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As retirement approaches, many people wonder how much they will need to save, especially if they plan to retire at 65 rather than the full retirement age of 67. The rule of thumb is $1 million, but there’s no one-size-fits-all answer.
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Lifespan after retirement often extends to 30 years, so your strategy must be personalized and sustainable. So, whether you’re counting down the days or still have a few years to go, this guide will help you on your path to financial security.
Understanding Retirement Today
Traditionally, financial advisors recommend saving in multiples of your salary – three times by age 40, six times by age 50 and more than eight times by age 65. So, someone earning $40,000 to $100,000 annually would need about $340,000 to $850,000 by age 61-64.
However, with the full retirement age now at 67, and economic changes affecting costs and returns, old rules like the 4% rule – where $1 million gets $40,000 a year – may no longer suffice.
New benchmark: $1.5 million
Today’s experts recommend saving around $1.5 million for a comfortable retirement. Following the 4% rule, this would allow for $60,000 per year in retirement income. That extra $20,000 provides a buffer against rising costs, unexpected expenses, and an improved quality of life.
This figure is also not arbitrary. This reflects rising inflation, changing interest rates, and fluctuations in job markets. Retirees need more to maintain the same lifestyle that previous generations could afford for less.
Major Factors Affecting Retirement Costs
- Place: Where you live has a huge impact on your retirement budget. The cost of living varies across the US, so your savings goal should reflect your local expenses and future financial plans.
- marital status: Married couples benefit from double Social Security checks, and one partner can delay claiming benefits to make up for the overpayment. But after one spouse passes away, the survivor only gets the larger check. Fixed expenses remain unchanged, so plan for loss of income.
- Health care, housing and lifestyle: In addition to daily living, retirees should also budget for health care, home maintenance, travel, and leisure. It’s important to make sure your nest egg can cover these without financial strain.
How Politics Affects Retirement: OBBBA
In July 2025, President Donald Trump signed the One Big Beautiful Bill Act (OBBBA), affecting Retirement and Social Security. Here are some highlights:
- It does not eliminate Social Security benefits taxation but adds a Temporary Senior Bonus Reduction – $6,000 for single filers over age 65 or $12,000 for joint filers over 65 from 2025-2028.
- Retirees who work part-time can deduct up to $25,000 of qualified tip and overtime income (with income limits).
- These deductions could exempt nearly 90% of retirees from paying income taxes on Social Security.
However, critics warn that the revenue shortfall from these tax breaks could accelerate the Social Security and Medicare trust fund depletion, potentially leading to bankruptcy as early as 2032 – earlier than the previously estimated 2033.
planning ahead at any age
The bottom line is that active financial planning is of great importance, whether you are just starting your career and savings journey or approaching retirement. Here are some tips for each.
for young investors
start early. Consider equity-indexed life insurance – it offers market protection, potential growth, and life coverage. Combined with a diversified portfolio, this creates a strong retirement base. Early investment benefits from compound interest and lower insurance premiums.
For those who are near retirement
It’s never too late to take action. Reevaluate your expenses, cut down on unnecessary expenses and consider working a few extra years. Turn to safe investments and explore part-time work or consulting for supplemental income.
Whatever your age or income level, it’s important to make proactive plans. Stay informed, consult experts and align your savings strategy with your long-term goals. With careful preparation, retirement can truly be a time of relaxation and satisfaction.
Laura Beck contributed reporting to this article.