How Much Should I Have Saved For Retirement?

Everyone (myself included) is always preaching about saving for retirement. So maybe you already have that part of it beaten into your head. The next logical question would be, “Well, how much should I have saved for retirement?” For younger savers (late 20’s-early 30’s) especially, it’s hard to know how much we should ideally have stocked away at this point in our careers.

Online retirement calculators aren’t much help because we have to make so many assumptions about our future income, contributions, tax rates etc…

So, how much should you have saved for retirement by age X?…

You guessed it. It depends.

We all take different paths in our careers and, have different goals about when and how to retire. Add in the fact that we start with different levels of student loan or credit card debt and coming up with a one size fits all number as an answer is nearly impossible.

I’m not one to just tease a question and not provide an answer though! So if you’re really looking for a black and white answer to the question I’ll give you one… Assuming you’re in your late 20’s to early 30’s and have worked for at least 5 years I would say that a good guideline would be to have at least one year’s salary saved away in your retirement accounts at this point in your life.

Now, many of you surely read that and probably muttered something like “One year’s salary? F*%& this guy…” under your breath.

I realize that’s not an easy task to have accomplished by this point in our lives. Full disclosure, I’m even behind on that benchmark. However, we do have on thing working to our benefit. Time. Even in your early 30’s you’re still young enough to harness the power of compound interest and achieve your long-term retirement goals.

The same reason most retirement calculators don’t help us much is the same reason we shouldn’t lose hope if we’re behind the eight ball in our retirement savings right now. There are just too many variables left to play out.  Most of us have a number of job changes, salary increases and life events still ahead of us. All of which will affect our ability to save for retirement, as well as our need to save for retirement.

Most retirement planning is done off of “finding your number”. Meaning, determining how much money you need to save to have $x per month in income during retirement. Most of the time this is done by taking a percentage of your current salary that you’d like to live off of when retired. That may be fine for someone in their 50’s and making close to their career max in salary, but if I’m going to pick a percentage of my current salary to live off of in retirement, I’m picking something like 200%.  If you do want to play around with a calculator to see what kind of income you’re currently looking at in retirement check out’s retirement income calculator.

How much should I be saving?

While pinpointing an exact savings goal at this point in your career may be next to impossible, knowing how much to save isn’t rocket science. The absolute minimum anyone should be saving is the amount needed to get the full employer match in your 401(k). If you’re already doing that, open a Roth IRA and increase your contributions there until you’re maxing out the $5000 annual contributions.

Once you’re maxing out your Roth IRA contributions start increasing your 401(k) contributions as much as you can until you reach the $16,500 annual limit for that account. If you’ve still got more money to save after that, you probably don’t need this article, but check out your options for a Traditional IRA or a taxable brokerage account at that point.

My favorite saying when it comes to saving is that if it doesn’t hurt, you’re not doing it right. Always be asking yourself if you would really miss another $100 or 1% of your salary if you upped your 401(k) contribution or put more into your Roth IRA each month. You don’t want to forfeit everything in the name of saving more, but a little discomfort is a good thing. If you ever find yourself remarking about how easy it is to meet your savings goals, it’s probably a sign that you can afford to increase those goals!





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3 Responses to How Much Should I Have Saved For Retirement?

  1. I agree with Level 1 & 2 but not so sure about Level 3 being the next step. It really depends on what your 401k plan is like, if the options are bad and have high expenses then that’s not where I would go for my next level of savings. Of course there’s still 2 other big issues to address. One is your motivation, some people don’t have the discipline to save it if the cash hits their checking account so that could be the best way to go. Two is what your goals are. I’m currently investing up to the max matching and then my Roth IRA and then every other penny that I can throw into my brokerage account gets funneled there. But I’m aiming for early FI so my situation is a little different than some people.

    • Good points…you are right about the options and fees, a lot of 401(k) plans suck in these areas. However for your average person who is just trying to achieve A retirement, let alone an early one, I think it’s a good guideline as the majority of people fall woefully short on their retirement savings.

  2. Life Ant says:

    The only way for one to know how much is needed in retirement, is to track expenses. ALL OF THEM and do this long before you retire. Track them for at least several years–preferably for at least 5 years. You need to understand the short term and long term trends in terms of your saving and spending. Seasonal trends, family trends, etc. Include all the most mundane and often forgotten expenditures, that bagel, pack of gum, the six dollar car wash, parking fees at the game, and then of course all the obvious things, DSL, phone, food, gas, housing, clothing, and so on. You spend more that you think you do. Make a spreadsheet and track your expenditures. EVERY LAST DIME. This takes a lot of discipline. Then after you do this for a long time, you can then subtract the average yearly amount from what you know you will be getting on a monthly basis (the very sure stuff) when retired–such as SS, rental income, investment income, and maybe a 3 % a year from an IRA, which will fluctuate too much to really hone in on. Then and only then will you truly know what you need to retire with. Or you would need to make drastic changes to your lifestyle, which frankly is a bummer and most people don’t want to. And don’t forget to figure in inflation costs, maybe a used car or new car in 10 years, new water heater, maybe a pool pump, or air conditioner, and so forth. Make sure you include a bit of discretionary money in your figures as well. Remember that you won’t want to be using credit cards or buying on credit after you retire.

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