How much do I really need to retire? Fidelity wants you to save 10 times your income by age 67. But here are 3 reasons why that could be dead wrong

Everybody craves a benchmark. They give us guidance, a target, an easily understood standard. So it’s little wonder that one of the most popular financial Google searches is some variation of this question: How much money will I need in retirement?

For many people, retirement is simultaneously a bonanza of free time, full of travel, hobbies and passionate pursuits.

But once you leave that full-time job behind — along with the 401(k) employer match, health insurance and other benefits — here come the sobering snags: Medical care. Rising costs for everything. And a nest egg eaten away by required minimum distributions, taxes and even market slumps.

What may be surprising, however, is that a popular recent answer to that retirement amount question — Fidelity Investments’ counsel to sock away 10 times your current annual income by age 67 — may be one of the most misleading pieces of advice on the retirement web.

Let’s explore why the 10 times rule may be no good rule at all.

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When 10 times may not be enough

Fidelity is a highly respected investment house, and their advice is rooted in deep experience in retirement planning for clients. But some financial experts believe Fidelity’s 10 times guidance undershoots the real cost of retirement.

Financial consultant Grant Cardone recently wrote in a LinkedIn post that inflation and the risk of unplanned emergency spending — like a catastrophic health event or emerging condition — could mean that target falls short. Not only would that leave you exposed, it could undermine the feeling of financial independence we all want in retirement.

Inflation and health costs are among the expenses that shock retirees who simply aren’t saving enough, Cardone said.

“I know the idea that ‘a million dollars isn’t enough to retire on’ is hard to swallow,” he wrote. “But your opinion doesn’t change the reality: A million dollars is simply not what it used to be.”

Health expenses alone should have many folks writing their plans in pencil, not pen. Consider Fidelity’s own 2022 guidance that a retiring 65-year-old American couple can expect to spend $315,000 on medical and health expenses in retirement, a 5% jump over 2021.

Read more: Here’s how much the average American 60-year-old holds in retirement savings — how does your nest egg compare?