Retirement savings by age

Are you saving enough for the retirement you want? Understanding retirement savings benchmarks by age can help you set realistic goals based on your timeline and financial situation.

Use our retirement calculator to see where you stand today by testing different scenarios, and follow these age-based savings strategies to help you work toward the retirement lifestyle you envision.

How to start saving for retirement in your 20s

Your 20s are important when it comes to setting yourself up for a comfortable retirement. Why? Time is on your side when it comes to investing.

The longer your money is invested, the more you benefit from compounding returns. You'll earn interest on your initial investment and on the growth that your investment accumulates over time.

A longer time horizon also means you can take on more risk in your investment portfolio as you work toward your long-term goals. Even if market volatility causes your portfolio to fluctuate in value, there is plenty of time for it to recover.

Contribute to an employer plan. Start funding a 401(k) if your employer offers one, especially if your employer matches your contributions.

Consider an IRA. If you don’t have the option to contribute to a 401(k), consider an individual retirement account (IRA). With a traditional IRA, you’ll be taxed when you withdraw your funds. With a Roth IRA, you’re taxed upfront but not when you withdraw, which can maximize your tax savings later.

You can contribute to both a traditional and Roth IRA as long as your total contributions don’t exceed the annual limit.

Build an emergency fund. Begin building an emergency fund to prepare for unexpected expenses or a loss of income. A general rule of thumb is to have three to six months’ worth of your household income set aside for emergencies.

Create a budget. There are numerous online resources and budgeting apps that can help you track your income and expenses.  A budget can help you form good spending and saving habits.

Take advantage of wage growth. Every time you get a raise, bump up your 401(k) or IRA contributions. You might not even notice a difference, but your investments will benefit.

How to start saving for retirement in your 30s

Everyone’s journey through life is different, but while your 20s are usually spent establishing a career and getting control of your finances, your 30s are when you’re likely to move toward financial maturity.

By the time the decade is out, you’ll likely have established your career and bolstered your earning power, which means you can afford to set more aside for retirement savings. You might have also bought property, gotten married and/or had children. You’re more confident in your earning potential and long-term goals. 

Establish a financial plan. If you haven’t already, consider working with a financial professional to create a plan that accounts for your short- and long-term financial goals, including retirement.

Pay down debt. Focus on paying off higher interest debts like college loans and credit cards. The money you free up can be put toward retirement savings.

Increase contributions. If possible, boost your contributions to your retirement accounts. Aim to set aside at least 10-15% of your pre-tax earnings for retirement.

Fund your children’s education. If you have or are planning on having children, consider a 529 plan to put money aside for their education without affecting your retirement savings.

Consolidate retirement accounts. If you change jobs, check if you have the option to roll over any previous employer-sponsored plans into an IRA or your new employer’s 401(k).

Review your insurance needs. Now is the time to get life insurance if someone, such as a spouse or child, depends on your income. Additionally, consider adding disability insurance to your portfolio, either through work or as a standalone policy.

Saving for retirement in your 40s

You may still feel like you’re in your 30s (or even your 20s), but once you hit your 40s, retirement may only be a couple decades away and no longer an abstract idea.

You’re likely in your prime earning years, so if you’re just starting to save for retirement, do so aggressively. And if you’re already investing in a retirement vehicle regularly, see if you can increase your contributions. Time is still on your side.

Maximize contributions. A financial professional can provide guidance on how to ramp up your retirement planning, including maxing out contributions to retirement accounts and coming up with an exact dollar amount for your final goal.

Manage debt. Maintaining a mortgage may make sense for tax purposes but look at other debt you carry to see how you can pay it off without putting pressure on your finances. This will free up funds for other areas of life, whether that’s increasing retirement contributions, saving more for your children’s education, helping to care for aging parents or other financial must-dos.

Plan for large purchases. You might be considering a move to a larger home, remodeling your current home, buying a vacation home or making other large purchases. Make sure to factor in your retirement plan when determining the impact of this purchase on your long-term savings.

Create an estate plan. If you haven’t already done so, work with an attorney to establish key estate planning documents, such as a will, healthcare directive and financial powers of attorney.

Saving for your retirement in your 50s

Retirement could be just a decade away. Meet with your financial professional at least annually to ensure your retirement plan is on track and your contributions to your retirement savings are appropriate for your goals.

It may also be a good time to re-evaluate your investment strategy to align with your time horizon and feelings toward risk.

Use catch-up contributions. Individuals over the age of 50 have increased contribution limits on retirement accounts. Catch-up contributions apply to employer-sponsored plans – such as 401(k)s and 403(b)s – IRAs and health savings accounts (HSAs) and can help you save more for retirement in the latter part of your career.

Re-evaluate your risk profile. You may want to consider shifting your portfolio to more conservative stocks to capture growth while minimizing risk. Think about adding more bonds or other relatively safe investments.

Take care of remaining debt. Talk with a financial professional about paying off any remaining debts, such as a mortgage, to see if that’s a good option for you. 

Consider future health needs. Research insurance options such as long-term care to safeguard your retirement nest egg from unexpected health events.

Understand IRA and 401(k) withdrawals. At 59½, you can start withdrawing from a 401(k) or an IRA without penalty; if you don’t need it, avoid doing so. You likely want to save it for retirement.

Review your estate plan. Make sure to keep your designated beneficiaries and other estate planning documents up to date, ensuring your wishes are accurately reflected.

Retirement savings goals and preparations for your 60s

Retirement is nearly here. At this stage, you have an opportunity to make final adjustments to your retirement plan, but the most important task is to select a retirement date. Setting a retirement date will affect retirement benefits such as Social Security and will also determine the amount you need for a comfortable retirement.

Plan your income needs. Consider creating a retirement income strategy to account for all your income streams. Make sure you consider taxes, life expectancy and your investment portfolio in your retirement withdrawal strategy.

Factor in Social Security. Calculate when you should start drawing Social Security retirement benefits. The longer you can wait to withdraw, the higher the monthly payment you’ll receive.

Modify your investment allocation. You may want to continue adjusting your portfolio’s asset allocation into more conservative investments. As a potential hedge against inflation, however, consider retaining some aggressive positions that offer the possibility of higher returns.

Determine future employment needs and wants. Not sure you’ll have enough cash when you retire? Think about ways to keep working after retirement, such as consulting in your current field or part-time work, if necessary.

Prepare for the lifestyle transition. If you’ve been employed for your entire adult life, retirement can be a big adjustment emotionally as well as financially. Put a retirement lifestyle plan together that will keep you occupied and help you stay social, such as traveling, regular volunteering or picking up new hobbies. You may also consider downsizing your home if (or when) you’re empty nesters. 

Living in retirement

Retirement planning doesn’t stop when you’re retired. You’ve worked hard building your retirement savings through your IRA and/or employer-sponsored retirement plan over the decades, and now is the time to start reaping the benefits.

Know the RMD rules. You’ll need to start taking required minimum distributions (RMDs) from certain retirement accounts at age 73. Your financial professional can help you assess what it will mean for your retirement income and investments.

Maintain a budget. Reassess your budget once you know exactly how much income will be coming in each month. Consider consulting a financial professional if you have any budgetary concerns as you adjust to living in retirement. 

Analyze your portfolio. If you haven’t already done so, consider moderating any aggressive positions in favor of a more conservative investing strategy. But don’t overdo it. Some investment growth can help offset your drawdown of retirement accounts, so you remain funded throughout your retirement years.

Communicate with family. Have important financial conversations with family members about estate planning, including wills, trusts and beneficiaries. Keep your documents in a safe place and let your loved ones how to access them.

Relax. Lastly, remember to enjoy your retirement savings! You’ve earned it.

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