Want To Retire In Comfort? Thanks To Inflation, The New Price Tag Is $1.5 Million

The golden rule of retirement used to be $1 million. The belief was, if you retired at age 65 and lived until age 84, then $1 million will probably be enough retirement savings for you. That number was once a symbol of extravagant wealth. However, $1 million is now the retirement savings goal for millions of Americans. With rising inflation rates and a higher cost of living, is $1 million still the target?

The new rule of thumb to retire comfortably is $1.5 million. This would give you an income of about $3.5k to $4k a month, which is enough for most people to live in comfort without having to cut back on their morning lattes. 

Of course, this number can change based on a person’s financial picture. If you can live in comfort spending only $2k a month, then the $1 million retirement goal could still work for your specific situation. 

If you currently make more than $100,000 a year (and spend in proportion to that), you’ll need to double your retirement savings to at least $3 million if you want to continue enjoying the same lifestyle post-retirement. 

Plus, women need to be especially careful. Historically, we haven’t been able to retire with as much as men (women work just as hard, but retire with only one-third of the wealth of a man) – yet we live longer. Women have a life expectancy of 80+ years, so it’s especially important for us to become money savvy enough to make the right decision for our financial future.

The key question to ask is: how much do YOU think you’ll need to retire with full financial freedom and the lifestyle you want? 

Add It Up

First, calculate how much you might need to cover your living expenses, based on your cost of living today. Think mortgage, rent, utilities, food, the basics. Tally it all up. 

Plan for Emergencies

Then, add a cushion for emergency savings and fun money. Emergency savings are a part of life. Fun money is for the post-retirement fun you want to have. Do you want to travel around the world? Pamper your grandkids endlessly? Invest in a philanthropic endeavor? Add it in. 

Use A Retirement Calculator

Finally, throw that number into a retirement savings calculator. It will help you factor in things like inflation, and investment earnings and confirm how much more you might need to save to ensure you have enough to retire. 

As a personal finance expert, I’ll be the first to admit: there’s no one-size-fits-all answer to retirement planning. If you don’t want to do the math, know that $1.5 million is the average retirement goal most people should aim for. But you are the only one who can decide if that’s truly enough for you to retire and live in comfort.