Retirement Planning: Are You Saving Enough?

Planning for retirement is one of the most important financial goals you'll ever set. With pensions becoming rare and Social Security uncertain, your retirement security depends largely on how much you save and invest during your working years.

Retirement Savings Benchmarks by Age

General guidelines for how much you should have saved:

Age 30: 1x your annual salary
Age 40: 3x your annual salary
Age 50: 6x your annual salary
Age 60: 8x your annual salary
Retirement: 10-12x your annual salary

These are guidelines, not rules. Your target depends on your desired retirement lifestyle, expected expenses, and other income sources.

How Much Do You Need to Retire?

A common rule of thumb is the 4% rule: you can safely withdraw 4% of your retirement savings annually without running out of money. To calculate your target:

Annual Retirement Income Needed × 25 = Retirement Savings Target

For example, if you need $50,000/year in retirement, you'd need $1.25 million saved. This assumes a 4% withdrawal rate and accounts for inflation and market returns.

Maximize Your 401(k) Contributions

If your employer offers a 401(k) match, contribute at least enough to get the full match—it's free money. Then aim for 10-15% of your salary total (including employer match).

2024 contribution limits:

$23,000 employee contributions ($30,500 if 50+)
$69,000 total including employer match ($76,500 if 50+)

Start Early, Benefit from Compound Interest

Time is your greatest ally. Starting to save in your 20s vs. 30s can mean hundreds of thousands more in retirement due to compound interest. Even small contributions add up significantly over decades.

Example: Saving $200/month starting at age 25 at 7% return = $525,000 at age 65. Starting at age 35 = $244,000. That 10-year delay costs $281,000!