It’s the question that haunts many of us: how much money do I need to retire comfortably? There are endless rules of thumb out there—some tell you to save 10 times your salary, others suggest you need more, but how accurate are they? According to financial expert Jean Chatzky, the answer is more nuanced than simply following a number. Let’s dive into what she says and why it matters to you.
The Benchmarks You’ve Heard About
You’ve probably heard that saving 10 times your salary by age 67 is the magic number. Companies like Fidelity advocate for this guideline, but is it truly a one-size-fits-all approach? Chatzky doesn’t outright reject these benchmarks, but she does urge people to understand what’s behind them. For example, Fidelity’s advice is geared toward people earning between $50,000 and $300,000, and it’s designed to replace 80% of your pre-retirement income.
Chatzky acknowledges that these benchmarks are appealing—they’re easy to grasp and provide a target to work toward. But she also points out a crucial reality: not everyone can meet those targets, and that doesn’t mean you’re doomed to a poor retirement. The important thing is that you understand the math and work with what you’ve got.
Focus on the Process, Not the Numbers
So, if it’s not about hitting some magic number, what should you focus on? Chatzky’s advice is simple: consistency. She recommends saving about 15% of your income each year for retirement. That includes any employer matching contributions to your retirement savings, which can be a big help. By sticking to this savings habit over time, you’ll be in a strong position to meet your retirement goals.
Of course, hitting this percentage might sound daunting, especially if you’re starting later in life or you’re nowhere near the target. Chatzky’s advice here is pretty reassuring: It’s better to focus on the process and build up savings steadily than to get discouraged by some far-off number that feels unattainable.
Retire Without Expecting to Cut Back
Another big myth that people often buy into is the idea that retirement automatically means lower expenses. Sure, you’re no longer commuting or spending money on work lunches, but that’s not the full picture. Chatzky argues that most people retiring today are healthy and planning for long, active retirements, and with that comes expenses. People want to travel, renovate their homes, or help support adult children or grandchildren, all of which cost money.
In fact, research from JPMorgan Asset Management shows that spending often goes up during the first few years of retirement, not down. This comes as a surprise to many people who assume they’ll automatically be able to live on less. According to Chatzky’s comments to Yahoo Finance, the assumption that you’ll need 20-25% less in retirement than before is a dangerous one, and it can leave people unprepared for the reality of what retirement costs.
What’s the Bottom Line?
When it comes to retirement planning, it’s clear that the “rules” aren’t as straightforward as they might seem. There’s no magic number, no secret formula that fits everyone. The key takeaway from Chatzky’s insights is that retirement savings should be about building healthy financial habits over time. While you may not hit the 10-times-your-salary target, saving consistently and planning for the lifestyle you want is far more important than chasing a specific figure.
Chatzky’s advice doesn’t just focus on hitting a number. It’s about preparing yourself for the long game, staying disciplined, and being aware that retirement might not look like what you expect. With the right mindset and steady saving, you’ll be better equipped to enjoy your retirement, no matter what you’ve got in the bank.
