Retirement may seem far away, but the choices you make today determine the lifestyle you will enjoy later. A common question I hear is “How do I save enough to retire?” The good news is that it’s not about luck or guessing; it’s about consistently spending less than you earn and investing the difference.

The most-important factor when planning for retirement is how much you spend! The less you spend, the less you need to save. This is because you generally need to accumulate 20 to 25 times your annual expenses to leave the workforce.

With a diversified portfolio that is at least 70% stocks, you may be able to withdraw 4% to 5% per year from your portfolio and not run out of money. However, you need to make sure that amount, along with your other income, can cover all your expenses, including income taxes.

The best thing those preparing for retirement can do is to consistently live on less than they earn and regularly invest their savings. A great place to start your investing journey is your job’s retirement plan, especially if your company provides a matching contribution. You will eventually want to increase your savings rate beyond that point to ensure you reach your goal of 20 to 25 times your annual expenses.

Fortunately, many companies make it easy to increase your annual savings with “automatic escalation” options. This allows you to automatically increase your savings every year. Saving between 15% and 20% of your income by age 35 puts workers on a great path to meet their retirement savings goal.

Higher earners may need to save beyond their employer’s retirement plan to reach this goal. This is where Roth IRAs and taxable brokerage accounts come into play. The IRS imposes limits on how much you can contribute to your employer’s 401(k) or 403(b) plan each year. Those under 50 years old in 2025 can contribute a maximum of $23,500 to these workplace plans. Someone making more than $160,000 per year would need to use their Roth IRA or taxable brokerage account in addition to maximizing their workplace retirement plan to continue saving at least 15% of their income.

While saving and investing 15% to 20% of your income is a great target for a younger individual, this may not be enough if you start saving later in life. Those beginning in their 40s or 50s need to target a higher rate to reach their accumulation goal of 20 to 25 times their annual expenses. The good news is that these are typically their peak earning years, allowing mid- and late-career workers to save a significantly higher percentage of their income than they could when they were younger.

The key is to limit lifestyle creep as their income increases. Workers often allow their spending to rise along with their paycheck. While there is nothing wrong with rewarding your hard work, you still want to ensure you are saving enough to meet your future goals. Lifestyle creep not only limits the amount you can save but also increases how much you need to retire.

Remember, your retirement savings goal is a multiple of your spending. Increasing your spending by $20,000 per year means you would need an extra $400,000 to $500,000 for retirement. The good news is that the reverse is also true. Reducing your spending as you near retirement can have a dramatic impact on your retirement readiness. Doing so allows you to decrease your target savings amount while also turbocharging your savings rate.

Ultimately, saving enough for retirement comes down to how much you save and how much you spend. The earlier you start investing, the more you can benefit from compound interest, making it easier to reach your goal. However, if you begin later in life, you can still make significant progress by limiting spending and increasing your savings rate. Staying disciplined and making strategic financial decisions will put you on the path to a secure and comfortable retirement.

Kyle Labelle is a financial advisor with Milestone Financial Planning, LLC, based in Bedford, New Hampshire. Disclaimer: This is not to be considered investment, tax, or financial advice. Milestone Financial Planning, LLC (Milestone) is a fee-only financial planning firm and registered investment advisor in Bedford, NH.  Advisory services are only offered to clients or prospective clients where Milestone and its representatives are properly licensed or exempt from licensure.