Let's face it: age has long been the benchmark we use to determine our retirement strategy. While it's an important number, it's worth knowing how other numbers can impact your retirement savings journey, for instance, taxes. With Tax Day on April 15th, it's essential to strike a balance between the various retirement vehicles and how they may impact your tax contributions, both short and long-term. 

Retirement is a Number

One of the goals of retirement is to maintain a certain lifestyle, and that means knowing how much to put away. By having a number in mind, you'll have a better understanding of how much to put away each month and for how long. There are some considerations to take into account: 

• The lifestyle you want post-retirement 
• Whether you have the option to downscale your current financial commitments 
• If there's any outstanding debt 
• The state of your health
•  Whether you have the support of a partner to share financial responsibility
• If you have any dependents, such as adult children who need specialized care 
• Whether you'll have other sources of income to supplement any retirement income

Tips for Finding Your Retirement Number 

There are several ways to determine how much you need to retire. Two of the most popular options is to use your annual, pre-retirement income as a guide. 

The first method suggests you save up enough to replace at least 70% to 80% of your income for each year you're retiring. What makes this method a little bit tricky is that no one really knows how many years after retirement they'll need to have an income for. This may require you to speak to a financial advisor about retirement products that pay an income for life. 

The second method is simply saving 10 to 12 times your annual income. This method allows you to accumulate a healthy lump sum, but it requires some finesse when it comes to your budgeting post-retirement. You'll need to consider out-of-the-ordinary expenses that may elevate your income needs.

How Taxes Impact Your Retirement

Surprisingly, your retirement age will play a part in your retirement taxes as those under the age of 59 1/2 may have to pay higher taxes than those who are older. The type of retirement vehicle you choose also carries certain tax implications. 

Qualified Roth IRA and Roth 401(k) distributions are tax-free, but there are restrictions in terms of contributions. 

Traditional IRA and traditional 401(k) offer a tax deduction, however, distributions are calculated at your personal tax rate. 

With Social Security, 15% of your benefits are tax-free, with your personal tax rate applied to the other 85%. 

There are other investment options, too, and it's important to seek advice from a tax professional or a financial advisor to see how this would affect your taxes. For instance, some investments may have capital gains taxes and/or investment income taxes as well. 

Draw Up Your Retirement Plan With Savvly 

With Savvly, you can plan your retirement journey more effectively and take the guesswork out of your retirement goals. We offer a retirement calculator that helps you determine just how much you need to invest every month. Our pension offers a two-part investment strategy that allows you to benefit from both traditional and pension portfolios. 

If you're ready to start your investment journey and you're wondering whether Savvly is good for you, visit our website to learn more. You'll discover: 

✅ How Savvly compares to your current retirement plan

 ✅ Your projected retirement payouts with our calculator

 ✅ Whether Savvly could help you retire with more confidence