By Tom Sedoric and Casey Snyder

It’s an age-old question. A quick Google search of “How much should I save for retirement?” yields millions of results in seconds, each touting differing opinions, various rules of thumb, and countless “conventional wisdoms”. The reality is that the answer to your question requires much more thought and calculation than many of these Google results will lead you to believe. 

In order to determine how much you should save for retirement, you’ll need to examine your needs, wants, and goals. While we recommend that all our clients save at least 15% of their pre-tax income for retirement, your savings plan will likely look a lot different from any “standard” you’ll find during your initial Google search. No two financial situations are completely identical, and it’s important to consider your unique position as you plan your retirement.

Define Your Retirement Goals 

What do you want to get out of retirement? Perhaps you and your partner are excited to travel the world, or maybe you’re looking forward to a chance to relax and improve your golf game. You may also have plans to downsize or move closer to children and grandchildren.

Your retirement is what you make of it, so it’s essential to take time to define what a successful retirement looks like to you. This includes your desired annual retirement income, the age you’d like to retire at, where you’ll live, whether you’ll rent or buy, and additional considerations like healthcare, transportation, and socialization. Having a clear picture of the lifestyle you’d like to lead in retirement will help you plan accordingly financially. When you and your partner have aligned your goals and visions for retirement, it’s time to take the next step: set a spending plan.

Set a Spending Plan 

We take a slightly different approach to retirement planning. Rather than focusing solely on how much money our clients should save, we encourage them to tell us how much they’d like to spend. A spending plan shows what’s possible in retirement by extrapolating current saving and spending habits, including fixed and discretionary costs. In the wise words of Barbara O’Neill, Ph.D., of the Rutgers NJAES Cooperative Extension,

“Spending plans provide a number of advantages. They can force people to make choices in the way they spend money and to prioritize needs and wants. They can also help you live within your income if the plan that is written down on paper is carried through in real life.” 

Working one-on-one with our clients, we dig into nearly every aspect of their financial life, from subscriptions to savings and even to out-of-pocket dental care. We account for income, tax rates, and show clients how their retirement plan may be affected by shifts in their saving or spending habits. Ideally, we want our confidence level for their success in retirement at about 85% to 90%. We play with the numbers in the spending plan according to goals, wants, and needs to achieve that desired confidence level.

A successful retirement—as opposed to an unsuccessful or complicated one—ultimately comes down to the client’s willingness to evaluate their decisions in the context of their short, middle, and long-term financial goals. A spending plan can help you do just that. Rather than having a fixed amount in mind to save, leverage your spending plan to take a step back and examine the bigger picture. 


This material is being provided for information purposes only. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. Raymond James and its advisors do not provide tax or legal advice. You should discuss tax or legal matters with the appropriate professional. Investing involves risk, and you may incur a profit or a loss regardless of the strategy selected. No investment strategy can guarantee your objectives will be met. The projections or other information generated by investment planning software regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time.