Do You Need $4.3 Million to Retire Comfortably? Today's Workers Seem to Think So

You're going to need savings to live comfortably in retirement -- there's no question about that. However, the amount of savings you'll need is a tough figure to nail down.

Let's say you're 35 years old and want to retire at 65. You might currently spend $5,000 a month between your mortgage, transportation, entertainment, and childcare costs. But who's to say what your expenses will look like in 30 years? Maybe your home will be paid off. Or maybe it won't be, or you'll have moved. Maybe you'll live in an area where you don't need a car. Or maybe you'll live in the middle of the woods where you need not just a car, but a truck with massive tires to navigate those roads during winter.

When you're years away from retirement, it's really hard to nail down a savings target for your IRA or 401(k). When you see data published along those lines, it can be pretty unhelpful.

A recent survey by New York Life, for example, found that Americans think it'll take around $4.3 million in savings to retire comfortably. And if you're thinking there's no way you'll be able to pull off a nest egg that large, well, you may or may not be wrong.

But that almost doesn't matter. Your best bet is to carve out your own savings goal and ignore what the surveys have to say.

A better way to set a retirement savings target

Fidelity suggests aiming to retire with a large enough nest egg to cover 10 times your ending salary. And while that's not a perfect formula, it's better guidance than telling yourself you have to come up with $4.3 million or you're doomed.

Of course, if you're only part way through your career, it can be tricky to determine what your ending salary will be. But you can make some educated guesses.

If you're 35 years old earning $65,000 as an editor, and you know the most seasoned editors at your company make $120,000, you can use that as a benchmark. It may not be exactly what you end up earning in your 60s, but it could be close.

From there, if you use Fidelity's formula, you'll see that you should be aiming for a nest egg of $1.2 million. That's certainly a lot of money. But it's not $4.3 million.

A goal that seems really off target

While today's workers seem to think that they'll need $4.3 million for retirement, the reality is that New York Life found the average actual savings balance among workers today to be about $135,000.

Now to be fair, someone in their 20s with $135,000 in their IRA or 401(k) might manage to get to $4.3 million by their 60s through large contributions and savvy investments. But people in their 40s and 50s with only $135,000 are probably not going to reach the $4.3 million mark in their lifetime.

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And that's okay. That figure really isn't one you should get hung up on. Instead, do your best to save consistently, and if anything, use Fidelity's formula to set a goal for your nest egg. The beauty of that guidance is that it's specific to you. And since it's your savings, that's an important thing.