In order to retire at your current standard of living, you would need to save enough money to replace between 70 and 90 percent of your annual income. That may sound like a lot, but in this blog, we’ll tell you approximately how much to save, some average retirement savings benchmarks and tips to keep on track.
How Much do you Need to Save?
Depending on your age, income and desired standard of living, your necessary retirement savings will vary. A general suggestion is that you save between 10 and 15 percent of your income every year.
However, things are more complicated than that in reality. Since age and income fluctuate, you will need a more specific set of benchmarks.
Average Retirement Savings Benchmarks
In the average retirement savings chart below, the “multiple” is approximately how much you should have saved by a certain age, based on your income, to live comfortably. For example, let’s say you make $100,000 at the age of 40. You should have about $300,000 saved for retirement at that time.
Retirement Savings Tips by Age
|
Income |
|||||||
|
|
$50,000 |
$75,000 |
$100,000 |
$150,000 |
$200,000 |
$250,000 |
$300,000 |
|
Age |
Multiple of Income |
||||||
|
35 |
1.0 |
1.8 |
2.2 |
2.6 |
3.0 |
3.4 |
3.7 |
|
40 |
1.7 |
2.7 |
3.0 |
3.7 |
4.3 |
4.6 |
4.8 |
|
45 |
2.5 |
3.5 |
4.2 |
4.8 |
5.6 |
6.0 |
6.3 |
|
50 |
3.6 |
4.6 |
5.3 |
6.3 |
7.3 |
7.7 |
8.0 |
|
55 |
4.7 |
6.0 |
6.8 |
7.9 |
9.1 |
9.7 |
10.1 |
|
60 |
6.0 |
7.6 |
8.5 |
10.0 |
11.2 |
12.2 |
12.4 |
|
65 |
8.1 |
10.0 |
11.2 |
12.7 |
14.2 |
15.3 |
16.0 |
30s
During your 30s, saving for retirement may seem like a low priority. You’re likely starting a family, purchasing a home and making other life-changing financial decisions for the first time. However, even small contributions will pay off down the line.
Think about doing the following in your 30s:
- Fund your employer-matched 401(k) to the full limit
- Contribute as much as you can to a Roth IRA
- Establish healthy financial habits like monthly budgeting
40s
As you progress through your 40s, you will likely have more financial opportunities than ever, such as pay raises and promotions at work.
This is the time to clearly establish long-term financial goals, including approximately how much you would like to have saved by retirement. Also, consider diversifying your investment portfolio a bit more.
50s
The average retirement age is approximately 63. It’s approaching more quickly than you may think.
Keep in mind the following retirement tips:
- Make catchup contributions to your 401(k)
- Consider downsizing your home (if you’re behind on your average retirement savings)
- Max out contributions to all retirement funds
60s
The home stretch. Just a few more years until retirement.
Here are some helpful preparation strategies:
- Think about making aggressive mortgage payments
- Create a withdrawal plan
- Budget for leisurely activities like vacations
At any step of the way, a local financial planner can steer you through the complicated process of retirement.
