How Much Retirement Savings Should You Have by 67? A Big Financial Firm Gives a Clear Answer, but There's More to the Story.

Figuring out exactly how much you should save for retirement can feel very difficult. After all, this is a very high-stakes issue because if you underestimate what you need invested, you could end up a broke retiree.

There are rules of thumb out there to guide you in making this choice, though, including one rule that comes from a prominent financial firm.

The big question is, should you follow this blanket rule, or are you better off taking a different approach to setting your goals for your nest egg?

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Here's how much the financial firm says you need

According to Fidelity, you should have 10 times your salary by the age of 67.

This is based on the assumption that you will retire at 67. While that may feel like an oddly specific age, Fidelity assumed retirement at 67 because that is the full retirement age for Social Security for anyone born in 1960 or later. So, Fidelity assumed you would retire when you can claim your standard Social Security check without reducing it.

Fidelity's estimate is also based on the assumption that you plan to maintain your preferred lifestyle at the age of 67. It means that if your salary is $60,000 when retiring, you would need a nest egg of $600,000 to supplement your Social Security benefits and live comfortably.

This simple number should be easy to calculate, and it can be really tempting to accept it as fact because then you have a clear goal to shoot for during your retirement planning process.

There's more to the story

So, should you set the goal of saving 10 times your final income and just work toward that as you decide how much to invest in your 401(k) or other retirement account?

Not necessarily.

While this is an OK general rule to follow if you plan to just have a basic standard retirement, you may not want your retirement to be just an average one. In fact, there are many reasons why you may need to deviate from the blanket rule of saving 10 times your final salary, including if:

• You hope to retire early
• You have a disabled child or other disabled relative to support
• You anticipate having high medical needs
• You plan to move to an area with a higher cost of living
• You want to enjoy a lavish retirement

All of these could mean that you need more money in your retirement plans.

On the flip side, if you plan to move to an area with a much lower cost of living, sell your expensive family home, and no longer spend a fortune on private school and monthly activities for your kids, then you may need far less money than 10 times your final salary -- especially if you were making a lot of money to fund expenses for your kids who are grown and off on their own.

Ultimately, the best way to decide how much you need in your 401(k) or IRA is to consider what you want your lifestyle to look like in retirement. The more you hope to spend, the more you'll need saved to supplement Social Security and the larger your account balances need to be.

By taking your personal needs into account, you can decide on the savings number you need to have the retirement you want and deserve.

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