Am I Saving Enough for the Retirement I Want?

Ask three retirement experts how much you need to save for retirement, and you’ll likely get three different answers. One might respond with a specific number, say $3 million; another might suggest you save enough to let you draw down 80% to 90% of your annual pre-retirement income every year; and a third may say you should strive for 12 times your pre-retirement salary. So what’s right for you? And how do you know if you’re on track?

As you seek answers to those questions, the following steps can help you identify a sustainable savings target, one designed to support your desired lifestyle over a retirement that could last 30 years or more. Knowing that can be useful in figuring out whether you need to adjust your current savings and investment plan.

Ask Yourself: How Long Could My Retirement Last?

“There are multiple personal variables to weigh when starting to think about how much you’ll need to save for retirement,” says David H. Koh, managing director and senior investment strategist, Chief Investment Office, Merrill and Bank of America Private Bank. Your current age may be among the most important. Especially if you’re young and in good health, your retirement may last several decades, he notes. No matter what your current age is, however, you may find that you end up retiring earlier (or later) than expected based on unforeseen circumstances. Either situation could affect the number of years you will need to rely on your assets for income, and it’s important to plan for those possibilities.

Picture Your Perfect Retirement

Having a clear idea of the sort of lifestyle you want in retirement will help you estimate how much it could cost annually. Start by thinking about your essential or non-negotiable regular expenses, such as a roof over your head, food on the table and out-of-pocket healthcare expenses. Then consider expenses that are important to your lifestyle, which might be anything from dining out and regular travel to offering financial support to aging parents or helping adult children or grandchildren with education. Keep in mind, too, that some essential expenses—such as your own healthcare spending—may increase in retirement, while your retirement lifestyle may shift as you age.

Finally, consider any aspirational or discretionary goals you may have, like purchasing a second home or pursuing certain philanthropic activities during retirement. Just as you juggle and prioritize competing goals when you’re younger, you’ll need to do the same in retirement.

Review How Much You Already Have Saved

Once you have a target annual income figure in mind, take an audit of all of your anticipated sources of retirement income (retirement accounts, Social Security, possibly a pension, annuities, rental income and an inheritance or sale of a business) and calculate how much you could potentially draw from them once you retire. Your personal retirement accounts may be one of your biggest sources of income, and you could be surprised by how much — or how little — even a seemingly large retirement account could provide over the course of a long retirement.

Close the Gap: Adjust Your Strategies to Pursue the Income You’ll Need

You will then be ready to consider any adjustments you might need to make to pursue your retirement goal. If you’re now in your mid-30s, you may have 30 years to build assets, but if you’re relatively close to retirement, a first step may be figuring out what you’re spending today and calculate whether you’re currently on track to support that in retirement. “Even if you find that you’re behind where you want to be, don’t get discouraged,” advises Jeremy Kaneer, director, Retirement & Personal Wealth Solutions for Bank of America. “There are a number of ways that you can catch up.” First, be sure you’ve maxed out tax-advantaged retirement plans, such as a 401(k) or IRA, and taken advantage of any employer match. And don’t forget that if you’re over 50, you may be eligible for additional “catch-up” contributions. “If that’s still not enough, consider other ways to invest for your retirement goals,” says Kaneer.

Tax-advantaged options include certain annuities and cash-value life insurance. You might also want to consider participating in a high-deductible health insurance plan, Kaneer adds. When you do that, you’re eligible to contribute pre-tax dollars to a health savings account, which can be rolled over year after year and used in retirement for more than healthcare costs.

Beyond saving, you might want to consider revisiting your investment strategy, Koh says. “Asset allocation and thoughtful, goals-based portfolio management are two things that can potentially steer you to a better retirement outcome.”

Remember, too, that retirement is a journey, adds Kaneer. “You can always change course if you need to — maybe by working a few years longer or adjusting your expenses.” But by starting early and planning ahead to pursue a specific attainable goal, you’ll have a far better chance of living the life you truly want in retirement.

For more information, contact Merrill Financial Advisor Ashley Ament in the Scottsdale, Ariz, office at



Opinions are as of the date of this article 3/31/2022 and are subject to change.

Investing involves risk including possible loss of principal. Past performance is no guarantee of future results.

This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.

The Chief Investment Office (CIO) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

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