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Not necessarily. If you’ve calculated how much savings you’ll need in order to retire comfortably, and the number is dauntingly, impossibly large, you’re not alone. Many, perhaps most, Americans have that reaction. Don’t let it scare you away from retirement planning or use it as an excuse to do nothing. There are several reasons to believe you’ll reach your retirement goals after all.

First, keep in mind that you don’t actually need to save that much at all. You need to save only enough that, when invested in the financial markets over time, will grow into the amount you need. And if you still have some working years left before retirement, you very well may be underestimating the extremely powerful effect of compounding.

Second, if you’ve used a “rule of thumb” approach to estimate your retirement needs, remember that those rules almost always build in assumptions for the sake of simplicity – and your situation may not match those assumptions. To get a better estimate of much you may really need, try T. Rowe Price's retirement calculator.

Calculator: Are my current retirement savings sufficient?

Many methods of projecting your retirement needs also assume that you’ll need to maintain your current level of expenses or something close to it. (Many experts use 70% to 80%.) That’s all fine if you’re trying to make some conservative back-of-the-envelope projections. But again, there’s little reason to think that approach will capture the nuances of your particular situation. If you are currently paying for a child’s education, funding elder care for your parents, or making payments on a home that will eventually either be paid off or unnecessarily large, for example, it’s very possible that your expenses will decline dramatically in retirement.


Working part-time can help, too. But the problem is that you don't know if you'll have the interest or energy to work at an advanced age - or if you'll have health problems that prevent it. You also may have a tough time finding an employer who wants to hire you in your later years for the amount of money you want to earn. So pinning your entire retirement strategy to working in your 70s or beyond isn't such a great idea.