Experts say that you would probably need around 70% to 80% of your annual pre-retirement household income to retire comfortably. The retirement goal is a moving target because you just never know what you’re going to do. Below are the two factors that you need to consider when determining your retirement goals:

Personal Factors

Your household expenses
When you retire, you will probably have less obligations because your kids are all grown up and no longer lives in your house. In addition, your house is probably paid off or close to getting paid off. For most household, around 30% to 40% of the family’s income goes to their mortgage payments. Because of this, you would probably need less of your regular monthly salary.

What you want to do for retirement.
The other factors to consider are what else would you do for retirement? What kind of lifestyle do you want to have? Do you want to maintain your current standard of living ? Perhaps you want to travel more, or perhaps you would finally buy that season ticket for your favorite sports team.

How much do you need for healthcare
You may be covered by medicare but you may need to include to your budget some healthcare cost that may not be covered by your insurance.

How long do you expect to live
If you expect to live for 30 years after retirement, then you need to make sure that you account for this. With better medical technology and with people being health conscious, people are living longer than before. The last thing you want to do is run out of money.

Economic Factors

These factors are the ones that you normally cannot control because it is dictated by the financial market or economy.

Inflation Rate
When calculating your goal, you need to take into consideration the effect of inflation. We can only assume or estimate what the inflation rate is. On average, the inflation rate is around 3-4% per year.

Savings Rate
Once, you retire, chances are that you would be saving your money in a much safer account than what you used to have when you were saving for retirement. Depending on which savings account investment you put it, more than likely than you would be earning between 4% to 8% return on those.

Calculating How Much You Need.

It is tough to figure out how much you need because you just don’t know all the various factors. In addition, you need to take precaution on various retirement calculators and use it mostly for informational purposes only. One single adjustments could change your goals dramatically. But for illustrative purposes, let’s take a look at the calculator used here on this website.

For example, using the calculator with the following scenario:

Current Age: 35
Current Savings: Zero
Desired Retirement Age: 65
Current Annual Income: $100,000 (not included in the calculator)
Desired Annual Retirement Income: $70,000 (70% of current annual income)
Annual Income You’ll Need: $70,000 (70% of current household income)
Age at which savings run out: 90 years old (25 years from desired retirement age)
Yearly post tax investment return: 7% –
Expected Inflation: 3%

Based on the projectionsÂ entered, you will need total savings of

which is Â Â $1,093,546 in today’s dollars

Each individual’s circumstances are different. You may be younger or have a savings already to start with. Or you maybe making more or less money and the interest rates may be higher or lower.