I recently came across a visual representation of how much to save for retirement and what sort of income that savings might be able to provide. The visual looked at three different retirement income numbers and a few different scenarios. I’ll provide a link for you to check it out at the end of this post, but first I want to highlight what I thought were the most important things.

When you see these numbers, you might have one of two reactions. You might see this and think, oh good! Seems like I’m on the right track and everything’s fine. Or you might think, oh, I’m really behind. What am I going to do now?

If you have the second reaction, don’t let this ruin your day. Remember that these are just assumptions and not your specific financial plan. If you feel any sort of anxiety when looking at this information, do one thing that will give you a sense of progress in your financial life. A great way to fight anxiety is seeing small steps towards a goal. So, take one small step today. It could be listing out your accounts and how much is in each one. Then, see if you can save a small amount more into one of the accounts, or something like that.

Additionally, remember this is not specific advice to you. Talk to a financial professional before doing anything related to changing finances or updating your plan.

Factors to Consider

The big question is always how much should I save? And although this is just about the most frequently asked question, it never leads to a straightforward answer. It really is about the income. A few factors to be thinking about are:

• Lifestyle – how do you plan to spend your time later in life
• Downsizing – a lot of clients end up doing this because they’re still living in the same house that they have for 30 years and just don’t need the space anymore
• Medical Expenses – the average American, age 65-plus, spends roughly $11,000 on medical expenses each year
• Inflation – a lot of people will use 3 percent inflation across the board, but what if it was higher for an extended period of time? What would that look like for your plan?

Savings Scenarios

Before we get into the actual numbers, there are a few underlying assumptions. The big one is annual income. These projections assume that you’ll be using 70 percent of your current annual income. And that you’ll have a 7 percent estimated annual return on investments. Keep these assumptions in mind as we look at the numbers. Yours can look much different than this.

Scenario 1 is for an annual salary of $50,000 per year. 70 percent estimates a $35,000 need, coming out to about $778,000 saved in order to get that sort of income per year.

There are also numbers on the visual representation that look at what you need if you’re just now starting to save for retirement, 20, 25, or 30 years out, but I’m guessing you’re most likely in your 50s or 60s already so I won’t go into those here. If it is applicable to you, you can check it out on the infographic linked at the end.

Scenario 2 looks at somebody who’s making about $75,000 per year. Seventy percent of that number is between $52-53,000 per year with a savings target of about $1.17 million.

Scenario 3 is for someone making $100,000 per year and using the 70 percent assumption, we’re looking at about $77,000 per year. You’d need about $1.7 million.

Something important to remember. If you’re reading this and your expenses are close to one of these examples, please don’t just think, oh, I’m going to be fine. This is my retirement plan now and it looks like I’m going to be just fine.

It’s important to explore multiple scenarios that could happen in your life. Meaning that maybe this is Plan A, where a lot of the assumptions in these scenarios are true for you with the types of investment return and the amount of income you need.

But we both know that life changes rapidly and having a Plan B is crucial planning for the worst-case scenarios, or maybe just the unexpected. It isn’t fun, but it will give you more confidence if you do it. Mapping out different scenarios will end up giving you more peace of mind too. I actually recorded another video looking at a similar scenario to the $100,000 income. With just a few small changes, it really messed up the trajectory of their retirement plan. So, I’m sharing this with you just to give you some information that’s helpful and encourage you to talk to a financial professional.

If you’ve made it this far and you don’t see yourself represented in any of the above scenarios, I have a tool called the DIY Retirement Plan to help you map out more accurate numbers and give you some idea of what it could look like for you.

Click here to view the infographic on The Visual Capitalist.