How Much Should You Save for Retirement?

“As much as you can, and as soon as you can,” would be the answer to the question posed by this article’s headline.

While saving early and often is a good and simple rule of thumb, there is a longer and more complex answer for those who really want an in-depth answer. And considering the truly paramount necessity of building up a nest egg for your golden years, this is one issue that deserves more than just a summation. So here’s a more comprehensive look at how much money you should save for retirement, and some pointers on how to get there.

Crunch the numbers

There are a few more general guidelines for saving that most experts agree on, starting with the idea that people should try and save 10 to 15 percent of their pre-tax income, beginning when they are in their twenties. While those earning a higher salary strive for the 15 percent number, those making more modest wages can sometimes get away with doing the 10 percent bare minimum and relying on Social Security to supplement the rest.

However, there are other factors to consider, some of which are unknowable variables. For example, if you know you want to enjoy a very comfortable or even extravagant retirement, you know you’ll have to save more. You will also need to save more if you beat the actuarial life tables and live longer than expected - though obviously, most people can only hope for longevity, not predict it.

The best you can do is aim high and, as you get closer to your target retirement age, attempt to create a budget for your future self. Try to calculate which expenses, such as healthcare, are likely to increase, and which costs, such as a mortgage, might actually go down or disappear over time. And if you want to travel the globe, don’t forget to factor in the cost of travel or any other pricey new hobbies you’re interested in pursuing.

Once you have an estimate of your monthly expenses, multiply that by twelve to figure out your annual budget. Then keep in mind that the average retiree lives for 20 years after retiring, so your annual budget times 20 is how much you could reasonably expect to need in retirement.

Hit the targets

You may be experiencing some sticker shock after figuring out your target number for retirement. Many Americans believe that $1 million is what it will take to retire, which may sound like a whole lot.

And to save up a cool million by the time you are 67 years old, you will need to start saving $319 each month when you are just 20, and then continue scaling up, until you’re eventually putting away $2,831 a month at age 50.

If you are one of the 21 percent of Americans with nothing saved for retirement, or among the 10 percent with less than $5,000 saved, you may now be developing a sick feeling in the pit of your stomach, or even wishing you hadn’t read past that opening sentence that simply recommended you save as much as you can as early as you can.

Still, there are some reasons for optimism. If you’re young and unable to save right now, it’s very probable that if you continue working hard, you’ll be able to advance to higher-paying positions in the future. Now would also be a good time to look at your budget and determine what you can actually afford. According to the Bureau of Labor Statistics, the percentage of income that workers between 25 and 74 years old have left over after meeting their basic needs is nearly 20 percent, which more than covers the 15 percent that workers are advised to save.

You may not feel like you could possibly save an entire fifth of your income - and maybe you couldn’t, but a shrewd appraisal of your purchases would probably reveal new clothes, meals out and other little indulgences that have a way of adding up. Download an app like myTrustmark® to map out your finances and get a better sense of what you’re spending and how you can save more.

Also remember to put into practice the best habits of highly successful savers. Forbes contributor Robert C. Lawton has several recommendations, including maxing out your 401(k) from the beginning and further increasing your contributions with each raise you receive. Opening a Roth IRA and contributing the maximum amount allowed - $5,500 for most, $6,500 for those over the age of 50 - is a great way to invest in a supplementary retirement fund that can grow in addition to whatever plan or pension your employer provides. Fully funding a tax-free Health Savings Account and making any catch-up contributions you are legally eligible to are also good strategies.

Thinking about the future can provoke all sorts of anxieties, many of which are financial in nature. While many of the things that happen to you as you age are out of your control, there are ways to build a sizeable nest egg that will at least give you more optimism than stress as you imagine your golden years.