Retirement should be an achievement to look forward to, not a burden to fret about—but your financial situation when you enter your golden years greatly determines how enjoyable they will be. Unfortunately, the average American household has saved very little towards retirement according to the National Institute on Retirement Security.

 

In a recent report, they noted the median retirement account balance for all working-age households is a mere $3,000. While median saving increase to $12,000 for near-retirement households, 66 percent still have a savings balance less than one times their annual income—and that is far less than needed to support their standard of living after the paychecks stop.

 

How much should you save?

Ask several experts that question and each may give you a different answer. Some subscribe to the theory that you should stash away 11 times the annual salary you earn your last year of work if you intend to retire at 65. Others, including the Employee Benefit Research Institute, suggest saving 33 times what you expect to spend your first year of retirement minus Social Security benefits.

Of course, these equations are just estimates. It’s impossible to know how long you’ll live, you good your health will be, or exactly how much you’ll need to spend in retirement. It’s up to you and your financial planner to figure a savings goal with which you are comfortable. In the process, you’ll likely consider the questions.

 

Are you married?

If you’re married and have both been working full-time throughout your careers, you’ll have twice the Social Security benefits of someone who is single or a couple with only one wage earner. Saving should also be easier as a married couple with two incomes to live on.

 

Do you have children?

If so you may be saving for college expenses as well as retirement, and this will impact your savings plan. You may also want to leave an inheritance, in which case you may need to save even more.

 

Will you own your home by retirement?

The mortgage is one of most households’ biggest monthly expenses. If you’re still going to be paying on yours when you retire, you’ll need to figure those payments into your savings requirements.

 

What retirement lifestyle do you want?

Some people want to spend their retirement years traveling the world and having all the experiences they never had a chance to have while working. These people might need to save more. Others want to sit back and relax. They plan to spend less than they did before retirement and may need to save less as a result.

 

What can you expect in the way of inflation?

The rate of inflation fluctuates. Recently measured at 1.8 percent in June, it averaged 3.35 percent from 1914 to 2013. Some experts say you can expect inflation to cut your spending power in half over 30 years. You’ll need to save more to compensate.

 

How much will you really receive in Social Security benefits?

According to the Congressional Budget Office, Social Security will exhaust its trust funds in 2038 and may have to cut benefits by 19 percent to match the payroll-tax revenues estimated at that time.

 

What are your current savings?

If you’re like most Americans and have saved very little to date, your advisor may suggest a more aggressive plan to get you back on track.

 

When do you plan to retire?

If you retire before full retirement age, as determined by Social Security, you’ll receive reduced benefits. You’ll also have fewer years to save and earn interest on those savings. In general, the more years you plan to work, the less you’ll need in the bank when you retire.

All of these factors can have a huge impact on how much you’re able to save before retirement and what you’ll need in income to sustain a comfortable lifestyle afterwards. Talk to your financial advisor about performing a complete review of your finances to be sure you’re on the right track.

You can also use the AARP Retirement Calculator for a quick snapshot of where you are and need to be.