How Do Your Retirement Savings Compare? [Updated for 2023]
Goals to consider for retirement savings by age
Having a retirement savings account seems like a no-brainer, but how much are people actually saving? According to Andrew Rosen’s article in Forbes, “Americans aren’t saving for retirement at all, or [not] enough.”Here are the average retirement savings of a national study by Vanguard, “How America Saves 2022”.
To get an idea of how you are doing, compare your retirement fund with the following goals and recommendations in this article “How Much You Should Have in Your Retirement Fund at Ages 30, 40, 50 and 60”from the Yahoo Finance page.
Age 20 Goal – Start Saving for Retirement
- Opening a 401(k) can provide a boost if you have employer matching funds, or simply appreciate the ease of automatic contributions.
- No 401(k)? It may be time to discuss other options, such as IRAs, for retirement savings with your retirement team.
Age 30 Goal – 1 Time Your Salary
- Commit to saving 20% of your salary per year from the start of your career.
- Growing your savings may trump aggressively paying off debt, depending on your situation. Consult with your retirement team to build the best strategy for you.
Age 40 Goal – 3 Times Your Salary
- Time to take a serious look at your savings strategy. Ask yourself these two questions:
- Are you meeting your goals?
- Are your savings growing?
- The power of growth over time is slipping away. At this stage, having a retirement team that you trust is critical to help you strategize, understand your options, and demystify the market.
Age 50 Goal – 5 to 6 Times Your Salary
- Use catch-up contributions to hit your goals.
- IRA tax-deferred limit for 2023 is $7,500 per person, but other pension plans like 401k) and 403 (b) vary with income ( click here to check limitations that may affect your household)
- Post-tax money can be invested in any amount for non-tax-deferred plans.
- Consider cutting costs to be able to add to savings. Cutting costs early has the added benefit of making the transition to a fixed retirement income easier when the time comes.
Age 60 Goal – 7 to 8 Times Your Salary
- Push to pay off debt.
- Protect your retirement income by minimizing loan payments.
- Work to increase your credit score to enable refinancing your home at a lower rate.
- Time to lower the risk of your investments – at this age, there’s no time to make up for losses.