Most Americans are clueless about how much to save for retirement

If there were a single savings target that could guarantee a financially secure retirement, saving for that milestone would be much easier. But alas, there’s not, and so the best we can do is make educated estimates based on factors like anticipated expenses and lifestyle choices. And while most of us can’t nail down an exact savings number, we can still come up with a ballpark figure.

But most Americans aren’t there yet. In fact, roughly 30% admit they have no idea how much money they’ll need to retire, according to a new FinanceBuzz survey. Meanwhile, 45% say they have a vague idea as to how much to save, but they haven’t officially done the math. Only 25% feel they have a strong understanding of what their nest eggs should look like heading into retirement.

If you’re in the dark about how much to save for your golden years, consider this your wake-up call to start mapping out a potential retirement budget and seeing where it takes you. Here are a few specific items to account for.

1. The city you’ll live in

You might live in an expensive city now because it’s close to your job and offers amenities, like 4 a.m. food delivery, that you’re able to take advantage of. But once you retire, you might get away with relocating to a less hopping metro area, and one with a far lower cost of living.

Of course, if you’re years away from retirement, you may not be in a position to make that determination. But if that’s the case, figure out what your most expensive retirement locale looks like and factor that into your personal calculation. You’re better off overestimating your expenses than doing the opposite.

You might also consider whether you wish to own a home in retirement. In some locales, renting is cheaper than owning, especially if it means avoiding costly property taxes, maintenance and repairs. Again, you may be too young to decide how you’ll feel as a senior about home ownership, but if you do some research to see what it costs to own property in your area, you’ll get an idea of what you should be saving for.

2. The state of your health

Health care is a major expense for retirees, and its cost seems to grow increasingly astronomical from year to year. In fact, HealthView Services, a cost-projection software provider, estimates that a healthy 65-year-old couple retiring this year will spend $387,644 on medical care throughout retirement. For today’s 40- and 50-something couples, that number increases to $455,866 and $405,241, respectively, thanks to inflation.

Of course, different factors will dictate what your health care expenses wind up looking like. The key, however, is to be prepared, because health care is the one expense that, to a certain degree, is out of your control.

3. The age at which you retire

The longer your retirement, the more savings you’ll need to support yourself during your golden years. The average 65-year-old man today is expected to live until age 84, according to the Social Security Administration. Meanwhile, the average 65-year-old woman is expected to live until 86½. But these are just averages, and 1 in 3 65-year -olds today will live past 90.

If you’re planning to retire in your early 60s, you’ll need to account for the fact that you might have a 30-year retirement on your hands. On the other hand, if your plan is to retire closer to age 70, it’ll change the extent to which your nest egg needs to last.

4. Your desired senior lifestyle

Some people want to spend their retirement traveling the globe. Others are content staying local, spending time with family and friends and pursuing hobbies. The life you expect to uphold in retirement will affect the savings you need, so think about how you’re looking to spend your days.

Whether or not you’re willing to work in some capacity during retirement will also determine how much of a nest egg you’ll need. If you’re open to the idea of starting a business or turning a pastime you enjoy into a moneymaking opportunity, then you can get away with saving less for your golden years. But if you don’t want the pressure to work at all, you’ll need more in savings.

Err on the side of saving more

As a general rule, you should aim to set aside 15% to 20% of your earnings for retirement to ensure that you’re able to live comfortably. You can play around with these numbers, however, based on your specific retirement plans.

The key, either way, is to get a sense of how much money you should be setting aside for the future. The longer you remain in the dark, the greater your chances of underfunding your nest egg and winding up cash-strapped later in life.

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