How much should I have saved for retirement?
This a frequently asked question. And understandably so. You are 30, 40, 50, or 60 years old and want to know where your retirement savings stands in relation to where it should be.
Believe it or not, the answer isn’t a hidden secret. In fact, there are several studies out there with similar responses to the question, “How much should I have saved for retirement?”
Let’s consider a study produced by Fidelity. The following was assumed:
- retiring at 67,
- having a 15% savings rate (Milestone 6),
- a wage growth of 1.5%,
- living to 93 years of age,
- and a desire to replace 45% of pre-retirement income.
Based on those assumptions, here is the age and the recommended amount saved:
30 years old—1x your salary
35 years old—2x your salary
40 years old—3x your salary
45 years old—4x your salary
50 years old—6x your salary
55 years old—7x your salary
60 years old—8x your salary
67 years old—10x your salary
Now if you find yourself hyperventilating, take a breath. Remember these numbers are based on the provided assumptions. You may or may not fit those assumptions. At the same time, use these benchmarks as motivation. Start working through the 8 Money Milestones found in the The Money Challenge so you can have enough financial margin to set aside money for retirement.
Planning for your retirement is planning for your future ability to live generously. Get serious about retirement savings so that your retirement years become the most generous, open-handed years of your life.