these expenses can add up in retirement, especially without a solid nest egg.
Your retirement savings don’t have to do all the work. Consider:
Social Security benefitsPensions (if applicable)Part-time workOther investments
Budget Estimates
Knowing this, it’s important to plan ahead. Review your budget today to make sure you’re leaving space for retirement savings. Common starting points include:
Plan to need about 70%–85% of your pre-retirement income each year. Why not 100%? Because some expenses drop. But healthcare, inflation, and longer life expectancies mean you still need substantial income.
Using methods like the 50/30/20 rule or managing a budget via a financial app or printout can help you create benchmarks for savings and spending for the future. You’ll be able to see where you may be overspending or under saving and can make adjustments accordingly.
The Balance has a simple tip: take what you spend annually today, and multiply it by 25. The total is what you will need to have in your retirement accounts to maintain today’s lifestyle.
Doing the Math
If you’re still wondering how much you need to save for retirement, grab a calculator. Rules of thumb are helpful but calculators make it personal.
With retirement planning tools, you can adjust for:
Contribution increasesSalary growthRetirement ageDifferent savings scenariosMarket assumptions
Slavic401k’s retirement planning calculators help you test “what if” situations like:
“What if I increase my contribution by just 1%?”“What if I retire two years later?”“What if I get regular raises?”
We know that lifestyle and spending patterns change. Because of that, it’s important to use retirement calculators to ensure you’re staying on track. Slavic401(k) offers a retirement planner calculator that will help you plan for retirement. You can input different scenarios for saving, income increases, and annual household income to get a better snapshot of what’s needed.
For a quick overview, Slavic401k also offers a retirement nest egg calculator, which shows you how much it will take to secure a financially stable retirement. Both calculators provide beneficial information for planning and can help you calculate your next steps.
Diversified Portfolio
Figuring out how much you’ll need for retirement goes beyond using a calculator. It also means making sure your money is invested in a way that supports you at every stage of life.
A well-diversified portfolio, one that includes both more conservative and more growth-focused investments, can help balance risk. This mix may help cushion the impact of market downturns while still giving your savings the opportunity to grow during stronger market periods.
Many employer-sponsored 401(k) plans offer pre-mixed or diversified investment options. Even so, it’s a smart move to periodically review your portfolio or speak with your employer or financial advisor to understand how your money is allocated. If your investments are heavily concentrated in one area, it may be time to consider diversifying.
Make Sure Your Investments Match Your Timeline
A key concept to keep in mind is your time horizon. This is the amount of time you expect to keep your money invested before you’ll need to use it. It sounds simple, but it plays a major role in how you should approach investing.
Time horizons are generally grouped into three categories:
Short-term: Less than 3 years Medium-term: 3 to 10 years Long-term: 10+ years
The longer your time horizon, the more opportunity your investments may have to recover from short-term market swings and grow over time.
Adjust as Life Changes
This isn’t a “set it and forget it” number. Revisit your retirement plan when:
Your income changesYou change jobsYou get married or divorcedYou pay off a homeMarkets shift significantly
Retirement planning is a moving target, and small course corrections can keep you on track. Remember, you don’t need to guess your retirement number. With the right tools, a clear target, and steady contributions, you can build a future where work is optional, not required.
It may also help to meet with a financial advisor to make sure you’re making your savings work for you the best way they can. Together, you can explore options for maximizing contributions.
Learn more about getting the most out of your retirement savings, including how to diversify, on the Slavic401k blog.
