Dime — How Much Should You Have Saved for Retirement at Every Age
On a long Monday between the meetings and the emails and the water cooler chats about last night’s episode of a show you don’t watch, retirement can seem like a far distant dream that you’ll never reach. But the reality is that retirement will sneak up on you before you know it. And if you don’t prepare early, you could find yourself stuck in those long Mondays for a few years longer.
Saving for retirement can seem like something you can do later, tomorrow, next year, but the longer you wait, the less you’ll be able to save (unless you invent the next Netflix or iPhone). The amount you have saved can make all the difference to what you can do in your retired life.
But how much should you have saved at each stage of your life? There are a number of ways you can save for the future, but the amount to save should vary as you get older. Your retirement income should be about 80% of your final pre-retirement salary. So if you retire making $100,000, you’ll need about $80,000 per year in retirement to retain your lifestyle of choice.
Use this guide below to help ensure you’ve saved enough to do everything you want to do when you retire, like go on that world tour you’ve been dreaming about, purchase that summer home on the beach, or join the circus.
Age 30
When you’ve finally left your 20s behind you, it’s recommended that you have about 1 year salary in your retirement fund. So if you’re making $50,000, try to save that much for your retirement. Investing those funds in slightly riskier options could help drastically increase your future savings. It’s best to take a few risks when you’re young as you still have time to make up any losses you may have. Just like your poor joints, you’ll find it easier to bounce back in your early 30s than you will in later years.
Age 40
By the time you’ve hit the big 4-0, we recommend you save at least two times your annual salary. That means if, again, you’re making $50,000 per year, we suggest you have at least $100,000 saved. Now is the time to start getting serious about your finances to ensure your future is set and you don’t have to worry about affording your yacht.
Age 50
This might not be the exact midpoint of your career, but it’s a good time to take a moment and check in on your finances. Hopefully they’re looking strong! At age 50, aim to save between four and five times your annual salary. Let’s use the $50,000 example again. By your fiftieth birthday, you should have somewhere between $200,000 and $250,000 in your retirement account. You could have a quarter of a million dollars at this point! So if you’ve gotten a raise to $75,000, you should have somewhere between 300,000 and $375,000. As you get older, you’ll probably want to get a little more conservative with your investments, so moving them to more secure holdings might be a smart move. But that doesn’t mean you still can’t earn a nice interest on your investments. Trust your financial adviser to guide you in the right direction.
Age 60
Retirement is within sight by now, but you’ve still got a little ways to go. At this point in your career, we recommend saving six to seven times your annual salary. Adding this money to everything else you’ve saved will get you even closer to your goal, especially since your previous savings has spent the last 30 years earning interest. 30 years of interest can really make a difference.
Age 67
It’s finally here! You’ve reached the retirement age! Hopefully you’ve been able to reach the next benchmark, which is eight times your annual salary. It might seem like a huge amount, but if you plan on living to 100, you’ll be glad you saved what you did when you did.
No matter how old you are when you start saving for retirement, the more you can save the more you can do. Your future is calling. Make sure you’ve got enough to answer it.
Need help finding the right plan for your retirement future? The experts at Dime are here to help.