Retirement Savings: 8 Signs You Miscalculated How Much You Need

Senior couple having a hard time at home, calculating incoming bills and debt.
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Retirement planning can be overwhelming, and understanding exactly how much money you’ll need can be difficult without professional help.


A recent GOBankingRates survey revealed that most Americans don’t have enough money saved for retirement. Almost half (48.6%) of those surveyed had less than $10,000 in their nest egg. And 28.5% had absolutely nothing saved.

Miscalculating how much money is needed can have profound effects on your life, and that’s why it’s important to recognize the warning signs now.

Even if you don’t know exactly how much you’ll need in retirement, these are common telltale signs that you may not be saving enough.

You’re Not Considering Inflation

The price of goods and services in the United States rises approximately 3% annually. This is known as inflation.

When you’re working, you’ll likely receive salary increases to keep up with price increases. Unfortunately, you don’t have that luxury in retirement. All you have is the amount of money you’ve saved. 

When saving for retirement, you should consider that things will cost more over time. If you have $100,000 saved for retirement, it will likely be worth about 60% less in buying power over a 20-year period. 

You’re Not Considering Taxes

Taxes can take a large percentage of your retirement income. For example, when you withdraw from a 401(k) or IRA, you must pay income taxes on that withdrawal. 

Make Your Money Work Better for You

A combination of taxable, tax-deferred and tax-free accounts can give you more options. This is why Roth IRAs are so popular for retirement planning. You’ll pay taxes today on your investments, but then you can withdraw money in retirement tax-free.

You Haven’t Factored in Large Unexpected Expenses

Not factoring in large expenses in retirement is a common problem.

Things like a new roof on your home or a new car if yours breaks down are unexpected, and they can cost thousands of dollars that you probably hadn’t budgeted for.

To ensure you can cover these expenses without feeling a financial pinch, be sure to include it in your savings plans. 

You Haven’t Factored in Large Healthcare Expenses

As you get older, there are added healthcare costs you should account for as well. No one likes to imagine that they will have health problems in the future, but it’s important to plan for them in advance. 

You may need additional healthcare services like assisted living, frequent doctor visits, surgeries or medical devices as you age. These costs can be extremely high if you don’t have good health insurance.

Even with health insurance, you may still need to pay out of pocket for copays, deductibles or anything not covered by insurance. In this case, it’s best to plan for the worst and hope that you don’t need it. 

Make Your Money Work Better for You

You’re Living Beyond Your Means

Most retirees live on a fixed income thanks to the savings in their retirement portfolios. Because you aren’t earning an income during retirement, living a high-cost lifestyle can quickly run your accounts dry.

Downsizing and keeping a budget are easy ways to lower your cost of living without disrupting your lifestyle too much.

You Don’t Have a Monthly Plan

Having a monthly plan of where your money will be spent is important for financial planning at all life stages, but especially when planning for retirement. If you don’t have a monthly plan, you can easily end up overspending, leaving your retirement accounts in a less than ideal situation. 

“It’s absolutely impossible to correctly calculate how much you need without a detailed spending plan or projection of future expenses,” says Joe Allaria, partner at CarsonAllaria Wealth Management and host of the Retirement Powerhour Podcast

Allaria went on to discuss how some people lose some big expenses in retirement. If you’ve paid off the mortgage on your home, this will be a large expense removed.

But you’re also going to have new expenses. Things like additional medical expenses, maybe more traveling, or long-term care. 

“If you haven’t outlined a spending plan, you’re flying completely blind,” says Allaria. 

You’re Underestimating Your Life Expectancy

According to the Social Security Administration, about one in every three 65-year-olds will live to age 90. If you only saved enough money to cover expenses for 20 years of retirement but end up living for 30 years, you’ll need to find a way to stretch your savings further or risk running out. 

Make Your Money Work Better for You

You can use life expectancy calculators to estimate how long you may live based on your health and family history. However, no one knows exactly how long they will live. It’s best to overestimate how much money you’ll need. 

You Have a High Amount of Debt

If you currently have a lot of debt, this may cut into your ability to save properly for retirement. If your debt has high interest rates (like credit cards), it may take longer to pay it off and prevent you from savings as much as possible for your golden years.

Make your debt payments a priority now, and avoid accumulating additional debt once you retire. 

The Bottom Line

Saving enough money for retirement can be difficult because most people don’t know exactly how much they’ll need. But by creating a plan based on how much you expect to spend, you’ll be able to save more effectively. The end result will be a more comfortable retirement. 

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