We’re in a retirement crisis right now in America. Every day, Americans in their mid-60s wake up on the eve of their retirement, only to finally and fully realize that they simply don’t have enough. In fact, over half of American households (54%) report having no dedicated retirement savings at all. And even among those who do save, many fall short of what they think they’ll need. Your average American feels that they would need about $1.25 million to retire successfully, yet the typical 65–74 year-old has only about $200,000 saved.
Why does this gap exist, and how can you avoid becoming part of these statistics?
Age-Based Savings Benchmarks
So, how much should you have saved? While the exact number will be different for everyone, financial experts have developed some benchmarks to gauge whether you’re on track. One widely cited guideline comes from Fidelity Investments, which suggests aiming to save around 10 times your annual income by the time you reach age 67. This assumes you want to maintain a similar lifestyle in retirement as during your working years. To help achieve that big goal, Fidelity recommends the following age-based milestones for your savings:
Retirement Savings Milestones
Track your progress toward financial security with these age-based savings benchmarks
Building Foundation
Gaining Momentum
Peak Accumulation
Home Stretch
Retirement Ready
These milestones are aspirational, not hard rules. Everyone’s situation is unique, and you likely won’t hit every target perfectly. But they serve as helpful goalposts. Hitting these benchmarks simply means you’re potentially more likely to retire with a nest egg that can sustain you. For example, if you earn $80,000 at age 60, aiming for 8× that (~$640,000) in retirement accounts by that age is a reasonable target. By the time you’re 67, 10× your salary (if you’re still making $80k, that’s about $800,000) would be the goal to shoot for.
These numbers are based on some assumptions about saving and investing. One key assumption is that you consistently save around 15% of your income each year (including any employer 401(k) matches) starting in your 20s. Historically, that level of saving, invested for growth, can accumulate roughly ten times your salary over a few decades of work. Of course, if you start saving later or save a smaller percentage, you might end up with less. But don’t be discouraged if you’re not exactly at these multiples right now. They’re a mid-course check to help you adjust your plan as needed.
Key Factors to Consider
The 10× salary by the age of 67 rule of thumb is a very general guideline. Naturally, other factors will shift the target higher or lower for you.
Retirement Age
The age at which you stop working has a big impact on how much you need saved. Retiring earlier means your savings have to last longer (and you have fewer years to contribute), so the target multiple is higher. Conversely, retiring later can lower the required multiple, since you’ll have more years to save and fewer years to fund. For example, according to Fidelity’s analysis, someone retiring at 65 might aim for roughly 12× their final salary saved. Retire at the traditional 67 and 10× is usually sufficient. Delay retirement to 70, and you might get by with around 8× your salary saved. Why the drop? Working a few extra years not only lets you save more, but also shortens the retirement period you need to fund and increases your Social Security benefits. (Of course, not everyone can or wants to work longer, but it’s a lever to keep in mind.)
When you retire significantly impacts your savings target. Earlier retirement means your money needs to last longer, while working a few extra years could substantially reduce your required savings.
Working longer means more time to save, fewer retirement years to fund, and potentially higher Social Security benefits
Retirement Lifestyle
How you plan to live in retirement is the other key piece. Do you envision a frugal retirement – downsizing your home, spending much less than you do now? Or do you plan to travel extensively or indulge in hobbies that could even increase your spending? Your expected retirement spending level (relative to your current lifestyle) will affect how much you need saved. If you expect to spend less than you do pre-retirement (what experts might call a “below average” lifestyle), you could likely target the lower end of savings need (maybe around 8× your income). If you want to maintain a similar lifestyle to today (“average”), the standard ~10× guideline is appropriate. And if you foresee spending more in retirement than you do now (“above average” lifestyle, perhaps due to travel or expensive hobbies), you may need to save 12× or more of your income to be safe.
How you plan to live in retirement significantly affects your savings needs. Your expected spending level compared to your current lifestyle could determine whether you need more or less than the standard 10× salary guideline.
Other Factors
Other factors can also influence your personal “number.” For instance, if you’ll receive a pension or sell a business, that could reduce how much personal savings you need. Your health and family longevity (how long you expect to live in retirement) play a role – longer life means more years of expenses. And investment returns matter too: stronger portfolio growth could reduce how much you must save out-of-pocket (though you should never bank on unrealistic returns – always plan conservatively).
Remember: There's no single magic number for everyone. Your personal retirement savings goal might be significantly different from general benchmarks. Consider working with a financial professional to develop a customized plan that accounts for your unique circumstances and goals.
As you can see, there’s no single magic number for everyone. Your personal retirement savings goal might be lower or higher than the common benchmarks once you factor in when you retire and how you’ll spend your retirement years.
Recreating Your Income: The 4% Rule
Ultimately, the reason you save money is so that you can replace your paycheck when you retire. One useful way to estimate how much savings you’ll need is to work backwards from the income you want in retirement. For example, let’s say you determined you’d like to have $60,000 per year available to spend in retirement (before taxes, in today’s dollars). How big should your nest egg be to support that?
A popular guideline is the 4% rule. This rule of thumb suggests that if you withdraw around 4% of your retirement portfolio in the first year of retirement (and adjust that amount for inflation each year after), your savings should last about 30 years without running out. In other words, your total savings needs to be roughly 25 times your first year’s withdrawal.
Using the 4% rule: if you need $60k per year, you’d multiply that by 25, suggesting about $1.5 million saved. If you expect to need $100k a year, you’d need roughly $2.5 million, and so on. This aligns with that earlier 10× income guideline for many people (for instance, if $100k is your salary and also what you want in retirement, 10× is $1M; however, to get $100k/year from savings alone you’d actually need $2.5M at 4% — the difference comes from the fact that in reality some of that $100k could come from Social Security).
Speaking of Social Security. It’s an important income source, but for most people it won’t replace their entire pre-retirement income. Social Security might cover perhaps 30-40% of your previous income (more for lower earners, less for higher earners). The rest has to come from personal savings. In fact, Fidelity suggests planning for your own savings/investments to provide about 45% of your pre-retirement income on average. This reinforces why that 10× salary savings goal (or whatever your personalized target is) matters so much.
Keep in mind, the 4% rule is a guideline, not a guarantee. Actual sustainable withdrawal rates can vary based on market conditions, your investment mix, and how long your retirement lasts. Some retirees choose to withdraw less (say 3% annually) to be extra safe, especially if they retire very early or want to leave a legacy. The main takeaway is that there’s a direct relationship between the income you’ll need each year and the nest egg you must accumulate. If the numbers look daunting, don’t panic – it’s better to know now than to be surprised later. And if you’re far from the target, you still have options to course-correct.
Retirement Savings Calculator
See if you're on track for retirement. This tool could help you understand how much you might need to save based on your goals and circumstances.
Your Retirement Analysis
The Bottom Line
Figuring out how much you should have saved by retirement is a crucial step toward achieving financial security in your later years. While general rules provide useful starting points, your personal number will depend on your unique circumstances, and planning is essential. The earlier you start and the more consistent you are, the easier it is to reach that number. And even if you start late, there are ways to catch up and improve your position.
It’s okay if you’re not exactly at 3× your salary by 40 or 6× by 50; these are signals to adjust rather than reasons to panic. Adjust your strategy, stay focused, and seek help by arranging an appointment via the calendar below. We can analyze your situation, craft a tailored plan (incorporating smart strategies like tax-efficient investing and risk management), and guide you toward a comfortable retirement.
