How much you should be saving for retirement is an age-old question that just about everybody wants to know.
While the answer has a lot to do with when you plan to retire and the type of lifestyle you want to have in retirement, there are some general guidelines that you can follow at every age to help get you there.
According to retirement-plan provider Fidelity Investments, the rule of thumb is to save 10 times your income if you want to retire by age 67. Adjust this amount if you want to retire any earlier or later.
Those retiring at 65 (the earliest you can claim a pension plan ) will need to save more to compensate for an additional five years without income. Those retiring at 70 probably won’t need the full amount of 10 times their income, as they will have worked a further three years and presumably have fewer years left to spend their savings.
While Fidelity’s guideline is a big goal, it’s more manageable when you start early and have many years to reach it. Fidelity suggests the following age-based savings milestones that would provide enough income for you to continue your current lifestyle in retirement (rather than planning to downsize or spend more).
Here’s how much cash they say you should have stashed away at every age:
Ideal Emergency Fund by Age
Your emergency fund should contain 3 to 6 months’ worth of expenses. Considering that the average 25 to 34 year old spends $4,705 each month
|By Age||Ideal Savings Balance*|
|30||$14,115 to $28,230
|40||$17,799 to $35,599
|50||$18,846 to $37,693
|60||$18,846 to $37,693
|70||$14,067 to $28,134
|80||$10,794 to $21,588
Retirement Savings in Your 30s and Beyond
- A general rule of thumb is to have one times your income saved by age 30, twice your income by 35, three times by 40, and so on.
- Aim to save 15% of your salary for retirement — or start with a percentage that’s manageable for your budget and increase by 1% each year until you reach 15%
- User our retirement savings planner to see how you compare to other retirement savers.
When it comes to saving for retirement, the early bird gets the worm. The sooner you start saving, the longer you have to take advantage of the power of compound interest, which is the interest you earn on your original principal and any accumulated interest.
|By Age.||You Should Have Saved..||Which Translates to.|
|25||.5x your income||$30,000|
|30||1x your income||$61,937
|40||3x your income||$185,811
|50||5x your income||$309,685
|60||7x your income||$309,685
|70||9x your income||$557,433
|80||11x your income||$681,307
Saving for Future You: Family, Fun, and More
- Like new homes, cars, weddings, children, etc., more considerable life expenses vary.
- Research the average cost of these expenses and use our savings goal calculator to help set your savings goals and plans.
- Prioritize your savings when aiming to save for multiple large expenses at once.
- As you make progress saving for (not so fun) emergencies and retirement (the end goal), you’ll probably have other purposes in the interim that’ll require saving up cash to accomplish.
|If You're Saving For...||Plan to Save...
|A car||$20,000 to $55,000
|Down payment for a home||$15,930 to $63,720
|College for your kids||$35,160 to $203,600
The amounts above are based on averages, meaning the actual amount you’ll need to save will probably differ, depending on the circumstances. For example, the cost for a two-week vacation in Hawaii will be drastically different than a weekend getaway to your local state park.
Also, some, like saving for furniture or a vacation, maybe short-term financial goals. But others — a down payment on a house, a wedding, or college, for example — might take a little longer. When you’ve got so many goals, it’s understandable if you don’t know where to start.
Prioritizing can help.
Say you want to get married in the next two years and purchase a home three years after that. You can afford to save $1,500 a month towards both items. In this instance, you might sock away $1,000 each month for the wedding and $500 for the down payment on a house. After you say, “I do,” you can redirect that $1,000 over to your home savings fund.
The buckets tool in our Online Savings Account can help you organize your savings goals into separate digital envelopes, eliminating the need to open multiple savings accounts for your various savings priorities.
Expert Tip: Prioritizing keeps you from stressing over not saving enough for all the things you want to do with your money. And if you’ve got a plan for saving toward multiple goals, it reduces the chance that something slips through the cracks.
Remember that when you’re saving money, any little bit counts. If you aren’t able to put away larger chunks of cash at a time, like $500 or $100 or even $50, that doesn’t mean saving is out of the question. By using microwaving strategies (or stashing away small amounts of money, usually less than $2 at a time), you can consistently add to your savings without the pressure of putting big amounts away all at once.