How Much to Save for Retirement: Benchmarks by Age

There is no single dollar figure that fits everyone, but there are two well established shortcuts that get you most of the way there: a savings rate that tells you how much to put away each year, and age benchmarks that tell you whether you are on track. Below we cover both, add a worked example, and show how to sanity check your number using the 4 percent rule.

How much should I save for retirement each year?

Aim to save about 15 percent of your gross (pre-tax) income each year, and count your employer match toward that 15 percent. This guideline is promoted by Fidelity and echoed across mainstream personal finance sources. If your workplace plan matches 4 percent, you only need to contribute 11 percent yourself to hit the target. Starting earlier lets you save a smaller percentage because compound growth does more of the work over time.

If 15 percent feels out of reach today, that is normal. Contribute enough to capture the full employer match first (that is an immediate, guaranteed return), then raise your rate by one or two percentage points each year or whenever you get a raise. If most of your saving happens through a workplace plan, our 401k calculator shows how contributions and the match grow over time, and our guide on compound interest explained shows why small consistent amounts snowball.

Retirement savings benchmarks by age

Fidelity's benchmarks express your target as a multiple of your current salary, so they scale with your income. The table below shows the milestones. Read them as checkpoints, not pass or fail grades.

The headline anchors most people remember are 1x by 30, 3x by 40, 6x by 50, 8x by 60 and 10x by 67. If you are behind, do not panic. These assume steady saving from your mid twenties, and there are catch up rules and higher savings rates that can close a gap faster than the multiples suggest.

How much money do I need to retire?

A common way to estimate your total target is the 4 percent rule, which suggests a sustainable first-year withdrawal of about 4 percent of your nest egg. Turned around, it means you need roughly 25 times your desired annual spending from savings. The rule comes from retirement research popularized in the 1990s and is widely referenced by outlets such as Investopedia and the SEC's investor.gov as a planning rule of thumb, not a guarantee.

To use it, work out how much annual income you want your savings to provide (after subtracting any pension or state benefits), then multiply by 25. That is your rough nest egg target. The 4 percent figure is a starting assumption. Market conditions, fees and how long you live can all move the safe rate up or down.

Worked example: turning the rules into a number

Say you are 35, earn 60,000 a year, and want your savings to cover 40,000 a year in retirement on top of other income. Here is how to combine the guidelines into a plan.

1. Set your yearly savings rate. 15 percent of 60,000 is 9,000 per year. If your employer matches 4 percent (2,400), you contribute the remaining 6,600 yourself.
2. Check your age benchmark. At 35 the target is about 2x salary, so roughly 120,000 already saved. Compare that to your current balance to see if you are ahead or behind.
3. Estimate your total target with the 4 percent rule. 40,000 of desired annual income times 25 equals a nest egg goal of about 1,000,000.
4. Bridge the gap with time and growth. Model how your yearly 9,000, plus your current balance, could grow with our retirement calculator and adjust your rate until the projected balance meets the target.
5. Revisit yearly. Raise your contribution with each pay rise and rerun the numbers, since even a small percentage increase in your savings rate compounds meaningfully over decades.

Common mistakes to avoid

Small errors early can cost years of growth. Watch out for these.

• Leaving the employer match on the table. Not contributing enough to get the full match is turning down free money and a guaranteed return.
• Ignoring inflation. A target that looks large today buys less in 30 years. Factor in rising prices when you set your goal, and see how to calculate an inflation rate to understand the effect.
• Treating benchmarks as guarantees. The multiples and the 4 percent rule are averages and rules of thumb, not promises. Your real number depends on lifestyle and other income.
• Starting late and hoping to catch up all at once. Compound growth rewards early, consistent saving far more than a big late push.
• Forgetting fees and taxes. High fund fees and the tax treatment of your accounts quietly reduce the amount you actually keep.

Good to know before you set a target

These guidelines assume a fairly typical career and retirement age. If you want to retire early, plan to travel heavily, or expect large healthcare costs, your target should be higher. If you will have a generous pension or plan to work part time, it can be lower. The point of the benchmarks is to give you a fast reality check, not to replace a plan tailored to your own numbers. When you are ready to model your own figures, the calculator below does the arithmetic for you.

Use the benchmarks to judge whether you are on track, use 15 percent as your default savings rate, and use the 4 percent rule to sanity check your total. Then let the calculator project your own path so you can adjust while you still have decades of compounding on your side.