 TITLE: How Much Should I Save for Retirement? CONTENT: Estimate How Much You Need to Save\n----------------------------------\nEveryone is different, and your retirement goals may not be the same as the goals of your friends or family members. And frankly, there's no getting around that retirement planning is built on a bunch of assumptions.\nWhile those goals can change over time, you want to make the most educated guesses possible, and use them to adjust your savings plan accordingly. Here are three steps to help you create your plan:\n### 1\\. Consider Your Lifestyle\nSome people plan to downsize their lifestyle in retirement. A survey of retiree spending by the Employee Benefit Research Institute found that in the first two years of retirement, median household spending dropped by 5.5% from pre-retirement spending levels, and by 12.5% after four years of retirement.\nSimply not having to save for retirement anymore—whether through your company's 401(k) or an individual retirement account (IRA)—can reduce how much money you'll need. Also, aiming to pay off your mortgage before you retire would also reduce your living costs.\nStill, not all retirees have a big drop-off in expenses. Health care costs tend to get higher the older you get, and you may want to replace some expenses, such as retirement savings or a mortgage payment, with travel and other activities.\nIt's also important to consider how long you'll need to live off of retirement savings. According to the Social Security Administration, A 65-year old woman today has a life expectancy of 21.5 more years. For a 65-year old male, life expectancy is 19 more years. What's more, roughly a third of all 65-year-olds will live past 90.\nSo as you determine how much money you'll need each month to live comfortably and do the things you want in retirement, you'll need to multiply that by how many years you expect to live past retirement age. And, in general, it's best to be as conservative as possible to avoid putting yourself in a position where you run out of cash.\n### 2\\. Decide When You Want to Retire\nJust as your life expectancy helps determine how much you need to save, so does your retirement age. The sooner you choose to leave the workforce, the longer you'll be living off of your savings, so you'll need to have an idea of how old you'll be when you make the transition.\nAnd if you're thinking about working longer than the traditional retirement age, you've got plenty of company. According to the Employee Benefit Research Institute, more than half of today's workers expect to still be working past age 65. Yet less than 15% of today's retirees worked past 65.\nKeep in mind, though, that it's difficult to predict the future, and retiring before 65 may be inevitable. Illness, layoffs or needing to care for a family member can push people to retire earlier than expected.\n### 3\\. Calculate How Much to Save\nInvesting experts generally recommend saving 15% of your gross income or more toward retirement, but understanding your retirement goals can give you a better idea of the right savings rate for you.\nAs you think about your lifestyle, health care expenses, debt obligations and other costs, come up with an amount you expect you'll need in today's dollars to cover those expenses without putting you in a difficult financial position.\nThen use a retirement calculator such as those from investment firms Vanguard, Charles Schwab or Edward Jones to input your assumptions about income needs and debt to determine how much you need to save now to reach your goal.\nAlso, keep in mind that you can take full Social Security benefits at age 67. If you're not sure how much of a benefit you'll receive, you can register for a my Social Security account to get an estimate based on your earnings.\nThat said, avoid the temptation to rely fully on that estimate. The U.S. Congress has made changes to the normal retirement age for Social Security before, and the Social Security Board of Trustees projects that the program will only be able to pay 75% of its scheduled benefits by the year 2035.\nSo while it can be a nice supplement, don't take the estimate at face value—focus on your savings, and consider any Social Security benefits you might receive as a bonus. END