7 Factors that Influence Your Retirement Savings

Based on today’s workplace, longer life expectancy, and escalating health care costs, we all are planning for retirement differently. Unfortunately, there is no magic number for the amount that you should have saved for retirement; leaving you to wonder how much you really need to save to maintain your lifestyle in your golden years.

Investor and research surveys recommend 85% of your ending salary should be saved for retirement. For example, if you are 45 years old and are steadily earning $80,000, you should have $240,000 saved for retirement. Although it is impossible to predict the future, we have 7 factors to consider to see how much you really need to save for retirement.

  • Age you start saving.

The age when you start saving is a factor that you can control. The earlier you start saving, the higher investment returns you will receive.

  • What age you will retire.

Consider your particular work and health situation to estimate how long you will be able to work into your life. Working longer will make it easier to reach your savings goals.

  • Income saved annually.

How you save is also another factor to consider whether it be with an IRA, 401K, etc. The earlier you enroll in a workplace savings plan, the best for your retirement savings.

  • Annual salary growth.

Salary growth is a good judgement of how much you will need to save to maintain your lifestyle. Don’t over estimate your salary growth as you cannot predict the future workplace, layoffs, and job switching.

  • Salary replacement in retirement.

How much of your ending salary you may need, weighs heavily on how much income you are saving annually prior to your retirement. It’s key to start saving as soon as you can.

  • Life expectancy.

It is impossible to predict your life expectancy, however it’s recommended to assume a lifetime of 92 years to save comfortably for retirement.

  • Expected rate of return.

This is one factor that you can’t control, but is important to consider. This is driven by your asset distribution and market performance. It’s smartest to make modest long-term return assumptions to be safe.

It is also important to realize your personal choices and lifestyle weigh heavy on how much you will need in retirement. Keep in mind, retirees typically spend a lot less on housing and a lot more on health care.


Photo Source: https://www.fidelity.com/viewpoints/retirement/what-to-spend-in-retirement

Photo Source: https://www.fidelity.com/viewpoints/retirement/what-to-spend-in-retirement

With so many market and health care fluctuations, you may have to make adjustments to your plan. Have you started a plan for your retirement savings? If you haven’t started already, use our savings calculator or check out our retirement accounts to get an idea of what you can do to build an effective retirement plan.


Abby Keibach
Abby Keibach

Abby Kiebach is the Chief Executive Officer at Lancaster Red Rose Credit Union. As the CEO of a community credit union serving Lancaster County, PA, she is dedicated to maintaining the strength and stability of LRRCU while providing personal member service to all current, and future, members. In her spare time, Abby loves to volunteer for a full range of local community organizations and spend time with her family.