Retirement Savings by Age: How Much You Need and How to Start

Retirement savings are easier to build when you start early, but many people begin later than they planned. A simple benchmark helps you see whether you are on track and how much to aim for at each stage.

A common savings guideline

One widely used guideline, from Fidelity, suggests saving multiples of your annual salary: about 1 times by age 30, 3 times by 40, 6 times by 50, 8 times by 60, and 10 times by 67. These are rough benchmarks, not rules. Your target depends on when you plan to retire, how much you will spend, and what other income you expect.

Estimate what you will need

1. Estimate your yearly spending in retirement. Many people plan for slightly less than their current spending, but costs for healthcare can rise.
2. Subtract guaranteed income, such as a pension or government benefit.
3. Multiply the gap by 25. This gives a rough savings target using the 4 percent withdrawal guideline.

For example, if you need 20,000 a year from savings, the target is about 500,000. This is an estimate, and the 4 percent rule is only a starting point.

Ways to build the savings

• Use workplace plans: If your employer matches contributions, contribute at least enough to get the full match.
• Automate contributions: A fixed monthly transfer works better than saving what is left.
• Increase contributions with pay rises: Raising your savings rate by 1 percent each year is easy to sustain.
• Keep fees low: Small fee differences compound into large amounts over decades.

If you are behind

Being behind is common and fixable. Focus first on high-interest debt, then increase contributions gradually. Delaying retirement by a few years, working part-time later, or reducing spending before you retire can all close the gap.

Frequently asked questions

Is it too late to start at 45?

No. You have fewer years for compounding, so you may need to save more each month, but starting now still makes a difference.

Should I pay off my mortgage or invest for retirement?

It depends on the interest rate on the loan, your tax situation and your comfort with risk. Compare the loan rate with the expected after-tax return on investments.

This article is for general information only. Returns are not guaranteed. Speak to a qualified financial adviser about your situation.