Planning for retirement can feel overwhelming, but setting clear savings benchmarks can help you stay on track for financial security. While everyone’s retirement goals and income levels differ, financial experts offer general savings guidelines to help individuals gauge their progress. Below, we explore savings targets recommended by experts for ages 30, 40 & 50.
Savings Benchmarks by Age
By Age 30: Aim for 1x Your Salary
According to Fidelity, by the time you reach 30, you should aim to have saved the equivalent of your annual salary. For instance, if you earn $60,000 per year, your retirement savings should be around $60,000. This assumes you begin saving early and contribute consistently. The key to hitting this benchmark is starting early and taking advantage of employer-sponsored retirement plans like a 401(k) or an IRA.
By Age 40: 3x Your Salary
At 40, your savings should ideally amount to three times your annual salary, according to T. Rowe Price emphasizes, who also emphasizes the importance of increasing contributions as your income rises. If you make $80,000 per year, you should have saved about $240,000. Consistently increasing your contributions, especially as your career advances, will help ensure you reach this goal.
By Age 50: 6x Your Salary
By age 50, financial experts recommend having at least six times your annual salary saved. This is a crucial milestone because retirement is approaching, and maximizing savings during peak earning years is essential. iShares notes that individuals in their 50s should prioritize catch-up contributions, which allow those over 50 to contribute more to tax-advantaged retirement accounts.
How to Stay on Track
- Start Early: The power of compounding makes early contributions exponentially more valuable.
- Increase Contributions Over Time: As your salary grows, increase your savings rate.
- Maximize Employer Benefits: Take full advantage of employer matches and tax-advantaged accounts.
- Review and Adjust Regularly: Revisit your retirement plan annually to ensure you’re meeting your goals.
By following these savings benchmarks, individuals can work toward a secure and comfortable retirement. While personal goals may vary, using these guidelines as a roadmap can help ensure financial readiness for the future.
Kovitz Investment Group Partners, LLC (“Kovitz”) is an investment adviser registered with the Securities and Exchange Commission. This report should only be considered as a tool in any investment decision and should not be used by itself to make investment decisions. Opinions expressed are only our current opinions or our opinions on the posting date. Any graphs, data, or information in this publication are considered reliably sourced, but no representation is made that it is accurate or complete and should not be relied upon as such. This information is subject to change without notice at any time, based on market and other conditions. Past performance is not indicative of future results, which may vary.
