How much do you need to retire?

Planning ahead can improve your chances of living the retirement lifestyle you desire.

How much you need to retire depends on your unique vision for retirement. "Retirement is a personal thing," says financial advisor Jim Schaffer, principal at Cleveland-based Waypoint Partners. "No rule of thumb works for everybody."

Determine a figure that works for you:

Step 1: Consider your retirement lifestyle

Don't start by looking at a number. Instead, ask yourself how you want to spend your retirement, with questions such as:

Where will you live?
How will you spend your time—volunteering, golfing, caring for grandchildren or other activities?
Do you have a hobby you want to pursue, possibly as a second career?
Do you plan to travel? How often?

With the answers to these and similar questions, you'll have a better understanding of what you may need to save to help achieve your goals and your vision.

Step 2: Design your long-term plan

Next, consider the income you can expect from sources such as Social Security, pensions and part-time work. Use that information to zero in on your total savings target—then make a plan to reach it.

First, it's important to consider your goals and what your expenses may be in retirement. Here's something to keep in mind: In a recent survey, the median response among financial professionals indicated that individuals need to save approximately 15 percent of their pay, including their organization's contributions (if applicable), to have enough income during retirement, assuming they begin saving for retirement early in their career.*

Step 3: Review your investment choices

Take time to review your current investment choices and decide if you want to make any changes. How your contributions are allocated can potentially make a big difference in the amount of savings available at retirement. As you review your accounts, consider your tolerance for risk and how actively involved you want to be in managing how retirement funds are allocated among investment options.

Generally the sooner you begin to plan and save for retirement, the better your chances of realizing your goals. "Most people get to retirement and only then set about figuring out what they want to do," says Schaffer. The ones who are more likely to be successful "are the ones who ask questions early on."

Take action today.

Use our interactive retirement planning tool. It can help you evaluate your current retirement savings as you determine the actions you may need to take, over time, to help save for a more secure retirement. It's quick, easy, and it's all online!

Fast Fact: According to the March 2010 Retirement Confidence Survey from the Employee Benefit Research Institute, less than half of workers (46 percent) say they and/or their spouse have tried to calculate how much money they need to save for retirement.**

*Research with Financial Advisors, June 2011, conducted by Harris Interactive on behalf of the Principal Financial Group^®. When looking at all responses in the survey, the median is the middle of the responses given.

**Source: Employee Benefit Research Institute, 2010 Retirement Confidence Survey [http://www.ebri.org/pdf/PR.868.9Mar10.RCS-10.Final.pdf]

Jim Schaffer and Waypoint Partners are not affiliated with the Principal Financial Group or any of its member companies.

Insurance products and plan administrative services are provided by Principal Life Insurance Company a member of the Principal Financial Group^® (The Principal^®), Des Moines, IA 50392.

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