Saving for Retirement? 15% May Not Be Enough - 6 Points to Consider

By Sara


Last Updated: February 28, 2023


Saving for retirement is something we are all told to do.

The general advice is to save 15% of your income towards retirement. This is the 15% rule of thumb for retirement.

However, is this really enough to get you through retirement?

There may be other planning and savings you need to do to ensure financial security in your retirement age. 



6 Retirement Factors to Consider 

To know if 15% is enough for retirement, there are six factors to consider:

1. Age of Retirement

When you plan to retire can make your retirement planning look very different.

If you want to retire at an earlier age, you will need to save more than 15% of your income. 15% is just a rule if you work through retirement age.

When you plan to start receiving Social Security benefits also impacts this. If you want to wait for a later date to receive these benefits, you will also want to save more. 


2. Desired Retirement Lifestyle

Deciding what type of retirement lifestyle will also impact your savings plan.

You will need to maintain the lifestyle you choose to have through retirement. If you have a higher lifestyle requirement, you may want to choose to save more than 16%. 

Lifestyle factors can be:


3. Expected Retirement Expenses

To better plan for retirement, it’s important to estimate what your expected retirement expenses will be.

If you can list out expenses, you will know how much you need on a yearly basis and can plan towards a specific number of goals. If you have this number, you can then use it to see how much you should be contributing. It may be 15% or more. 


4. Inflation

When you are calculating how much to save for retirement, you need to account for inflation.

Inflation can diminish the value of your retirement savings. You want to be prepared for and save for inflation. 


5. Social Security Benefits

Planning to use Social Security benefits as part of your retirement savings?

You need to make sure you understand how these benefits work and how much to expect to receive. You don’t want to estimate too high and rely on that amount coming in to be worried during retirement if you don’t get that amount. 

Your benefits can be determined by:

  • Your age
  • Earning history 
  • And other factors 


6. Health Care Costs

Factor in health care costs as part of your retirement plan. Healthcare expenses usually rise in retirement. 

Important costs to consider are:

  • Health insurance
  • Prescription medication 
  • Long-term care

Understanding your personal situation in relation to these factors can help you decide if 15% is enough or if you will need to save more. 



3 Strategies to Boost Retirement Savings

If you haven’t started saving for retirement yet or need to save more than 15%, there are three strategies to help increase your retirement savings


1. Increase savings rate

If you need to save more money, try increasing how much you are saving and put those savings towards retirement.

If you can raise your savings even by a small percentage, you will see the power of compounding. Small increases, especially at a younger age, can greatly impact your account. 


2. Start saving earlier

This may seem like a no-brainer, but so many people don’t think about saving for retirement until they are in their late to early forties.

You will have to save more than 15% if you are starting that late in life. The earlier you start, like in your 20s and 30s, the more you can expect your accounts to grow and compound.

You can save a lower overall amount and retire with more money than someone who contributed much more but later in their life. 


3. Delay retirement

If you are not at your retirement goal, consider delaying retirement for a few more years if you can.

This can give you more time to save and allow your accounts to grow. Delaying retirement can make a big difference in savings. 



Final Thoughts on Saving for Retirement

While saving 15% of your income is a great rule of thumb, there are so many other factors that will require you to save more than 15%.

Understanding how you will calculate how much you need in retirement, from lifestyle to healthcare, can give help build your strategy. If you need to save more than 15% or start late, find ways to boost your retirement savings as fast as possible. 

Photo by olia danilevich


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