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pexels monica silvestre 1034597We all know that we need to save for retirement—it is what our parents told us and our grandparents before that, with the golden rule being to save at least $1 million. The reality is you may need double that.

Retirement looks different these days than it did for previous generations. Understanding how will allow you to better calculate what you will truly need in retirement, how that stacks up against what you have saved so far, and what you need to do to get those numbers to ultimately align. Here are five things to consider when determining how much you need to retire.

Longevity: It is natural to think of age 65 when we think about retirement. But there is a second age you need to think about: the age at which you will die. Due to increasing life expectancy, there is a good chance you or your partner could live into your 90s. That means you will easily need 25 to 30 years of income, and with fewer and fewer companies offering pensions, the burden of minimizing your longevity risk falls on you. This should impact your strategy. Taking on a little more risk by having more of your money in stocks may not be the gamble it once was. Waiting until age 70 to collect Social Security might be another move to factor into your planning. If your full retirement age is 66, waiting those 48 extra months will increase your monthly benefit by 32%.

A realistic budget: People typically assume they will not need quite as much money in retirement. But assuming you only need 75% of your current annual spending might be a mistake, especially if you still have a mortgage or other forms of debt, want to travel or take up an expensive hobby, or develop a medical issue.

Debt and your house: The more debt you bring with you into retirement, the more expenses you will obviously have. Make it your goal to enter retirement with your credit card debt and school and car loans paid off. If you will still be paying your mortgage in your retirement years, factor those monthly payments into your retirement budget. If your mortgage will be paid off, it is important to know that housing is still typically one of the biggest expenses in retirement due to taxes and home maintenance costs. The Bureau of Labor Statistics reported that in 2019, Americans ages 65 and older spent an average $17,472 a year on expenses tied to housing.

Health care: Medicare is not a free ride, and a 2020 survey found that roughly 65% of Americans don’t feel knowledgeable about how much money they’ll need to cover health care costs in retirement. The upshot: a lot. Depending on which parts of Medicare you choose to enroll in, you may have to pay monthly premiums and deductibles or co-pays. In fact, it’s estimated that the average couple’s medical costs in retirement will be $295,000 in today’s dollars. And that does not include the expense of long-term care, which is not covered by Medicare. If you have an HSA, max out your contributions now if you can, as those funds never expire and can be used tax-free in retirement.

Taxes: You will still have to pay them, and in ways that might surprise you. For instance, up to 85% of the Social Security benefit you are paid each month could be taxable, depending on your overall income. You will also pay taxes on most pension income and on withdrawals from your 401(k) or traditional IRA. How much you pay is tied to the tax bracket you fall in each year. You will also continue to pay taxes on dividends, interest income, or capital gains as you always have done. Factor these things into your retirement saving goal and aim for a mix of taxable accounts; tax-deferred accounts like 401(k)s and IRAs; and tax-free accounts, like Roth IRAs.

It is a lot to consider but doing it now will help reduce the number of unexpected financial curveballs in your golden years—while also making sure those golden years look as golden you hoped they will.

Learn more about how SmartBank can help you save for retirement here.