How much should I be saving for retirement?


How much should I be saving for retirement?

While retirement planning is personal to you, there are guidelines that can help set you up for success.


Retirement is a very personal topic, and everybody’s goals and ability to save is different.Regardless of your personal situation, there are guidelines to help you judge your progress. By saving consistently and at the appropriate rate, you can help yourself get to retirement—and through retirement—with the confidence that your needs and aspirations will be taken care of. Let’s take a look at how. 

The state of retirement today

If you’re not sure whether you’re saving enough at the moment, you’re not alone: less than half of workers have tried to calculate how much money they need for retirement. That said, it’s an expensive mistake not to know.

The good news is it’s never too early to get started, or too late to make progress.

Saving for retirement is expensive. Not only do healthcare costs rise as you get older, but also people are living longer these days, which means your retirement income may have to last 30 to 40 years.

Saving for a far-off “tomorrow” also requires juggling competing priorities today. Most workers today are confident they’ll be able to retire comfortably. On the other hand, 4 in 10 say that debt or saving for their children’s education is negatively affecting their ability to save.

We’d never suggest you forego family priorities, but it’s important to understand that you are your first financial priority. As they say, you can’t take a loan out for retirement. 

How much to save

There’s no dollar amount that’s appropriate for everyone. But there is an appropriate savings rate.

A common rule of thumb is to save 15% of your gross salary, ideally beginning in your 20s and 30s. It’s important to save this amount consistently. As an example, consider that people who consistently contributed to their 401(k) over the last decade saw a 17.3% rate of return.

By beginning to save early, you take advantage of the power of compounding—that is, the process in which an asset's earnings—from appreciation, dividends, or interest—are reinvested to generate additional earnings over time. Compounding can be thought of as “interest upon interest”. It allows your money to grow more significantly over time.

The exact amount you choose to save can and should differ based upon your retirement plans, taking into account things like:

  • Your age
  • Your current spending and saving levels
  • Your lifestyle preferences in retirement
  • Your life expectancy

Savings milestones

It can also be helpful to compare your savings to benchmarks. A good rule of thumb suggests you aim to save:

  • 1 x income by age 30
  • 2 x income by age 35
  • 3 x income by age 40
  • 6 x income by age 50
  • 8 x income by age 60
  • 10 x income by age 67

For example, if you’re 30 years old now and earning $55,000, your retirement accounts should have a total of $55,000 or more.

You are your first priority

Retirement may be one of the most expensive events you’ll encounter in your lifetime. Saving enough to get through it requires planning, patience, and diligence.

By taking small steps today, you’ll gain greater control over your financial outcomes.

When you take one small step, then another, you’ll surely make progress.

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