What Should My Nest Egg Be When I Get Ready to Retire?

by Cindy Quarters

Saving money for retirement requires commitment, but if you stick with it you can have a happy, comfortable life when you retire. How much you need depends on many different factors. Some changes reduce how much you need, such as if you pay off your home, have children that move out, or move to a smaller home. You can estimate how much you should have, which will help you to be prepared.

Average Savings

The average American in his 50s has only $29,000 in retirement savings. This doesn’t even come close to the minimum needed, and can be expected to provide only $190 per month. Not only is that amount extremely small, but when inflation is factored in it will be of little or no help to the average retiree. The monthly rate also assumes a 5 percent rate of return on the investment, which might not be realistic, depending on the market and other variables.

Other Income

In addition to retirement savings, most people can count on some sort of supplemental income to help them after they retire. Social security payments are the most common source and will replace about half the income for low paid workers, and around one-third of the income for higher paid workers. This typically isn’t enough to live on, but it can help when added to any savings you might have. Pension plans can also add income for those who have them, and Medicare generally reduces the cost of medical bills for those over 65.

Savings Requirements

There are many different opinions on how much money you should have for retirement. Some retirement planners suggest you should have between 70 percent and 85 percent of your pre-retirement income available to you after you retire. This figure doesn’t factor in things such as no more mortgage payment, children who have graduated from college, and other factors that reduce expenses. When the kids move out, you can drop about $12,000 per year from your current expenses.


The main concern when you retire is to ensure that you are able to live a comfortable lifestyle that is comparable to how you lived while you were working. There is no simple formula to tell you how much you will need, but a good rule of thumb is to have enough savings so that you will get at least 65 percent of your current monthly income from a combination of your savings, social security and any other sources you may have. To do this you will probably need a nest egg of at least $300,000 by the time you retire, but of course this varies depending on what your income is now, and your lifestyle.

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