How to Find Out If You Will Have Enough Money Saved to Retire

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When financial advisors tell people the standard rules of thumb, like they need to have at least ten times their final salary saved by the time they retire, people throw up their hands and walk away.

When you hit your fifties, you should think about your financial picture for retirement. Some people do their retirement planning much earlier than their fifties, but if you have not already sat down and taken a hard look at your assets, debts and the income and expenses you will have after you quit the day job for good, now is the time. You need to know how to find out if you will have enough money saved to retire.

Standard Advice Debunked

When financial advisors tell people the standard rules of thumb, like they need to have at least ten times their final salary saved by the time they retire, people throw up their hands and walk away. Many people are lucky to make it from month to month. You might have a mortgage or rent, car payment and all the everyday living expenses. Many people help their children and grandchildren financially. Some people also help their elderly parents with costs, like paying for caregivers.

The fact is, many people can live comfortably in retirement with far less money than ten times their highest salary. During the years between now and retirement, do your best to pay off your mortgage, car and other debt. Add up how much lower your monthly bills will be, if you had no debt. You will likely find your needs will be much more manageable than you think.

Then use the Social Security Administration’s retirement planning tools to estimate how much your Social Security check will be when you retire. Add to this figure all other sources of retirement income, like pensions and investments. Your shortfall might be minimal, even allowing for inflation over the years.

Reasons People Do Not Save for Retirement

Some of the common reasons people do not save for retirement include:

  • The goal of saving ten times your highest salary seems so far out of reach, you give up.
  • You know people who died soon after they stopped working and never got to use the funds they sacrificed to accumulate.
  • You feel that scrimping and saving for a lifetime would be unacceptable – that is not the kind of life you want to live.
  • You love being active, so you do not ever want to retire. The problem with this mindset is many people must stop working against their will. They want to stay on the job, but they get forced out due to health problems, decreased marketability of their skills, their employer goes out of business or downsizes and other issues.

Do Not Despair

It is possible to save for retirement, even if you start in your fifties. Saving a little is better than not saving anything. If your employer offers a 401(k) or 403(b) program, have the money deducted from your paycheck before taxes.

Because making these contributions to your employer retirement account lowers your taxable income, it costs you less than face value to put money into your retirement account. For example, it will not cost you $100 after taxes to contribute $100 into your retirement account, because those contributions do not get taxed, until you withdraw them.

If your employer makes matching contributions, you are leaving money on the table every month you do not contribute enough to your account to get the maximum matching from your employer. Let’s say you make $100,000 a year. Your employer will match every dollar you put into your 401(k) up to seven percent of your gross salary.

If you contribute $7,000 a year to your savings, your boss will match that with $7,000, for a total of $14,000 a year. If a person in this situation does not contribute at least $7,000 a year, he will lose out on the free money of $7,000 a year from the employer. He will also pay higher income taxes and have nothing to show for it in retirement savings.


AARP. “Countdown to Retirement: 10 Years.” (accessed September 23, 2019)


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