Saving for Retirement
How much do you need for retirement? Explore savings strategies to plan ahead for income and expenses.
Saving for retirement is a crucial aspect of financial health, yet many Americans have little to no money set aside for their retirement years. The sooner you prioritize your retirement savings, the better.
There’s no definitive amount you’ll need to save, but rest assured you’ll want enough to feel comfortable for decades of retirement bliss.
The most important factor in saving is the time value of money. The sooner you start saving, the better off you’ll be. Compound interest means that someone who starts saving at 25 could have almost twice as much at retirement as someone who starts at 35.
You can expect some of the biggest expenses in retirement to be:
- Health care
- Transportation Long-term care
When setting up your retirement savings goals, think about what kind of retirement you’d like to have and when you’d like to retire.
Numbers to Help You Plan
One popular savings method uses multiples of your salary to help you know how much you should have saved by each age.
- Age 35 – 2 times your salary
- Age 40 – 3 times your salary
- Age 45 – 4 times your salary
- Age 50 – 5 times your salary
- Age 55 – 6 times your salary
- Age 60 – 7 times your salary
- Age 65 – 8 times your salary
A common guideline for saving is to put 15% of your gross income toward retirement. This percentage can include your contribution, any employer match and cash savings. You may want to continue increasing above that 15% over time—with every raise, for example—to gradually save more.