Retirement isn’t a static thing, and your retirement needs aren’t either. How much will you need? Nobody can say with 100 percent accuracy. There are too many factors to consider. But good retirement planning advice helps you cover all your bases.
Retirement spending isn’t the same from person to person, but neither is it the same from year to year. Just as you’ve changed throughout life, you’ll continue to do so from the first day you’re officially retired throughout all of your golden years.
Want to know “how much money do I need to retire?” Consider these three factors:
1. How Much You Earn Pre Retirement Partly Determines How Much You Need to Save
You’ve probably read about standard savings guidelines. One financial expert might advise saving 70 percent of your annual income for each year of expected retirement, while another might recommend a higher amount. But those are just guidelines.
The truth is that retirement savings needs are determined by many factors, and your income is one of them. Generally, the lower your annual pre retirement income, the higher percentage you’ll need to save if you want to maintain a similar lifestyle.
Fidelity Investments suggests that the income replacement ratio varies greatly depending on what you earn before retirement. For example, if you earn $50,000 annually or less before retirement, you’ll need about 90 percent of that salary saved for every year of retirement. If your pre-retirement earnings are higher, closer to $120,000 annually, you’ll need about 70 percent.
2. Every Retiree’s Lifestyle Goal isn’t the Same
Most retirement advice mentions maintaining a certain lifestyle. But your idea of a good retirement might be very different from someone else’s. You might be frugal and look forward to slow-paced years and simple pleasures. Or you might anticipate extensive travel and living it up.
Also, your choices will probably change through the years. New retirees are in what Bob Carlson of Retirement Watch calls the “honeymoon period.” Retirement is new, and retirees are generally younger and healthier. There’s money to spend, places to go, and things to do.
After the honeymoon period settles into more of a routine, spending usually levels off, at least for a while. Expenditures are often lower than they were immediately after retirement, and this period can coast along until about age 75.
When considering how much you need to save for retirement, you need to really visualize what you want to be doing and how that will change over time and anticipate for those costs.
3. Spending Can Increase in Later Years
Later years can go a couple of different ways. Carlson explains that even healthy seniors over the age of 75 slow down on activity and spending. This could mean you’ll need less during this period to maintain the standard of living that you want.
However, this time could also bring higher expenses. Health care spending might increase, and as much as it’s unpleasant to think about, many retirees who haven’t planned earlier will spend on final arrangements. Steve Vernon for CBS MoneyWatch also lists long-term care, Medicare payments, and prescription drugs among expenses that can predictably go up.
On the other hand, Jean Chatzky writes for Fortune Magazine that the lower and higher possible expenses of later retirement might balance each other out. If there’s less spent on travel, spending more for medical could still result in a less dramatic change than you expect.
Maybe you look forward to a low-key retirement, or maybe you’re itching to see the world on nobody’s timeframe but your own. Or maybe your plans fall somewhere in between.
There’s no surefire way to know exactly what you’ll need for retirement; all you can do is predict and plan. But one thing is sure: The more you save now the better off you’ll be later, regardless of where and how you plan to spend your time. 
