Planning for the future can be stressful and overwhelming. That's why our three-part Retirement Power-Up Challenge is designed to give you the tools and confidence to see your retirement savings journey through. We will tackle your savings, investments, and mindset to help you build a future you can look forward to.

Part 1: Finding Your Freedom Number

Saving for retirement is hard enough — but what if you don’t even know how much you need to save? If that sounds familiar, you’re not alone. A 2024 SoFi study showed that three in four adults don’t know how much they need to retire.

I'm Sam Soland, senior writer at SoFi, and this week, I'll be walking you through our three-part Retirement Power-Up Challenge with one big goal: helping you save for the retirement you’ve always wanted.

Let’s start with the big question: how much do you actually need to save for your third act?

There’s no one-size-fits-all answer. But it’s easier than you think to get to a ballpark figure that can help set you on the right path.

Let’s find your freedom number – the amount of money that could help you achieve financial freedom in retirement . SoFi’s retirement calculator makes it super simple – you’ll just need to fill in a few details. It shouldn’t take more than five minutes. And if you don’t have exact answers, that’s OK, we’ve got suggestions.

Here’s all you need to get started:

•   Years until retirement: Maybe you have a specific number in mind. But if not, you can use the average retirement age in the U.S., which is 65.

•   Years of retirement: How long do you expect to be retired? It’s hard to predict exactly, but with average life expectancy around 76 for men and 81 for women in the U.S., most people plan for around 15 to 20 years in retirement.

•   Current annual income: Enter your current yearly income before taxes. Even if it changes over time, the goal today is to get a snapshot of where you are now.

•   Current retirement savings: This is what you’ve already saved across all your accounts. It’s an important baseline for calculating your freedom number.

•   Annual contribution for retirement: How much are you putting toward retirement each year? This includes any contributions to a 401(k), IRA, or other retirement savings.

•   Retirement income needed: If you have a number in mind, you can use a fixed dollar amount or a percentage of your current income. But estimating how much you'll need in retirement can be tricky. Rules of thumb like the 80% rule suggest you may need up to 80% of your income each year in retirement to maintain your current lifestyle.

•   Estimated annual returns: This is the percentage you expect to earn on your investments each year. The calculator defaults to 7%, a widely used benchmark based on the historical average of the S&P 500, the broadest U.S. stock market index.

Once you plug in these numbers, you'll see your estimated savings (what you’re on track to save for retirement), the amount you’ll need (your freedom number), and the savings gap between them.

Knowing where you stand today lays the groundwork for a retirement saving strategy.

In Part 2, we’ll show you a handful of financial tools to help you get to where you want to go.

In Short

Good Habit of the Day

Coming Up

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