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# How Much toSave for Retirement?

Updated: Apr 6

## Easy, straight-forward guide to determine how much money you should put away for retirement

It's literally the million dollar question: how much money should we save for retirement? There are some super complex projections out there, as well as some really easy calculators. Which are the best tool to use? We think any of them... as a starting point.  (Ahem, we also have a pretty sweet—and easy—retirement tool in the Pocketnest app. Go ahead! Log on and take it for a whirl!)

### How to determine how much to save for retirement

Multiply your income by a factor

One rule of thumb is to multiply your retirement savings by up to 10X your annual income in the years nearest to retirement. The reason for socking away more money in the years closer to retirement is because you're likely making the most money in your final working years. That's right, all that hard work has paid off!

A more detailed approach is to use the factor rule is featured below, from Fidelity's Savings Factor Table. Each year, Fidelity Investments issues a table showing how much one should have saved for retirement, depending on your age, multiplied by a factor. Take a peek!

Source: Fidelity Investments

Aim for your portfolio to double every 10 years

Based on the Rule of 72, an appropriately allocated portfolio can double every 10 years, if it is getting a 7.2 percent return. Sure, that return might seem a bit aggressive these days, but again, this calculation is a good starting point.

To make sure those in the back heard us: it's possible to take the amount of your investments now, and aim for them to double every 10 years.

Let's take this calculation for a spin, shall we? Let's assume you're 35 years old and will retire 30 years from now. Let's also say you've saved \$50,000 and have invested in a properly allocated portfolio. It's reasonable to assume that this pot of \$50,000 can increase to \$400,000 over the next 30 years. To reach this pretty-penny-number, we assume that your savings will double three separate times over the course of the next 30 years—in theory, your savings could reach \$100K at age 45, \$200K at age 55, and \$400K at age 65. Hooray! 🎉

See why we're such big fans of planning for the future!? It literally pays for itself!

### What to tackle first when planning for retirement

If you haven't started saving for retirement yet, that's okay! Rather than beat yourself up for not saving "enough" or getting started "too late," we believe it's NEVER too late to start saving! #YouGotThis! (We can help.)

Step 1 - Use the table (pictured above) to gauge how you're saving for your retirement so far.

Step 2 - Based on what you have saved, or what you will have invested in the near future, use the Rule of 72. If your portfolio is doubling every 10 years, is your retirement savings fund nearing what you'll need come your golden years of retirement?

Step 3 - You can aim to generate 4 percent on your portfolio each year to generate enough cash for retirement. If your finances are properly allocated, this is a fine and totally acceptable assumption to make. This, plus your age and risk tolerance, is a similar formula we use in the Pocketnest app to help you determine how much you need to save for retirement, and at what age. That means that if you have \$1,000,000 saved by retirement, you can reasonably assume that \$40,000 in interest will be yours to spend without touching your principal.

Step 4 - Next, play around with the Pocketnest app's retirement calculator. (Or, you can skip the previous steps and pop right into the app to plan your retirement. We won't leave you hanging!)

Step 5 - Yep, you guessed it! Next up is start to save and invest as much money for your retirement as you possibly can! We recommend starting to save for retirement early. If you commit to a disciplined investment and savings strategy, and you evaluate it annually, you can set yourself up for a successful and worry-free retirement. And who the heck doesn't want that?!

Before you get bogged down in the details or feel like your retirement savings plan is an insurmountable goal, remember, planning for your retirement is a road map, not a destination! Log onto the Pocketnest app and we'll take you, step-by-step, through this plan.

Great news! The Pocketnest app is available! Download Pocketnest and get your finances in order—in just 3 minutes a week! No jargony finance-speak, pricey fees or in-person meetings required.

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