July 23


Why You Need to Save Over $2.1M for Retirement: Understanding the Numbers

By Harrison O'Reill

July 23, 2023

Saving for retirement is a crucial aspect of financial planning, and the amount you need to save can vary depending on your lifestyle, goals, and other factors. However, it is essential to note that the amount you need to save for retirement is not fixed and can change over time.

In this example, we will explore why the amount you need to save for retirement has increased from 1.5 million to over 2.1 million. This might sound absurd, but stick around, and you’ll understand why.

Longer Life Expectancy

With longer life expectancy, individuals are likely to spend more years in retirement than previous generations. This means they will need a larger amount of savings to cover their expenses during this extended period.

The longer you live, the more time you will need to support yourself financially. You’ll have to account for not only basic living expenses but also healthcare costs, leisure activities, and unforeseen circumstances.

Moreover, inflation can erode the purchasing power of your savings over time. So, it’s important to factor in inflation and aim for a higher savings target to ensure that your money retains its value in the future.

Additionally, as life expectancy increases, the likelihood of facing health-related issues also rises. Healthcare expenses can be substantial during retirement, so having sufficient savings becomes even more crucial.

By recognizing the impact of longer life expectancy on retirement planning, you can make informed decisions about saving and investing. It’s advisable to start saving early, contribute regularly to retirement accounts, and explore other investment opportunities to grow your wealth.


Inflation refers to the gradual increase in prices over time, which erodes the purchasing power of money. This means that the same amount of money will buy you less in the future. When it comes to retirement planning, inflation plays a crucial role.

Imagine you have a fixed amount of savings for retirement. If inflation is 3% per year, the cost of living will roughly double every 24 years. This means that the amount of money you have saved may not be sufficient to cover your expenses in the future.

To combat the impact of inflation on your retirement savings, you need to save more. By increasing your savings, you are essentially compensating for the decrease in purchasing power caused by inflation.

This allows your savings to keep up with the rising cost of living and ensures that you have enough funds to sustain your lifestyle during retirement.

In addition to saving more, it’s also essential to invest your savings wisely. By putting your money into assets that have the potential to outpace inflation, such as stocks, real estate, or inflation-protected bonds, you can aim to grow your wealth and preserve its value over time.

Considering the impact of inflation on your retirement savings is crucial for long-term financial security. By factoring in inflation and taking proactive steps to save and invest accordingly, you can better prepare for a comfortable and worry-free retirement.

Healthcare Costs

Healthcare costs are a major factor in the increased amount needed to save for retirement. Medicare and general healthcare costs can add up quickly, and it’s important to plan for these expenses.

Whether it’s through an HSA or other means, it’s important to have a plan in place to manage these costs in retirement.


One of the biggest healthcare costs retirees face is Medicare. While Medicare is a great benefit, it doesn’t cover everything. For example, Medicare doesn’t cover long-term care, dental care, or eyeglasses. Additionally, Medicare premiums and deductibles can increase over time, which can add up to a significant amount of money.

Healthcare Costs

Healthcare costs, in general, are rising, and retirees are feeling the brunt of it. According to a recent study, the average 65-year-old couple retiring today will need $300,000 to cover their healthcare costs in retirement. This includes premiums, deductibles, and out-of-pocket expenses.

One way to manage healthcare costs in retirement is to consider a Health Savings Account (HSA). An HSA allows you to save money tax-free for healthcare expenses. Additionally, if you don’t use the money in your HSA, it rolls over from year to year, so you can use it in the future.

Retirement Planning

Retirement planning is an essential part of financial planning. It involves determining how much money you need to save to maintain your current lifestyle in retirement. There are several factors that can impact the amount you need to save, such as your current income, expenses, and lifestyle.

Saving for Retirement

The first step in retirement planning is to start saving early. The earlier you start, the more time your money has to grow. You can save for retirement through various retirement accounts, such as IRAs and 401(k)s. These accounts offer tax advantages and allow your investments to grow tax-free until you withdraw the money in retirement.

Retirement Plan

Having a retirement plan is crucial to ensure you have enough money saved for retirement. A retirement plan should include your retirement goals, the amount you need to save, and the investment strategy you will use to achieve those goals.

Your retirement plan should also take into account factors such as inflation, investment returns, and contribution limits.

Retirement Savings

Retirement savings are the funds you have set aside for retirement. It is important to regularly review your retirement savings to ensure you are on track to meet your retirement goals.

You should also consider diversifying your retirement savings by investing in different types of assets, such as stocks, bonds, and ETFs.

Retirement Income

Retirement income is the money you will receive in retirement from various sources, such as Social Security, pensions, and your retirement savings.

It is important to estimate your retirement income to determine if you have enough money saved for retirement. You should also consider strategies to maximize your retirement income, such as delaying Social Security benefits and annuities.

Overall, retirement planning requires careful consideration of various factors, such as your financial situation, retirement goals, and investment strategy. By starting early and regularly reviewing your retirement plan, you can ensure you have enough money saved for a comfortable retirement.


In summary, the amount needed for retirement is over 2.1 million due to various factors. The primary factors include inflation, healthcare expenses, and longer life expectancy.

Inflation is the biggest factor that affects the amount needed for retirement. As the cost of living increases, the value of money decreases, and retirees need more money to maintain their lifestyles. Healthcare expenses are another significant factor that increases the amount needed for retirement. As people age, they are more likely to require medical care, which can be expensive.

Longer life expectancy is also a contributing factor to the increased amount needed for retirement. People are living longer, and they need to ensure they have enough money to support themselves for a longer period. This means saving more money for retirement and planning for a longer retirement period.

To ensure a comfortable retirement, start saving early and regularly. It is also essential to factor in inflation, healthcare expenses, and longer life expectancy when planning for retirement. By doing so, retirees can avoid financial stress and enjoy their golden years.

Frequently Asked Questions

Here are some common questions about this topic.

Why does the amount you need to save for retirement increase from 1.5m to over 2.1m in this example?

There are several reasons why the amount you need to save for retirement can increase from 1.5m to over 2.1m. One reason is inflation. Inflation causes the cost of goods and services to rise over time, which means that you will need more money in the future to maintain your standard of living.

Another reason is healthcare costs. As you get older, you are more likely to need medical care, and healthcare costs are rising faster than inflation. Finally, you may live longer than you expect, which means that you will need to save more money to support yourself in retirement.

How can I calculate how much I need to save for retirement?

To calculate how much you need to save for retirement, you should start by estimating your retirement expenses. This includes things like housing, food, transportation, healthcare, and entertainment. You should also consider any major expenses you may have in retirement, such as travel or home repairs.

Once you have estimated your expenses, you can calculate how much you will need to save by using a retirement calculator or working with a financial advisor.

What if I can’t afford to save enough for retirement?

If you can’t afford to save enough for retirement, there are a few things you can do.

First, you can try to increase your income by working more or finding a higher-paying job. Second, you can reduce your expenses by cutting back on non-essential spending. Third, you can consider delaying your retirement to give yourself more time to save.

Finally, you can work with a financial advisor to develop a retirement plan that takes into account your current financial situation.

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