Discover How Much You Need to Save for a Comfortable Retirement with This Simple Calculation!

When you retire, you lose your salary, which for many is their primary source of income. Although this is partially replaced by social security and possibly additional retirement funds, there’s usually a shortfall. To make up for this, saving during your working years is recommended since these savings will supplement your income later on. However, determining the exact amount needed for a worry-free retirement can be challenging. Alexandra, a personal finance expert who shares her tips on her Instagram account, @parlonsbudget_, offers some insights.

First and foremost, she clarifies: “There isn’t a universal perfect amount to save for retirement. The ideal amount depends on too many factors.” So, how does one calculate the amount they will need based on their personal situation? Alexandra, author of Managing Your Budget (to Enjoy It More!) (Larousse editions), suggests starting by estimating your retirement pension amount. She recommends visiting www.info-retraite.fr: “It’s an estimate, as the amount can vary if your salary changes, or if you switch jobs, etc., but it provides a starting point. Once you have this estimate, you can determine how much income you’ll lose and figure out how much is needed to maintain your current lifestyle.”

Next, list all your expenses, both fixed and variable, subtract those that will disappear (like a mortgage that’s been paid off), and add new ones that may arise (like higher health insurance premiums no longer partly covered by employers, healthcare and comfort expenses, home modifications for physical changes, etc.). “This way, you can determine how much is needed to bridge the gap between your salary and retirement pension each month,” Alexandra explains to Journal des Femmes. Then multiply this monthly amount by 12 to get the annual figure. For example, if someone earns a net salary of 2360 euros per month (the average net salary in the private sector in 2022 according to Insee) and is expected to receive a net retirement of 1512 euros (the average retirement amount in France in 2022 according to the latest figures from Drees), this results in a monthly shortfall of 848 euros. If their monthly expenses are calculated at 2000 euros, they would need an additional 488 euros per month to maintain the same lifestyle, or 5856 euros annually (not accounting for potential unforeseen expenses). This amount is not universal and will vary depending on individual situations, possible salary changes, conditions at retirement, inflation, etc.

Finally, there’s the challenging task of figuring out how many years to multiply this number by: no one knows exactly how long they will live, but it’s possible to use the life expectancy in the country as a guide. Nevertheless, as the expert points out, it’s crucial to plan generously to prepare for any unforeseen difficulties.

Moreover, Alexandra notes that “just because you’re retired doesn’t mean you should stop saving!” Regarding special projects one might have for retirement, such as traveling, she suggests this can be included in the regular “projects” savings that you continue to contribute to. In her monthly budget, she also reminds us not to forget to allocate funds for leisure: “Just because you’re retired doesn’t mean you stop living—quite the opposite!”