Will I have enough money to retire?

You may have heard news outlets or personal finance sites say Americans should aim to put away $1 million or more for retirement. Meanwhile, the median retirement account balance is nowhere near that—it’s about $50,000, according to data from the Federal Reserve. So how much do you need? Creating a realistic retirement savings goal depends on your lifestyle, goals, location and more. To figure out if you’ll have enough money to retire, consider the following.

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Your comfort level

Your needs in retirement may differ from those in your working life. Determining the percentage of your salary you can comfortably live on is an important step. The Merrill Edge Personal Retirement Calculator can be a great way to figure that out.

Rule of thumb: You’ll need as much as 85% of your preretirement income to maintain your current lifestyle.

Source: Government Accountability Office

Your anticipated expenses

It helps to consider what you’ll spend your money on in retirement.

Living expenses


The average annual expenses (including out-of-pocket health care costs) for U.S. households headed by someone 65 or older.



The median debt for heads of household over 55, if they have debt.



Inflation (2% is the Fed’s target rate) can reduce the buying power of the money you have saved.

Length of retirement

20 years

The typical length of retirement is about 20 years, for now. It could be even longer in the future.

Sources: U.S. Bureau of Labor Statistics: Consumer Expenditure Survey, 2015; Employee Benefit Research Institute, 2015; Federal Reserve, 2015; Social Security Administration, 2016

Your anticipated income

Most retirees have more than one source of income. It helps to know what sources you can rely on.

This chart shows how most Americans fund their retirements.

Sources of retirement income for all households headed by someone 65 and older

20.9% Pensions

401(k)s, IRAs, pensions and annuities

32.2% Earnings from wages, salaries or self-employment

33.2% Social Security


$1,342 Average monthly benefit in 2015

9.7% Interest, dividends and other income

4% Other

(including public assistance)

Source: Social Security Administration: 2014 Income of the Aged Chartbook and 2015 Fact Sheet

Other key factors

There are many factors that determine how long a nest egg lasts, and you may be able to control a number of them.


Where you choose to retire matters a lot. Cost of living, taxes and more can fluctuate from place to place.

Ability to cut expenses

The things you bought while working, such as clothes or a car, might be sufficient in retirement, which can help keep your costs down.

Systematic withdrawal strategy

The amount you can sustainably deduct from your retirement savings depends on several factors, but a good rule of thumb is 4% annually.

Social Security claiming strategy

Waiting to claim Social Security adds up: Your benefit grows about 8% each year from age 62 until age 70.

Crunching the numbers

The numbers above may help you figure out how much you need to put away for retirement. Chances are it’s not precisely $1 million. If you’ve weighed your options and decided you need to start saving more, Merrill Edge has put together some tips to help boost your retirement savings, no matter your age. The important thing to remember is: It’s never too late to start a nest egg. 

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The material provided on this website is for informational use only and is not intended for financial, tax or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.

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