Retirement Savings by Age: Are You Saving Enough for the Future?

The dream of retirement—sun-drenched beaches, endless travel, or simply relaxing in your favorite reading chair—is a powerful motivator. However, turning that dream into a reality requires diligent planning and consistent saving, tailored to your current life stage. Retirement savings isn’t a one-size-fits-all endeavor; what looks appropriate for a 25-year-old focused on career launch is vastly different from what a 55-year-old needs to consider as the finish line approaches.

Understanding where you stand relative to your peers and established benchmarks is crucial for maintaining a healthy financial trajectory. This comprehensive guide breaks down age-based benchmarks, explains the power of compounding at every stage, and offers actionable advice to ensure you are saving enough for the future you envision.

Why Age Matters in Retirement Planning

Financial experts often use age as the primary metric for assessing retirement readiness because it dictates the two most crucial variables in the savings equation: time horizon and risk tolerance.

The Power of Compounding Over Time

The secret sauce of building wealth is compound interest—earning returns on your initial investment and on the accumulated returns from previous periods. The longer your time horizon, the more dramatic the effect of compounding.

• Early Starter (20s/30s): Even modest contributions benefit from decades of growth, meaning small amounts saved now are more potent than large amounts saved later.
• Mid-Career (40s/50s): The power of compounding is still present, but there is less time to recover from setbacks. Contributions need to increase significantly to catch up.
• Near Retirement (60s+): The focus shifts from aggressive growth to capital preservation and ensuring required income flows are established.

Adjusting Risk Tolerance

Age also influences how much risk you can afford to take with your portfolio. Younger savers have decades to ride out market volatility, allowing them to favour high-growth, higher-risk assets (like stocks). As retirement nears, the need to protect accumulated capital becomes paramount, necessitating a shift toward more conservative investments (like bonds and cash equivalents).

Benchmarks: What Should You Have Saved by Now?

While personal circumstances vary widely, financial industry leaders, such as Fidelity, have established general guidelines often referred to as “benchmark multiples.” These benchmarks suggest how much you should have saved relative to your current annual salary by certain milestones.

These targets assume you plan to retire around age 67 and will need approximately 80% of your pre-retirement income annually.

Age 30: One Times Your Income

By age 30, you should ideally have at least 1x your current annual salary saved for retirement.

• Context: If you earn $60,000, you should aim for $60,000 saved.
• Why: This level indicates that you have successfully navigated post-college debt (if applicable), established consistent savings habits, and benefited from the first few years of compounding. If you waited until 30 to start, aggressive saving is now essential.

Age 40: Three Times Your Income

By age 40, the savings goal jumps to 3x your current annual salary.

• Context: If you earn $100,000, you should aim for $300,000 saved.
• Why: This is the crucial decade where compounding truly begins to accelerate. If you miss this mark, high catch-up contributions will be necessary over the next two decades.

Age 50: Six Times Your Income

By age 50, you should target 6x your current annual salary saved.

• Context: If you earn $120,000, you should aim for $720,000 saved.
• Why: At this stage, market returns should contribute significantly more than new contributions. If you are behind here, financial advisors often recommend maximizing “catch-up contributions” allowed in retirement accounts.

Age 60: Eight Times Your Income

By age 60, the benchmark is 8x your current annual salary.

• Context: If you earn $150,000, you should aim for $1.2 million saved.
• Why: This is the final high-growth push before the transition to income generation requires prioritizing principal protection.

Age 67: Ten Times Your Income

The ultimate goal upon reaching traditional retirement age is 10x your pre-retirement income.

• Context: If your peak earning salary was $150,000, you should aim for a nest egg of $1.5 million (excluding Social Security and pensions).
• Why: This figure aims to support a secure withdrawal rate (often modeled at 4% annually) for a multi-decade retirement.

Saving Recommendations by Decade

While the benchmark multiples provide a snapshot, the required contribution rate changes dramatically as you advance through your career.

The Twenties: Establishing the Habit

Your twenties are about building foundational habits, often while tackling student loans or purchasing a first home.

• Goal Contribution Rate: Aim to save 10% to 15% of your gross income, including any employer match.
• Key Action: If your employer offers a 401(k) match, contribute at least enough to secure the full match—this is 100% immediate return on that portion of your savings.
• Investment Focus: Aggressive growth. Focus predominantly on low-cost stock index funds. Time is your greatest asset.

The Thirties: Stepping on the Gas

As your income generally increases, so too must your savings rate to compensate for lost time if you started saving later.

• Goal Contribution Rate: Maintain or push toward 15% to 20% of your gross income.
• Key Action: Increase contributions annually, ideally whenever you receive a raise. Automate these increases so you never “miss” the extra money. Maximize Roth IRA contributions if eligible.
• Investment Focus: Still aggressive, but perhaps begin diversifying mildly. Ensure you are not overly concentrated in any single stock or sector.

The Forties: Maximizing Contributions

This decade is the critical turning point. If you start behind, this is where you must lean in hard to utilize the remaining runway effectively.

• Goal Contribution Rate: Aim for 20% or more, including the employer match.
• Key Action: If you are significantly behind the 3x benchmark, explore increasing contributions beyond the standard retirement vehicle limits using taxable brokerage accounts or “mega-backdoor Roth” strategies if available through your 401(k) plan.
• Investment Focus: Growth remains the priority, but consider simplifying your allocations as they grow larger and more complex.

The Fifties: The Catch-Up Years

In 2024, those aged 50 and older are permitted to contribute extra amounts to their retirement accounts above the standard limits (known as “catch-up contributions”).

• Goal Contribution Rate: Aim for 20% or more, actively utilizing catch-up contributions where possible (e.g., IRA and 401(k) catch-ups).
• Key Action: Review your spending and downsize non-essential expenses to fund maximum contributions. If you are on track, begin slightly de-risking your portfolio by shifting a small percentage (e.g., 5-10%) from stocks to bonds.
• Investment Focus: Growth, but with increased ballast. Your portfolio should start reflecting a path toward stability.

The Sixties: The Final Strategy Shift

With retirement potentially 1 to 7 years away, the strategy flips from accumulation to preservation.

• Goal Contribution Rate: Continue maximizing contributions, especially catch-ups, until you retire.
• Key Action: Create a detailed withdrawal plan. Determine when you will claim Social Security and calculate projected income needs versus current savings balances. Increase your allocation to bonds and stable value funds.
• Investment Focus: Preservation. You want assets to generate predictable income, not volatility. Many advisors suggest having 3-5 years’ worth of planned withdrawals accessible in lower-risk investments by age 65.

Addressing Common Savings Hurdles

Hitting these benchmarks requires overcoming common obstacles that derail even the best intentions.

1. Lifestyle Inflation

As salaries rise, the temptation is to immediately upgrade your lifestyle (nicer car, bigger house) to match the new income. This phenomenon, known as lifestyle inflation, directly prevents you from hitting your savings targets.

• Solution: Treat every raise as an opportunity to immediately increase your savings rate before the money hits your checking account. Save at least half of every raise.

2. High-Interest Debt

Carrying significant high-interest debt (like credit cards) sabotages retirement savings because the interest you pay often outpaces conservative investment returns.

• Solution: Prioritize paying off any debt with an interest rate over 7–8% before aggressively funding non-matched retirement accounts. Use the “debt snowball” or “debt avalanche” methods consistently.

3. Unrealistic Retirement Spending Estimates

Many people underestimate how much they will spend in retirement, leading to under-saving. Current estimates suggest you will need 80% of your pre-retirement income, but if you plan extensive travel in early retirement, you might need 100% or more.

• Solution: Create a “Three Buckets” spending plan: Essential (Health, Housing), Discretionary (Travel, Hobbies), and Emergency buffer. Model spending based on your desired lifestyle, not just current expenses.

Conclusion: Action Over Anxiety

Retirement saving should inspire action, not anxiety. Whether you are starting early with small amounts or catching up later with aggressive contributions, the critical factor is consistency and alignment with your current time horizon.

Use the benchmarks as a guide, not a rigid pass/fail test. Assess where you are today relative to your age cohort, adjust your contribution percentage upward by at least 1% this year, and maintain control over your spending. The best time to maximize your retirement savings may have been 20 years ago, but the second-best time is right now.