The question of how much one needs to save for retirement is one that most people ask. And no wonder. There are a lot of unknowns in life, like when and how much one will spend in retirement.
Because of this, we conducted a thorough analysis to develop age-based retirement savings factors that will assist you in making plans despite the uncertainties. These milestones are aspirational. You likely wont meet all of them. However, they can act as benchmarks to assist you in creating a plan to save enough money to support your retirement lifestyle.
Our savings factors are predicated on the idea that an individual saves 5% of their annual income starting at age 2025 (which encompasses any employer-sponsored savings plans), invests more than the average amount saved in stocks over the course of their lifetime, retires at age 67, and plans to maintain their preretirement lifestyle in retirement (see footnote 1% for additional details).
Based on those hypotheses, we calculate that, in addition to other measures, saving 10x (times) your preretirement income by the age of 67 should help guarantee that you will have adequate money in retirement to maintain your standard of living. That 10x goal may seem ambitious. But you have many years to get there. The following age-based benchmarks will help you stay on track: by the time you’re thirty, forty, fifty, and sixty years old, try to save at least one times your income. Your individual savings target may vary depending on a number of variables, including the two major ones that are discussed below. However, you can use these guidelines as a starting point to create a savings plan and track your progress. 2,3.
Retirement planning is a complex process, and one of the most important questions you’ll need to answer is how much money you’ll need to save. This is especially true if you’re planning to retire early, at age 62.
While there’s no one-size-fits-all answer to this question, there are some general guidelines you can follow. According to Fidelity, a good rule of thumb is to aim to have saved 10 times your final income by age 67. However, if you’re planning to retire at age 62, you’ll need to have saved even more.
Here are some factors that will impact your personal savings goal:
- The age you plan to retire: The longer you can postpone retirement, the lower your savings factor can be. That’s because delaying gives your savings a longer time to grow, you’ll have fewer years in retirement, and your Social Security benefit will be higher.
- How you want to live in retirement: Do you expect your expenses to go down when you retire? Or will you spend as much as you do now? If you expect your expenses will be more than they are now, that’s above average.
Here are some hypothetical investors who are planning to retire at 62:
- Joe is planning to downsize and live frugally in retirement, so he expects his expenses to be lower. His savings factor might be closer to 8x than 10x.
- Elizabeth is planning to retire at age 62 and her goal is to maintain her lifestyle in retirement, so her savings factor is 10x.
- Sean sees retirement as an opportunity to travel extensively, so it may make sense for him to save more and plan for a higher level of retirement spending. His savings factor is 12x at age 62.
Here are some additional tips for saving for retirement at 62:
- Start saving early. The earlier you start saving, the more time your money has to grow.
- Save as much as you can. The more you save, the more comfortable your retirement will be.
- Invest your savings wisely. Choose investments that have the potential to grow over time.
- Don’t touch your retirement savings. It’s important to resist the temptation to withdraw from your retirement savings before you retire.
Here are some resources that can help you save for retirement:
- Fidelity Viewpoints: Fidelity Viewpoints is a website that provides financial education and resources.
- The Social Security Administration: The Social Security Administration website provides information about Social Security benefits.
- The National Institute on Retirement Security: The National Institute on Retirement Security is a non-profit organization that provides research and education on retirement security.
Here are some additional things to keep in mind:
- Retirement planning is a complex process. It’s important to consult with a financial advisor to get personalized advice.
- Your retirement savings goals may change over time. Be sure to review your goals regularly and make adjustments as needed.
- Don’t be afraid to ask for help. There are many resources available to help you plan for retirement.
By following these tips and using the resources available, you can increase your chances of having a comfortable retirement.
Frequently Asked Questions
How much do I need to retire at 62?
There’s no one-size-fits-all answer to this question, but a good rule of thumb is to aim to have saved 10 times your final income by age 67. However, if you’re planning to retire at age 62, you’ll need to have saved even more.
What factors will impact my personal savings goal?
The age you plan to retire and how you want to live in retirement are two of the most important factors that will impact your personal savings goal.
What are some tips for saving for retirement at 62?
Start saving early, save as much as you can, invest your savings wisely, and don’t touch your retirement savings.
What are some resources that can help me save for retirement?
Fidelity Viewpoints, the Social Security Administration, and the National Institute on Retirement Security are all good resources for retirement planning.
What are some additional things to keep in mind when planning for retirement?
Retirement planning is a complex process, your retirement savings goals may change over time, and don’t be afraid to ask for help.
Retirement planning is an important process that everyone should start thinking about early. By following the tips in this article, you can increase your chances of having a comfortable retirement.
4 things you may not know about 529 plans
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- The Fidelity Savings Guideline states that you should save at least one times your salary by the years 30, 40, 50, 60, and 67.
- Your personal savings goal will depend on various factors, such as your anticipated retirement age and desired retirement lifestyle.
- If youre behind, dont fret. There are ways to catch up. The key is to take action.
The question of how much one needs to save for retirement is one that most people ask. And no wonder. There are a lot of unknowns in life, like when and how much one will spend in retirement.
Because of this, we conducted a thorough analysis to develop age-based retirement savings factors that will assist you in making plans despite the uncertainties. These milestones are aspirational. You likely wont meet all of them. However, they can act as benchmarks to assist you in creating a plan to save enough money to support your retirement lifestyle.
Our savings factors are predicated on the idea that an individual saves 5% of their annual income starting at age 2025 (which encompasses any employer-sponsored savings plans), invests more than the average amount saved in stocks over the course of their lifetime, retires at age 67, and plans to maintain their preretirement lifestyle in retirement (see footnote 1% for additional details).
Based on those hypotheses, we calculate that, in addition to other measures, saving 10x (times) your preretirement income by the age of 67 should help guarantee that you will have adequate money in retirement to maintain your standard of living. That 10x goal may seem ambitious. But you have many years to get there. The following age-based benchmarks will help you stay on track: by the time you’re thirty, forty, fifty, and sixty years old, try to save at least one times your income. Your individual savings target may vary depending on a number of variables, including the two major ones that are discussed below. However, you can use these guidelines as a starting point to create a savings plan and track your progress. 2,3.
When you plan to retire
The amount you need to save and your progress toward your goals can be significantly influenced by the age at which you hope to retire. Your savings factor can be lower the longer you can delay retiring. This is due to the fact that waiting will increase your Social Security benefit, shorten your retirement years, and give your savings more time to grow.
Consider some hypothetical examples (see graphic). Max wants to wait until he is 70 years old to retire, so in order to maintain his preretirement lifestyle, he will need to have saved eight times his final income. Amy intends to retire at age 67, which means she will require ten times her pre-retirement income in savings. John intends to retire at age 65, meaning he must have saved 12 times his income prior to retirement.
Of course, there are situations in which your health and employment opportunities may prevent you from choosing when to retire. However, one thing is certain: Working longer will help you save more money.
For additional information, see the footnote at the end of the article.