You Need 10X Your Salary To Retire Comfortably: Here’s Where Gen X & Boomers Stand
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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As a general rule of thumb, financial experts recommend having 10x your salary saved to live comfortably in retirement.
“The ’10x your salary’ rule of thumb that many people cite is based on the assumption that you’ll save 15% of your annual income starting at age 25, stick to a financial plan that involves investing that money wisely, and retire at age 67,” said Mark Wise, president and CEO of Wise Financial, Northwestern Mutual.
While this rule might not work for everyone, Wise considers it a good starting point. Yet, many retirees and soon-to-be retirees are falling far short of this goal. Here’s a look at where Gen X and boomers’ retirement savings actually stand in relation to the 10x rule.
51% of Gen X Have 3X (or Less) of Their Current Annual Income Saved
According to the latest findings from Northwestern Mutual’s 2024 Planning and Progress Study, most of Gen X is falling far short of the 10x savings goal. Sixteen percent of Gen X have less than 1x their annual salary saved, 8% have 1x, 14% have 2x and 13% have 3x.
“For younger Gen Xers, this could be a small gap to overcome, but for Gen X individuals nearing retirement age, this could impact their ability to reach their retirement goals,” Wise said. “Ultimately, this could lead to some Gen Xers staying in the workforce longer to make up for retirement savings gaps or reassessing retirement goals to determine their needs to live comfortably once they leave the workforce.”
Wise offered some advice for Gen Xers who need to catch up on savings before they retire.
“The No. 1 thing to remember is that it’s never too early or too late to take steps to save more for retirement, but the longer you wait, the more challenges you’ll face,” he said. “One of the first things you should do is consult an expert. A financial planner can look at your situation and help you with a holistic financial plan that addresses your specific needs and goals.”
Next, he recommended maximizing contributions to any individual plans and employer-sponsored savings plans, such as a 401(k), HSA or IRA.
“Many retirement accounts also allow participants who are age 50 or older to make additional salary deferral contributions to some retirement plans,” Wise said. “These are known as ‘catch-up contributions.’ For instance, in 2024 the standard annual deferral limit for a 401(k) account is $23,000. The catch-up contribution limit for individuals 50 and older is $7,500. That means someone 50 or older could contribute up to $30,500 per year.”
Finally, Wise said to be very mindful of how you handle your retirement savings going forward.
“Gen Xers will put themselves in a much better position if they avoid the temptation to take pre-retirement withdrawals and stay consistent with their savings,” he said.
Nearly One-Third of Boomers Have 10X Their Income Saved
Boomers are in a better place when it comes to how their actual savings line up with the 10x rule. According to the study, 8% of boomers have 10x their income saved and 28% have more than 10x their income saved.
“A big factor is time,” Wise said. “Many baby boomers have had 10 to 20 years more to save for retirement, especially when compared to younger Gen Xers.”
Still, at least 60% of boomers have less than 10x their income saved (9% said they weren’t sure how their savings stacked up). This means there are many boomers who need to bridge that gap before retiring.
“Working longer may not always be an option, but it’s a great way to save more,” Wise said. “It can also help with delaying your Social Security benefits, which increase every year you delay them until age 70.”
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