How much do you need to save in order to retire?

Saving for retirement of course means putting money away into retirement accounts but it's not always that easy, especially when faced with financial challenges.

Brent McQuiston, Vice President and Senior Financial Advisor with WeathTrust-Arizona says finding ways to increase savings probably means sacrificing something you want now and putting it off until a later date. In everyday life, if you are smart with your expenses and can differentiate between needs and wants you will likely have a little extra to put away.

As far as how much money you really need to save, McQuiston says a 4 percent withdrawal in the first year and then inflation adjusted for 25 years will give you a 75 percent probability of your assets lasting thru retirement. If you have $1 million saved you can safely take out $40,000 the first year and then $41,240 the next year and so on...

Doing the math, divide what you think you will spend in year one of retirement by 4 percent, this will give you a good ballpark of what you need. Basically every $10,000 in income plan on $250,000 in assets

Some of the most common savings (investment) mistakes include breaking strategy, not diversifying and taking too much or too little risk. The biggest mistake is failure to have an objective financial plan completed.

McQuiston says it is hard to say whether men or women are better savers. Both parties can be equally guilty of spending too much and not saving enough.

He adds, “Now in this uncertain economy, more people are saving. Tough times have hit a lot of people. Even those that fortunately have done all the right things to survive a bad down turn find themselves helping family members and as a result, have cut their own budgets.”