You're 40, 50, Or 60 …. Do You Know How Much You Should Have Saved For Retirement By Now?

Planning for retirement can feel like a guessing game, but having some benchmarks can help you see if you’re on track. Here's a straightforward look at how much you should ideally have saved by different ages and what the average person has saved.

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By Age 40

By the time you hit 40, you should aim to have saved about 1.5 to 2.5 times your annual salary. So, if you’re earning $60,000 a year, you should have between $90,000 and $150,000 tucked away for retirement. This might seem like a lot, but it's all about taking advantage of compound interest and consistent saving early on.

By Age 50

When you reach 50, the goal post moves up a bit. You should aim to have saved around 3.5 to six times your annual salary. For someone making $60,000, that means having $210,000 to $360,000 saved. This is also a good time to start thinking about “catch-up” contributions, which allow you to save more in your retirement accounts.

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By Age 60

At 60, retirement is getting closer, and your savings should reflect that. The target here is to have six to 11 times your annual salary saved. So, if you’re still earning $60,000 a year, you should have between $360,000 and $660,000 set aside. This range accounts for different retirement lifestyles and spending needs.

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Benchmark standards and goals are great, but are they realistic? Here's a look at some real numbers. Using data from the Federal Reserve, these totals represent what people actually have saved at various ages. 

Ages 35-44:

Average savings: $141,520

Median savings: $45,000

Ages 45-54:

Average savings: $313,220

Median savings: $185,000

Ages 55-64:

Average savings: $537,560

Median savings: $185,000

Ages 65-74:

Average savings: $609,230

Median savings: $200,000

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Why These Numbers Matter

These benchmarks assume that you'll need to replace about 70-80% of your preretirement income to maintain your standard of living. They also assume that you're saving consistently and taking advantage of employer matches and tax-advantaged accounts like 401(k)s and IRAs.

Tips to Stay on Track

• Start Early: The sooner you save, the more time your money has to grow.
• Increase Contributions: Try to increase your savings rate each year. Even a 1% increase can make a big difference over time.
• Take Advantage of Employer Matches: If your employer offers a match on your 401(k), make sure you contribute enough to get the full benefit.
• Diversify Investments: Keep a mix of stocks, bonds, and other assets to balance risk and growth potential.

Retirement planning doesn't have to be overwhelming. By aiming for these benchmarks and making small adjustments, you can set yourself up for a comfortable retirement. And remember, it's never too late to start saving more or to adjust your financial plan to better meet your goals.

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