How Much Money Do You Need to Save to Retire in the US

Early retirement is a dream for many Americans, but how much do you need to save to retire early? It is impossible to name an exact amount because it depends on many factors, the publication explains. GoBanking.

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It is impossible to name a universal dollar amount, since each person has their own circumstances: much depends on the number of years spent saving and planning, health status and other nuances.

However, financial experts have offered some universal advice on how not to delay retirement.

On the subject: Pension in the USA: a complete guide on how to secure a decent old age in America

Start planning your retirement as early as possible

No one can accurately predict the future. While it's impossible to know in advance what kind of situation you'll find yourself in when you retire, especially if that's still a long way off, you may want to spend more time preparing for it, says Gina Stoddard of Broad Financial.

"Preparing for retirement requires a lot of research and consideration. If your goal is to retire early, you need to plan so that your savings will last for decades," she advises.

According to her, it is necessary to evaluate the desired lifestyle, the presence of debts, tax obligations and possible sources of additional income.

Don't focus on the "average" level

The first thing Melissa Fox, owner of Future-Focused Wealth, recommends to anyone asking about early retirement: “There is no such thing as average anymore. This is especially true when it comes to savings, lifestyle, and, of course, retirement itself.”

Every person's path to retirement is unique, so no retirement calculator formula can accurately predict the amount you need. It's best to work with a financial advisor to consider your specific goals.

The Four Percent Rule

If you want to get a rough estimate, you can use the "4% rule," which determines how much money you can withdraw from your investment portfolio each year without running out of it before the end of your life (calculations are made for an average life expectancy).

According to Michael Rodriguez, owner of Equanimity Wealth, if you have a $1 portfolio, you can withdraw $000 a year and live like that for about 000 years.

Rodriguez advises using a slightly lower withdrawal rate—around 3–3,5%—to have more margin.

Count your expenses

Rodriguez believes one of the most common mistakes people make when planning for retirement is not knowing their expenses.

"If you don't know how much you spend per month, start tracking your expenses for 6-12 months and add 20-30% on top as a safety net."

For example, if you spend $40 per year, it would be reasonable to budget your retirement expenses at $000 to $50 per year.

If you plan to retire before Medicare age (65), it's important to consider health care costs, he added.

Maximize Your Social Security Benefits

If you are eligible for Social Security or will be eligible, make sure you get the most you can. That typically means waiting until age 70, Rodriguez said.

Waiting until age 70 allows you to receive 124% of your full pension benefit, which can significantly impact your overall income during retirement.

Consider a partial pension option

If you don't have enough savings to retire fully, consider taking a partial retirement - continue working part-time or taking on a side hustle, Rodriguez advises:

"If you can find work that you enjoy and that you can do at a pace that is comfortable for you, it will greatly extend the life of your investment portfolio."

Take inflation into account

Inflation is also something to consider when planning, Stoddard says. It mostly affects expenses that retirees continue to incur, like housing and insurance, which she explains “statistically increase at the rate of inflation. Sometimes even faster.”

While inflation usually rises steadily, unexpected events such as the COVID-19 pandemic can cause prices to jump sharply.

Make alternative investments outside the stock market

The recent sharp declines in the stock market have shown how important it is to have assets that are not tied to stocks.

Stoddard recommends alternative investments such as precious metals, which retain value because they are a tangible asset and their value typically moves in the opposite direction of the stock market. Owning real estate is also considered a hedge against inflation.

Some retirement accounts that allow you to make alternative investments include self-directed Roth IRAs, traditional IRAs, and individual 401(k)s or Roth solo 401(k), Stoddard explained.

Define your goals

Because retirement is different for everyone, Fox encourages people to think about why they want to retire early.

"To finally take a break from a long career? To travel? To care for elderly parents or spend more time with children? Or simply to escape the burnout of a job that no longer brings joy? 'Why' gives us direction. And money? It's just fuel for the journey," she noted.

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Be prepared to compromise

Ultimately, retiring early may not be about the amount of money, but rather your goals. Fox says it’s important to “not get hung up on the numbers” when planning for retirement, but to “discuss the trade-offs.”

Having the right plan doesn’t always mean retiring early. Sometimes it means retiring more deliberately—with more clarity, meaning, and alignment with your priorities.

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