How Much Will You Need to Retire? Here’s The Truth About Those Retirement Calculators

How much do you need to retire? The answer depends on many factors, the most important being you. Just like no two people are exactly alike, no two retirement plans are alike. This is why you should be skeptical about retirement calculators. They are too general to be practical. Why?

Do Retirement Calculators Work?

A hundred years ago, Emmert Wolf 1 wrote that “a man is only as good as his tools.” That statement is as true today as it was then. Any job is worse without the right tools. You can’t hammer a nail with a screwdriver, nor write a novel with a large paintbrush. 

Any tool is only as good as the person using it — likewise with retirement calculators. Like mortgage calculators, car loan calculators, and other predictive tools, retirement calculators appear everywhere on the internet. Yet, they are only so useful. 

How Retirement Calculators Work

Most calculators require a dozen or so “inputs” from you, and they crunch your inputs with market assumptions, such as annual inflation, salary increases, investment returns, and taxes. A typical calculator will ask you for:

  • Current age
  • Annual income
  • Current savings
  • Monthly retirement spending
  • % of pre-retirement income
  • Other expected income
  • Desired age of retirement
  • Life expectancy
  • Investment rate of return

For example, one popular calculator predicts your retirement “nest egg” in today’s dollars and predicts how long it will last in retirement. They assume you’ll get a 2% salary increase, along with 3% inflation, 6% investment returns before retirement and 5% return post-retirement. 2

Sounds good, right? Eh, maybe. This was one of the simpler models. Others include ways to adjust for lower expected needs due to Social Security offsets. And some even factor in where you will retire, taxation, and pensions. Few include life insurance products like annuities or cash value. Still fewer account for the payoff of mortgages and other major loans. And not one was found that accounts for healthcare, which is odd considering the major role it plays in the senior lifestyle

Now think! If scientific calculators did not have consistent formulas for important measures, would scientists use them? Would teachers use them to teach calculus, trigonometry and other complex math topics? Surely not. 

Should You Rely on Retirement Calculators

No retirement calculator can account for changing behavior and attitudes and — as we learned in 2020 — for unexpected global events that result in an unprecedented impact. For that, you need a human, specifically someone who understands both finance and human nature. Look for a financial advisor who will look at your history, your risk tolerance, your family plan, and your goals for retirement. No calculator could ever replace the human element in planning for our future.

Most financial calculators assume you will continue to live the same lifestyle in retirement as you do now. But, really, how many of us want that! To use the current day as a basis for retirement planning is like starting with a false target. “Shooting blind” is another way to put that. 

How Much Do You REALLY Need to Retire? 

Why do so many financial calculators use today’s lifestyle as a basis for financial planning? Mostly because that is all most people can grasp. Few can imagine living better than they are now and even fewer imagine they will do worse. 

Yet, the facts are that retirees as a whole are better prepared than a generation ago. Yet, nearly half have nothing saved towards retirement.3 This means they will live on Social Security alone or continue working. Either way, the standard-of-living prospects for this group is dismal.

For those who are late to the game and starting now to plan, a common question is, “How much do I need to retire?” In fact, most ask something along the lines of, 

  • Can I retire at 55 with $300K?
  • Can you retire with $2 million?
  • How long will $500k last in retirement?
  • How much monthly income do I need to retire?
  • Can I live off the interest of 2 million dollars?
  • How much should you have in a 401k to retire?
  • How long will 800k last in retirement?

And those keeping up with the Joneses ask,

  • What is the average 401K balance for a 65-year-old?
  • How much does the average 60-year-old have saved for retirement?
  • Does 1 million dollars make you rich?

The rich dad in Robert Kiyosaki’s Rich Dad, Poor Dad, famously asks, “If you stopped working, how long could you survive?” It’s a valid question and one that strikes at the heart of retirement planning. This question highlights the better questions people planning retirement should ask:

  • How do I figure out how much money I need to retire?
  • How much should you have saved for retirement by age 30, 40, 50, etc.?
  • How do I know if I have saved enough for retirement?

Even better questions include:

  • How much do I need to retire on $100,000 a year?
  • How long will retirement savings last?
  • What age is the best time to retire?
  • How can I retire early with no money?

Now note that questions such as these can never be answered by a financial calculator. These questions require the input of someone skilled in financial planning. These are the questions you ask your Lundervold Financial planner

Kiyosaki’s Rich Dad’s question provides a clear guideline for true fiscal wealth. If all one needs to cover their cost-of-living is $1,000 per month, then under Social Security, they will be wealthy. Their needs will be met and they will even have a bit extra at the end of the month.

If, however, one requires $2,000 per month on which to live, they had better start planning. The average Social Security check-in 2021 is $1,543/month, according to US News.5 

The best way to make sure you have enough for retirement is to meet with a financial advisor as soon as possible. Call Lundervold Financial at 651.209.1906 to speak with Ryan or arrange a time to meet

We can help. And yes, there WILL be some math involved. But fear not! We like doing math. 

We are an independent firm helping individuals create retirement strategies using a variety of insurance products to custom suit their needs and objectives. This material is intended to provide general information to help you understand basic retirement income strategies and should not be construed as financial advice.

The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.

Neither our firm nor its agents or representatives may give tax or legal advice. Be sure to speak with a qualified professional about your unique situation.

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC. AEWM and Lundervold Financial are not affiliated companies. 873373-4/21


1 Matthew Stublefield. Adaptavist. Feb. 27, 2019. “A Tool is Only as Good as the Team Using It.” Accessed Feb. 8, 2021. 

2 Nerd Wallet. Retirement Calculator. Accessed Feb. 8, 2021.

3 Allison Schrager. Manhattan Institute. Sept. 29, 2020. “Issues 2020: Are Americans Prepared for Retirement?” Accessed Feb. 8, 2021. 

4 Robert T. Kiyosaki. 1997. “Rich Dad Poor Dad.” ISBN-10: 1612680178.

5 Emily Brandon. Money at US News and World Report. Jan. 11, 2021. “How Much You Will Get from Social Security.” Accessed Feb. 8, 2021.

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