How much do I need to retire?

A lot goes into figuring out how much money you need to retire, but one common piece of advice is that you need about $1 million — and some sources suggest even more. In fact, 16 percent of people believe you need at least $2 million, according to a recent Transamerica study.

Of the people involved in the Transamerica study, only 11 percent used a retirement calculator for their estimates and 47 percent just guessed. Although many think you need $1 million in the bank to retire comfortably, that number is not necessarily based on real calculations — nor is it the right number for everyone.

You can spend your golden years living on less than $1 million — and still live well. To figure out how much you’ll need to retire, you must assess your lifestyle needs, understand your risk tolerance, consider the effects of inflation and most important, learn how to create a budget and follow it.

RELATED: Top 10 cities where retirees are moving

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Top 10 cities where retirees are moving

10. North Las Vegas, Nevada

North Las Vegas is a newcomer to our top 10. One appeal for retirees living in North Las Vegas is how tax-friendly Nevada is for retirees. Social Security income and withdrawals from retirement accounts are not taxed. And if you plan on earning during retirement, the marginal state tax rate in Nevada is 0. Unfortunately, if you are a retiree in North Las Vegas who wins it big on the slot machine there will be some taxes to pay. The city also has great weather thanks to being in a desert.

Net migration: 929

(Mitchell Funk via Getty Images)

9. Cape Coral, Florida

Waterfront Wonderland is once again a popular destination for retirees. Last year Cape Coral ranked second while this year it ranked ninth. In total Cape Coral gained 949 retirees, with 1,926 immigrating and 977 emigrating.

Cape Coral was also the second-biggest beneficiary of Florida’s growth in retirees. What is interesting is that while a large chunk of Arizona retirees went to the Phoenix metro area, retirees coming to Florida tended to be more dispersed. Overall Florida had the largest gain in retirees but had only two cities crack our top 10.

Net migration: 949

(Joe Raedle via Getty Images)

8. Gilbert, Arizona

Gilbert is the final Arizona city to crack our top 10. Like Chandler this city is great for golfers. According to Census Bureau data, there are around 150 golf courses in the area. Retirees can also appreciate how safe Gilbert is. FBI data shows there are only 1,320 property crimes per 100,000 residents.

For the retirees looking to escape the cold, especially those coming from the Northeast, Gilbert is a great option. There are only 16 rainy days per year and the average daily high temperature is 87.

Net migration: 1,002

(jrmetcalf via Getty Images)

7. Peoria, Arizona

Peoria is a large suburb to the north of Phoenix. This city saw an increase of 1,310 retirees, with 1,839 arriving and 529 leaving. Peoria has seen stunning population growth in the recent past. In 1980 the population was only 12,171, while in 2016 it was 164,172.

For seniors who love baseball Peoria may be a good spot to settle. The Peoria sports complex is the spring training home of both the San Diego Padres and the Seattle Mariners.

Net migration: 1,310

(Greg Thomsen via Getty Images)

6. Overland Park, Kansas

Overland Park saw a net increase of 1,330 retirees. Kansas as a state only saw a net increase of 1,357, meaning that for retirees Overland Park was the star destination. Overland Park is a great bargain for retirees. Housing is relatively affordable, costing only $123.50 per square foot, according to Zillow data. In fact, according to our projections Overland Park is one of the most undervalued cities in America.

Net migration: 1,330

(Bloomberg via Getty Images)

5. Chandler, Arizona

Retirees are coming to Chandler in droves. Census Bureau data shows that 1,718 retirees immigrated to Chandler while only 260 emigrated. One reason they may be coming is the golf. Chandler is one of the best cities in the country for golf, thanks to its hot, sunny weather and abundant golf courses. Of course, the low cost of living and tax benefits Arizona provides probably doesn’t hurt.

Net migration: 1,458

(Richard Cummins via Getty Images)

4. Phoenix, Arizona

Phoenix is the second of five Arizona cities in the Phoenix metropolitan statistical area to crack our top 10. The Valley of the Sun, as far as big cities go, is relatively affordable, especially when it comes to paying for housing. According to data from the Census Bureau, the median monthly housing cost is only $993.

Phoenix actually saw some of the most churn when it came to retirees coming and going. Just over 4,100 retirees left the city while over 5,600 arrived. For both those metrics Phoenix ranked first in the top 10. In fact only Chicago and New York had more retirees emigrate than Phoenix.

Net migration: 1,470

(Davel5957 via Getty Images)

3. New Orleans, Louisiana

New Orleans is something of a surprise inclusion in this year’s top 10 since it did not even crack the top 25 in last year’s study. But it’s not too hard to see the appeal. New Orleans is a warm city on the coast with plenty of cultural activities to enjoy. Another factor attracting retirees may be the famous food scene in New Orleans. Overall the Big Easy saw an increase of 1,520 retirees coming into the area.

Net migration: 1,520

(picturist via Getty Images)

2. Jacksonville, Florida

Jacksonville is the largest city in Florida and saw a large influx of retirees moving into the city. Overall 1,817 emigrated while 3,761 immigrated, leaving the city for a net gain of 1,944.

One major reason why retirees love Jacksonville, and Florida in general, is how tax-friendly it is. In past studies we found that Jacksonville is the third-lowest taxed city in the country. It is also a good option for retirees who still want to live in the big city but keep costs low. We estimate that the average Jacksonville retiree would need about $62,470 in annual retirement income to live comfortably. That figure is much lower than other big cities.

Net migration: 1,944

(MichaelWarrenPix via Getty Images)

1. Mesa, Arizona

Mesa is a city in the Phoenix metropolitan area. Last year, Mesa led all cities with a net gain of 2,565 seniors. In this year’s study Mesa also ranked first with just over 3,400 more seniors immigrating to Mesa than emigrating. Mesa is attractive to seniors because of its weather. The sun is almost always out and even in the dead of winter, it never gets that cold. The average low in December, for example, is only 40 degrees.

Net migration: 3,442

(Terryfic3D via Getty Images)

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Planning Retirement Savings Is About Spending, Not Income

What many people might not realize is that retirement planning isn’t so much about how much you earn, but how much you spend. Your lifestyle today can have an impact on how much money you’ve got left over in your retirement years.

“I have met people who make $30,000 take-home per month and still have no retirement savings,” said Jeff Rose, certified financial planner, founder and CEO of Alliance Wealth Management, a financial planning firm. “Keep your lifestyle in check and make sure you are putting money away every month. Set a benchmark based on what [you] need per year and plan to live to 100.”

You might have heard you’ll need 55 to 80 percent of your preretirement income to live well, but with some budgeting and lifestyle changes, it’s possible to live on less. “A person or couple that has no house payment or car payments can live off less than 70 percent,” Rose said.

Don’t Miss: Survey Finds 42% of Americans Will Retire Broke — Here’s Why

Living on Less: How to Make a Budget for Retirement

Spending peaked at $71,166 per year for the 45 to 54 age group, then dropped to $38,691 per year for people 75 and older — a figure that shows a trend of spending less and living more simply in the golden years — according to the Bureau of Labor Statistics of the U.S. Department of Labor. With a reduction in overall expenses, it’s easier to live well on less during retirement. Here are some ways to achieve that:

– Drive less or use cheaper transportation. The typical senior between 65 and 74 spends $8,420 on transportation costs annually, according to the BLS. If you opt for an economy car, you can save money on gas and on the actual car because it will cost a lot less than a luxury model. You might also consider using public transportation.
– Downsize your home. The best places to retire might not be where you lived preretirement. Selling a home in California or the Northeast U.S. would enable you to buy something cheaper in, say, Detroit or Philadelphia — and you’d likely have cash left over.
– Cut back on entertainment. Spending less on things like dining out is an easy way to cut expenses. Be coupon-savvy at the grocery store and buy only what you need. Seek out low-cost activities with a senior discount, or clubs and groups aimed at your age group.

See: 17 Biggest Budgeting Mistakes You’re Making

Rely More on Investments Than Benefits

Your liquid savings probably won’t be your only assets when you enter retirement. Any employer-sponsored savings you’ve accrued can significantly supplement your retirement savings and any other nest egg investments you might have — like annuities or CDs — can also help when you retire.

Experts advise that with current and forthcoming Social Security trends, it’s not wise to rely solely on Social Security benefits to fund your retirement. “Right now, I would plan on getting 70 percent of the Social Security income we are being promised,” Rose said.

How Much Money Do I Need to Retire?

Estimating how much money you’ll need in retirement can be a difficult task. Here’s a starting point to find what your average monthly income in retirement should be:

1. Calculate your current monthly income and your monthly expenses.
2. Factor in lifestyle changes that might occur, like a cost of living adjustment, healthcare needs, travel plans and expenses, and money you plan to spend on kids and grandchildren.
3. Subtract what you’re currently investing each month in your individual retirement account or Roth IRA. Although you can contribute to a Roth IRA as long as you live, you likely won’t after you retire, and you can contribute to a traditional IRA only until you turn 70.5.
4. Factor in any pensions you’ll be receiving as part of your income.
5. Subtract the amount of taxes you’ve been paying on your current paycheck because you won’t be paying them anymore.

When you do these calculations you’ll end up with a retirement budget. You’ll be adding all of your income, subtracting your expenses and seeing how much — more or less — you’ll need to live on.

See: This Is All You Can Buy With the Average Social Security Check

Why Should I Retire Now?

No hard-and-fast rule mandates you must retire at 65. More seniors are choosing to work past the retirement age nowadays, and some are foregoing retirement altogether.

Social Security offers financial incentives to delay retirement. Currently, a worker born in 1943 or later gets an additional 8 percent for each year he puts off collecting benefits past the retirement age of 66.

Related: How Your Retirement Age Impacts Your Social Security Benefits

Avoid Retirement Pitfalls

Now that you have a better idea of what to do to save for your later years, remember to avoid some of the potential pitfalls, like carrying debt or prematurely withdrawing retirement funds.

So, how much do you need to retire? Aiming for $1 million is a great goal to have. But if you retire on less you can still have a happy, healthy retirement.

John Csiszar, Ruth Sarreal and Paul Sisolak contributed to the reporting for this article.

This article originally appeared on GOBankingRates.com: How Much Do I Need to Retire?

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