It’s a money question that has no definitive answer: “How much should I save for retirement?” An exact figure is so elusive because everybody’s financial situation is different, and crystal balls are always cloudy if you look close enough. We routinely hear specific dollar amounts we’ll need to make sure we don’t tarnish our golden years, but are any of them right?
Back in the good old days, a million dollars was enough money for retirement and pretty much anything else you wanted from life. If you had a million dollars you were considered rich. You had enough financial independence to pursue your bucket list. Those days are seemingly long gone. Now, a million dollars feels like a starting point when trying to determine how much you’ll need for retirement. The general retirement calculation we’re told goes something like this: enjoyable retirement + health care costs + inflation = at least a $1 million nest egg. Never mind the details, just keep working, spending, and saving until you one day hit that million mark — or die trying.
You don’t have to look far to find evidence that Americans are listening to these colossal savings targets. A recent study from Transamerica Center for Retirement Studies (TCRS) finds 25% of workers estimate they’ll need at least $1 million to feel financially secure in retirement. Twenty-nine percent of workers, the largest group in the report, say they’ll need at least $2 million, representing a 53% surge in four years. In 2011, only 19% of workers said they’ll need at least a $2 million nest egg to feel financially secure in retirement.