How much do you need to save for retirement?

My husband and I were cooking dinner a few nights ago. I said something about retiring to a cabin in the mountains. Then we laughed and laughed at my joke… that we’d ever be able to retire. 

I’m kidding. We’re totally going to be able to retire and so are you. But if you’ve ever wondered about the ins and out of saving for retirement I have a quick little list for you. 

Figure out the lifestyle you want.

Do you want to stay kind of the same but a little more comfortable? Maybe live in a tiny house? Or on the beach? Or maybe you want to travel? 

Determine how much your lifestyle will cost per year.

What will your living expenses be? Determine things like housing, travel, utilities, spending, medical and other costs.  

Then multiply that by 25.

Lifestyle cost x 25 = How much you need to save. 

That’s how much you need to have in your retirement. 

Wait what??? I’m so confused. 

Okay, let me break it down further. If you currently spend $45,000 a year total (groceries, housing, miscellaneous spending) you will multiply that by 25, you will get $1.1 million. That’s your goal. 

If that number sounds completely overwhelming or unobtainable - deep breath. 

You likely still have time. Here are a few things you can do:

Increase your contributions

Take full advantage of your employer match (even if you’re still paying off debt. Dave Ramsey is wrong about this. Period. I said it and I won’t take it back.)

Look into low-fee index funds (Investopedia is an AWESOME website for more information on this.)

Bankrate has an awesome calculator to help you figure this out a little bit better.