Woman jogging up an incline for an article about retirement planning

According to a recent consumer survey, most Americans have very little — if anything at all — saved for retirement.

Fifty-six percent of Americans have less than $10,000 earmarked for retirement, which is not even enough to cover a year of day-to-day living expenses for most people. This is echoed by a survey Get Rich Slowly did with Experian earlier this year. In that national survey, 71 percent of Americans felt they weren’t saving nearly enough as they should for retirement.

How much is enough

The consensus among financial experts is that $1 million is a good end goal for retirement savings. This estimates a 4 percent yearly withdrawal rate or the equivalent of a $40,000 annual salary in retirement.

But each person’s needs differ. If you’re not sure how much you should save, here are some tips for figuring out your number and building your nest egg.

Determine your goals

The first thing every future retiree should do is review his or her assets and determine a savings goal for retirement.

Retirement savings calculators are a good place to start. These tools assess how much money you have saved in tax deferred and taxable accounts, your current tax rate and your projected rate of return over time, which can give you a ballpark of how much you need to save on a monthly or yearly basis to reach your savings target.

An even better way to determine your number is to estimate your living expenses and lifestyle needs in retirement. Will you still have a mortgage, car note or other debt? Do you plan to travel several times a year? Will you help your kids or grandkids pay for college? All these things should factor into your yearly retirement income. If these costs amount to more than $40,000 a year, then you’ll need much more than $1 million in retirement savings.

Know your income targets

Most people think they’ll need to replace 100% of their current income in retirement, but that will all depend on the type of lifestyle you want and whether you have a pension and Social Security to supplement part of your retirement income.

“If you plan on living a more lavish lifestyle in retirement than you did before retirement, you may need to replace more than 100% of your income. For most people that is unrealistic,” says Ramat Oyetunji, CEO & Founder of The FI Woman, a financial planning firm. “Evaluating your current expenses and determining which ones would no longer apply in retirement, is a good place to start in determining how much of your income you need to replace. One rule of thumb is to plan to replace 70% of income, but it depends on the individual.”

Start early for retirement savings

Whether you need to $1 million or more for retirement, start early and be smart about investing. With retirement savings, you need to consider not only how much things cost today, but how much you’ll have to pay for them in the future.

Putting all your money in safe, low-interest bearing accounts like CDs or annuities won’t help you beat inflation, but these savings vehicles should be part of your overall investment mix.

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Also invest money in tax-deferred accounts like a 401(k) or traditional IRA and maximize your contributions to take advantage of any employer match. Invest after-tax dollars in a Roth IRA and fund this account to the contribution limit each year, which will allow you to withdraw the money tax-free in retirement.

Don’t forget to diversify (and save)

John Foard, senior wealth advisor with Hobart Financial Group in Charlotte, N.C., says it’s important for future retirees to be consistent with their savings and to have a diverse portfolio that spreads out their risks.

“The best time to put money away for retirement is when you have the money. It doesn’t matter what the market is doing, as long as you’re consistent and you have the money do the investing” Foard says. “Do it like clockwork, month in and month out, and allow it to accumulate.”

GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, and more.