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Getting yourself ready for retirement

How much savings should you have depending on your age?

Knowing how much savings you need by age can be confusing, especially if you’re unclear about your financial goals or critical planning variables. That’s because everyone’s financial dreams and realities, like their expected retirement date and budget, health status and local cost of living, are different.

We’ll review eight factors to consider and a target benchmark for the amount you should save by age.

8 factors to consider in retirement planning

The following eight factors significantly influence how much you need to save for a secure retirement.

  1. Your current savings – play a massive role in the additional savings you need to achieve your retirement goals.
  2. Your retirement age – is critical because the earlier you need income, the more savings you need. Most people plan to retire when they start receiving Social Security benefits — but if you save a large nest egg, you could retire earlier.
  3. Your return before retirement – determines how quickly your nest egg can grow. For example, investing $200 monthly for 40 years at an average 3% return in a high-yield savings account would grow to $185,000. But if you get an 8% investment return, you’d have $700,000.
  4. Your return during retirement – is also crucial so you keep your money working for you without exposing it to too much risk.
  5. Your Social Security benefits – or other income, such as a pension, is critical for determining how much you need to save.
  6. Inflation – causes prices to rise, making your retirement income less valuable. However, Social Security retirement benefits do get adjusted for inflation as the cost of living increases.
  7. Your withdrawal rate – is how much money you take out of your nest egg each year.
  8. Your longevity – is the biggest unknown when planning how much you need to save. If you’re relatively healthy at full retirement, statistics show you’ll live well into your 80s. If you have a good family health history and take care of yourself, you could need retirement income into your 90s.

How much retirement savings you may need

After you retire, your spending will probably be similar to some of your current expenses, like food, housing and insurance. While you might downsize to a less expensive home, some of your future costs, such as healthcare, hobbies and travel, could increase. You might want retirement income equal to 70% or 80% of your pre-retirement income.

For instance, if you earn $100,000 per year on average in the years leading up to retirement, you might need a minimum of $70,000 to enjoy a similar lifestyle. But if you plan on living a more luxurious lifestyle or expect higher expenses, you might plan for more than 100% of your pre-retirement income.

The Social Security retirement benefits you receive vary widely depending on your lifetime earnings and age when you begin taking it. Everyone has a “full retirement age” or FRA when you can first claim full or unreduced benefits. If you were born between 1937 and 1959, your FRA is 66. But if you were born in 1960 or later, your FRA is 67.

However, no matter when you were born, you can elect to take early retirement benefits starting at age 62. If you retire before your FRA, your benefits get permanently reduced.

And when you delay benefits past your FRA, they increase 8% annually to age 70.

Since how much you’ll receive from Social Security is a significant factor in how much you should save, be sure to track and verify your retirement benefits. You can visit to sign up, check your earnings history and see your estimated future retirement income and other benefits.

How much savings you should have by age

So, considering all those variables, how much savings should you have for retirement? Most people should accumulate at least ten times their average annual income to generate enough retirement income.

For instance, if you earn $100,000, having at least $1 million is a wise goal, in addition to your Social Security income. However, if you have a large pension, you may not need as much savings for a comfortable retirement.

One way to make sure your retirement savings is on track is to have age-based goals, such as:

  • Savings by 30: the equivalent of your annual income or salary
  • Savings by 40: two times your annual income
  • Savings by 50: four times your annual income
  • Savings by 60: eight times your annual income
  • Savings by 66 or 67: ten times your annual income

That’s a rough guideline, and you may need more or less each decade before retirement based on your unique goals, such as luxurious travel or relocating to an inexpensive country. Plus, you may have pension income or high medical expenses to factor into your retirement plans. Also, due to inflation, an amount that seems high today may not have the same purchasing power in the future.

If you’re not on pace to have what you’ll need or are unsure if you’re saving enough, get guidance from a certified financial planner or CFP. They can help you create the right retirement plan, choose the best savings accounts and investments and achieve essential goals for you and your family.

Hitting your retirement goals

Knowing if you’ll meet your retirement goals comes from forward planning, but that isn’t always easy. A combined 36% of American adults say they’re either underprepared for retirement (24%) or will never be able to retire (12%), according to the latest data from Finder’s Consumer Confidence Index.

Graphic source

The survey also found that 37% said they’d need $1 million or more to retire comfortably.

Graphic source

If you want to retire with a million dollars, you’ll need a minimum of $22,100 saved by the time you’re 25 years of age with no additional contributions and a compounding rate of 10% — the historical average annual return for the S&P 500.

If you wait just 10 years to start your retirement account, you’d need twice as much to be on your way to $1 million — $57,322.

Graphic source

About the Author

Laura Adams is a money expert and spokesperson for Finder. She’s one of the nation’s leading personal finance and business authorities. As an award-winning author and host of the top-rated Money Girl podcast since 2008, millions of readers, listeners, and loyal fans benefit from her practical advice. Laura is a trusted source for media and has been featured on most major news outlets, including ABC, Bloomberg, CBS, Consumer Reports, Forbes, Fortune, FOX, Money, MSN, NBC, NPR, NY Times, USA Today, US News, Wall Street Journal, Washington Post, and more. She received an MBA from the University of Florida and lives in Vero Beach, Florida. Her mission is to empower consumers to live healthy and rich lives by making the most of what they have, planning for the future, and making smart money decisions every day.

This article originally appeared on and was syndicated by

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