How Much Should You Have Saved for Retirement by Now?

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A lot of people get a later start in life when it comes to saving money. No matter when you start, it’s hard to know whether you’re saving enough.

We have some numbers that should help you know whether you’re keeping up — or falling behind.

Know This Simple Salary Rule

By age 35, you should have twice your annual salary saved up for retirement, according to the latest numbers from Fidelity Investments.

Five years later, you should have three times your annual salary. And on and on, until you reach 67 when you should have 10 times your annual salary saved.

The Fidelity guidelines for individuals look like this:

35Save two times your gross annual salary
40Save three times your gross annual salary
45Save four times your gross annual salary
50Save six times your gross annual salary
55Save seven times your gross annual salary
60Save eight times your gross annual salary
67Save 10 times your gross annual salary
Source: Fidelity Investments

The numbers from Fidelity are based on the assumption that a person:

  • Saves 15% of their income every year at age 25
  • Invests more than 50% of savings in stocks
  • Retires at age 67
  • Plans to maintain pre-retirement lifestyle in retirement

Your gross annual salary is the amount of income you earn before taxes and deductions. By contrast, your actual take-home pay that reflects all taxes and other deductions is called your net income.

To be clear, these numbers are aspirational, and your specific situation and goals may be different.

It Is Never Too Late To Start Saving

Money expert Clark Howard and Team Clark never want you to feel discouraged about your retirement savings:

“Whatever you’ve been able to do, whatever you’ve done, that’s what you’ve been able to do up to this point,” Clark says. “From here, it’s all about where you are now and how you’re going to move forward.”

If you’re getting a later start at saving, here are some things to keep in mind.


Try To Meet Your Company 401(k) Match

Enrolling with your company’s retirement plan is one of the best ways to start saving for retirement. If your employer offers a match, slowly increase your contributions so you can get the full match to maximize your savings, because that’s free money.

If your employer doesn’t offer a 401(k), open a Roth IRA with a low-cost provider like Vanguard, Fidelity or Schwab.

Play Catch-Up With Retirement Savings

There are mandated limits to how much money you can save in tax-advantaged retirement accounts. The good news is that, if you’re coming into the game late, you can play catch-up. You have to be 50 or over to do this, but here’s how it works:

  • If you have a 401(k), 403(b), or 457 plan, you can make an extra $6,500 contribution in 2021. (That’s on top of the existing $19,500 contribution limit for these plans.)
  • For those with IRAs, you can contribute an additional $1,000 in 2021, for a grand total of $7,000 in annual contributions.

Visit the Internal Revenue Service (IRS) website for more information.

Make Extra Cash

It can be difficult to balance a full-time job and a side hustle, but it’s a great way to boost your retirement savings. From participating in surveys to delivering groceries to renting out your home, there are several ways to make more money. You may not get rich quickly, but the extra money can go straight to your savings account.

If taking on more work takes too much of your time, try selling some of your old, unwanted items or look through your monthly subscriptions to see if you can cut any monthly expenses.

Final Thought

Clark has strong feelings about saving for retirement:

“The highest priority is to save for your own retirement. The highest priority,” Clark says.

Whether you’re just getting started or you’ve been saving for decades, there are several things you can do to prepare for retirement and reach financial freedom. No matter where you are on your journey, check out Clark’s 10-step guide to saving and investing. If you follow each step, you’ll lower any anxiety about money and increase your financial security.

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