Today’s question is: What is the magic retirement number? We often get this question from people. They will come in and ask us, “Hey, how much do I need to have saved up for retirement?”

I read an article recently in the Wall Street Journal where they talked about this and discussed that magic retirement number. That number ultimately was $1.46 million. Now, let’s take a moment to slow down. This was an opinion piece that surveyed individuals about their beliefs on how much should be saved for retirement.

The Real Retirement Number

In good news, the real answer is, “it depends.” It depends on your situation. We don’t go by any type of rule or metric that says you need to have a certain amount saved up. What’s most important for somebody in retirement is to be able to live their lifestyle. So, it is essential to assess your financial needs from two perspectives: firstly, understanding your lifestyle expenses and, secondly, determining the income required to meet those expenses.

Where Will Your Retirement Income Come From?

You’ll need to look at your income sources. Will you have a pension? How much is your Social Security benefit going to be? We could determine how those income sources, after tax, are going to cover those expenses.

Then, considering your nest egg, how much will you need to peel off of that to cover your expenses and maintain your lifestyle? We also factor in other things like inflation and making sure that expense number you know you can give yourself raises over time.

Create a Custom Retirement Income Plan

Instead of following a specific number or advice that suggests a one-size-fits-all savings target, it’s crucial to develop a retirement income strategy tailored to your unique lifestyle, income sources, and individual characteristics.