Saving enough for retirement is one of the most important goals you’ll ever set.

When figuring out how much we need to save, we see big numbers like:

  • $500,000
  • $1 million
  • $2.5 million

But you have to keep your own life situation in mind when creating your retirement savings goal. Setting your own expectations and formulating a plan well before you leave the workforce ensures you’ll be better prepared.

Alas, too many people don’t do this.

The Consumer Financial Protection Bureau ran the numbers and found a scary stat. Only 51% of people who retired between 1992 and 2014 were able to maintain their level of spending for five years after leaving the workforce.

That means the other 49% had to change their lifestyles just five years into retirement. They had to cut expenses by 28% in the sixth year.

Imagine getting through five years of retirement and then having to cut more than a quarter of your expenses. Are your bills just going to magically become 28% smaller?

Cutting that much is no easy task. Doing it in one year sounds miserable — if not nearly impossible for most people.

And I don’t know about you, but I plan on living in retirement for more than five years.

So let’s take a look at some ways you can prevent a cut of this magnitude. Being proactive in saving enough for retirement through proper planning is the key.

2 Keys to Saving Enough for Retirement

Set High Expectations

You likely don’t need to save $2.5 million for your retirement. But it helps to set lofty goals.

Don’t save enough to just scrape by.

Take some time to think about your ideal retirement. Do you want to downsize your home or move? Do you want to travel the world?

I know it’s hard to think of a concrete number to save. A good place to start is by looking at your current expenses and seeing where you can make cuts.

And that’s important because expenses in retirement can bite you when you least expect it. Health care is not cheap, and getting older means more visits to the doctor.

Figure Out How Much You Need to Withdraw Every Year

Saving enough for retirement is only the first step.

Finding a safe withdrawal rate for your funds once you get there is the next important hurdle.

But don’t wait until you are out of the workforce to figure this out. You should think about this in the run up to retirement.

Use a tool like this Bankrate calculator to figure out how to make your savings last through 30-plus years of retirement. Many experts throw around 4% per year as a safe withdrawal rate, but that may not work for you.

Planning to stretch your funds well into your 90s is another great way to assure a safe cushion.

Once you are in retirement, stick to the rate you’ve decided on as much as possible.

No one wants to cut their expenses by 28% in one year. But that’s a disaster you can avoid by saving enough for retirement through proper planning.