That depends on how well you wish to live in retirement and how many years you have before you retire. This Retirement Calculator can be helpful.
Some people think you will only need 80 percent of your current income when you retire since you won’t need work clothes, child care, etc. Others think you might need the same amount of money in retirement as you get when working. This is because of increased costs for health care, travel and entertainment. The notion of retiring and living on only a small percentage of your working wage is probably not a good plan. Who wants to live in poverty in old age?
How much should you save? One way to plan would be to take all your sources of income in retirement and add them up to get an idea of your annual income. These might include: social security, pensions, tax deferred savings plans such as IRAs or 401ks, investment income, or income from a part-time job. Add all this income up and compare it to what you make at present. Not enough? Better work on your savings plans. Maybe start by saving 10 percent of your income each year. After 30 years of saving and investing you might have a nest egg big enough to provide you all the income you need for a 30 year retirement. But who can tell the future? Maybe your investment results won’t be as good as was possible in the past. Maybe inflation will reduce the buying power of your savings. Who knows what could happen?
A common sense approach might be to save a minimum amount each year (say 10 percent) and use the rest to lead a reasonable lifestyle. Any extra money could then be used for additional savings for retirement.