According to an analysis that was published in February 2017 by Center for Retirement Research (CRR) at Boston College, 19 percent of those who were surveyed believe that they have enough money saved for retirement. In fact, they don’t, the analysis found. These overconfident savers might have fallen for the “wealth illusion”—seeing large numbers in a retirement-savings account but failing to equate that amount with their current living standard, CRR says.
To avoid this trap, you should use your current income to determine how much money that you have to have so you can retire securely, CRR researcher Geoffrey Sanzenbacher says.
With a goal to replace 75 percent of your current income each month in retirement, you should have in your retirement account a multiple of 9.4 of your current salary if you want to retire at age 65. (This assumes that you’ll receive Social Security.) The multiplier drops to 8.2 if you want to retire at age 67 and to 5.7 if you want to retire at age 70, Sanzenbacher says. These numbers are lower than are other benchmark estimates. Of course, your actual number also depends on how much that you plan to spend during retirement.