Retirement Savings Benchmarks: How Much Money Do You Need to Retire?
Although the 2017 Retirement Savings survey found most Americans aren't saving enough for retirement, that doesn't mean they can't catch up. If you're one of the many Americans falling behind on retirement savings, you can take steps to increase your retirement savings.
But before you can play catch up, you need to be able to answer this question: How much money do you need to retire?
The amount you need to retire largely depends on your lifestyle and expenses in retirement. However, you can use the following savings benchmarks to gauge if you're on track. According to Fidelity Investments, you can track whether you're behind on retirement savings using these savings factors. Multiply your income by your savings factor to see how much money you should aim to have saved for retirement at that point:
- By age 30, aim to save 1x your salary.
- By age 35, aim to save 2x your salary.
- By age 40, aim to save 3x your salary.
- By age 45, aim to save 4x your salary.
- By age 50, aim to save 5x your salary.
- By age 55, aim to save 7x your salary.
- By age 60, aim to save 8x your salary.
- By age 67, aim to save 10x your salary.
Based on these savings factors and our own survey results, GOBankingRates was able to roughly estimate how far behind some Americans are on retirement savings.
For example, the median salary of 25 to 34 years olds is $57,366. Based on the 1x savings factor, 30-year-olds should have at least that amount saved. Using GOBankingRates' survey results, an estimated 20 percent of adults in this age group are on track with their retirement savings while 80 percent are behind. Meanwhile, 40-year-olds should have an estimated $214,251 saved. But only about 15 percent are on track and 85 percent are behind.
Of course, you might need more (or less) money for retirement depending on your needs. Still, when figuring out how much to save for retirement, it's important to aim high. The only way retirement will be enjoyable is if you have enough resources to sustain yourself, said Zgainer.
And "the only way you can accumulate those resources is [setting aside money] while you're working," he said.
Up Next: How Much Money Do You Need to Retire?
Methodology: The GOBankingRates' survey posed the question, "By your best estimate, how much money do you have saved for retirement?" Respondents could select one of the following answer options: 1) "Less than $10K," 2) "$10K to $49K," 3) "$50K to $99K," 4) "$100K to $199K," 5) "$200K to $299K," 6) "$300K or more" or 7) "I don't have retirement savings." Responses were collected through three separate Google Consumer Surveys conducted Feb. 16 - 19, 2017, and responses are representative of the U.S. online population. Each survey targeted one of three age groups: 1) ages 18 to 34 2) ages 35 to 54; and 3) age 55 and over. For each age group, 1,000 responses were collected.