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How Much Is Enough for Retirement?

The amount you'll need to have saved to be able to retire depends on a number of factors, like where you want to live and what you want to do. Similar to creating a budget, you'll need to look at your money coming in and money going out. However, there are also some general guidelines that can make it easy to create a realistic strategy.

Sources of retirement income

First, take a look at all of your potential sources of retirement income. Americans used to count on a pension plus Social Security benefits to get them through their retirement years. Today, the vast majority of American workers will not receive a pension. And even though Social Security is a significant source of income for most retirees, it was never intended to be our only source of income in retirement.

Here's a typical breakdown of income for those 65 and older:

  • 38% Social Security benefits
  • 30% employment
  • 18% retirement plans
  • 11% income from assets
  • 3% other income     

Source: Employee Benefit Research Institute,
Databook on Employee Benefits, Chapter 3, updated 2014

Your retirement expenses

While planning for your retirement adventures, keep in mind that health care may be one of your more costly expenses. The Employee Benefit Research Institute (EBRI) estimates a married couple who is age 65 will need about $392,000 to cover health care expenses in retirement.

Other expenses, like transportation and income taxes may go down. It's a good idea to put together a list of your expenses to help you determine how much you'll need each month to cover them. Consider:

  • Health care
  • Housing
  • Utilities
  • Taxes
  • Insurance
  • Transportation
  • Travel and entertainment
  • Loans
  • Charities

Download this free retirement expenses planning worksheet to help you get started.

A general rule

If it's difficult to estimate what your income and expenses will be in the future, consider using a general guideline. Many experts recommend saving about 80% of your pre-retirement income for every year spent in retirement. To help you determine if you're on track, sign on to your account on the Wells Fargo website. Check out the Dashboard and you'll find a status of your progress toward your retirement paycheck goal. If you have savings outside your employer-sponsored retirement plan, you can add it to the estimate.

Don't wait another day

Whether you've been saving for years or are just getting started, compound earnings can work for you. Start now — or start saving more now — because your money will grow faster over time as your earnings produce their own earnings. Take a look at the difference 10 years can make in this example, featuring Mike and Marie:

The importance of saving now
Age started contributing
Years contributed
Monthly contribution
Total contribution
Total value of savings at age 65
This example is based on a 7% annual rate of return. This example is for illustration purposes only and is not intended to represent the return of any specific investment. Estimates are based on the assumptions noted, do not guarantee or imply a projection of actual results, and do not include the effect of taxes or fees. Wells Fargo cannot guarantee results under any savings or investing program, including a regular investment program, and cannot guarantee that you will meet your retirement savings goal.