Retirement is one of those things that seems very far away—until suddenly, it isn't. But no matter your age, now is a fantastic time to start planning for what your life will be like when you're no longer working.
Imagine what your bank account would look like without one paycheck coming in. Now two in a row. Now three. It probably isn't pretty, right? Then stretch out that financial scenario by three decades—that could be the length of your retirement. Thirty years. How would you meet your living expenses?
Social Security is a start, but it's not the end. It's unlikely that your benefits will provide you with the lifestyle you were accustomed to pre-retirement. For that, you'll need to save.
Getting started early (or right now) and making regular contributions to your retirement savings is a healthy financial habit, as is regularly checking on your progress and making necessary adjustments. Keep reading to find out how much you should have in retirement savings at every age.
The Beginning: Your 20s & Early 30s
Experts recommend that young adults have one year's salary saved for retirement by age 30 and two times their salary saved by age 35. To get there, they suggest putting aside at least 15% of your pretax salary each year. For instance, if you earn $40,000 per year, that would work out to $6,000 per year, or $500 per month.
If you're a young adult, here's your unfair advantage: time. Thanks to the magic of compound interest, money you save now will grow far more over the decades than money you save later. Why? Because your money earns interest, that interest earns interest and so on—like a snowball rolling downhill.
For example, if you park your cash in a high yield savings account, interest is added to your balance regularly—monthly, in many cases. That new, larger balance then earns even more interest the next time around. The earlier you start, the bigger the snowball.
That said, while high yield savings and similar accounts are an important part of your overall financial strategy, they're not usually the best choice for long-term goals such as retirement. Instead, you want to be investing, ideally in tax-advantaged accounts including 401(k)s, IRAs and Roth IRAs. One smart tip? Investigate and sign up for any retirement-related plans offered by your employer, especially if they'll contribute to your account.
Saving when you're young isn't always easy, especially if you're juggling student loans or saving for big goals like buying a house. One powerful way to stay on track? Watch out for lifestyle creep—that sneaky habit of spending more as you earn more.
When it comes to deciding where your money should go—debt, savings, investing—it's part math, part mindset. The math says: Crush high-interest debt first. And if your debt has a low or zero interest rate, you may be better off making minimum payments and investing the rest.
That said, don't underestimate the emotional win of knocking out a loan. If you can eliminate your debt within a year, going all in might be worth it for the peace of mind (and the interest savings). On the flip side, many people thrive on a balanced budget—allocating money across debt payments, short-term and retirement savings, essentials, and yes, a little fun. Because financial wellness isn't just about numbers—it's about feeling in control.
READ MORE: 10 Lessons You Should Learn Before Investing
Building Up: Your 30s & 40s
By the time you reach age 40, experts recommend you aim higher, with three times your annual salary put aside—and four times by age 45.
Your 30s and 40s can be a busy time of life: You might be balancing career growth with starting a family, buying a house or even caring for aging parents. With all of that going on, it wouldn't be a surprise if thinking about retirement savings took a back seat.
But for many people, now is the time when earnings begin to peak. So it's a good idea to check in on your accounts and make sure you're hitting your targets, and adjust if you're not. If you're having trouble meeting your savings goals while also covering the cost of living, look closer at ways you might be able to spend less, like choosing budget-friendly vacations and cutting down on your grocery bills.
That said, while budgeting is never a bad idea, it can only get you so far. Now that you've got work experience under your belt, you can aim to increase your income, too. That might mean looking for a raise or a completely new job. Either way, a higher salary can help you reach your savings goals faster.
Now is also a good time to review your investment accounts periodically and make sure you're well diversified and positioned for growth. That probably means a mix of stocks and bonds regularly balanced so they match your needs and appetite for risk. Want to save a million dollars for retirement? With fiscal discipline and smart decision-making (and some good fortune), you can do it.
READ MORE: Retirement Planning Mistakes to Avoid Throughout Your Career
Maximizing: Your 50s
Now is when things start getting serious. As you enter your 50s, you probably have friends and coworkers who are already retiring—and you might be tempted to join them. By this point, you should have at least six times your salary in your retirement account, and aim to hit seven times your salary by age 55.
The good news? Sometimes it's just the lack of bad news. By this stage, your student loans are likely paid off—or at least close to it—and you're probably in your peak earning years. The challenge now is balance: managing your retirement goals while possibly helping with your kids' college costs or other family responsibilities.
Recognizing that time is getting tight, the federal government allows you to put additional money in your retirement savings vehicles after you turn 50. These are known as "catch-up" contributions, and they're a valuable tool if you're among the 68% of workers in your cohort who feel behind on saving for retirement. If you can, find ways to increase your contributions. With a little smart budgeting, you might even be able to dig up an extra $5,000 per year.
Your 50s are usually focused on maximizing growth, but depending on your life situation, you might want to consider adjusting your investment strategy to gradually reduce risk. This is especially true if you think you might take an early retirement.
If you don't already have a financial advisor, now might be the time to start consulting with one. A fee-only advisor can take an objective look at your finances and help guide you toward where you want to be. If you're married, make sure you and your spouse have detailed discussions about what your ideal retirement looks like so there are no surprises when the time comes.
READ MORE: 10 Questions to Help Accurately Calculate Your Retirement Numbers
Pre-Retirement Years: Your 60s
Experts recommend that you have eight times your annual earnings put aside by age 60, and 10 times by age 67—the idea being that the magical figure of 10 times your salary is enough to finally stop working.
When it comes to investing, your portfolio at this point should have a more conservative investment mix as you inch closer to retirement. While that will probably limit gains, it also minimizes losses. And capital preservation becomes more important closer to retirement, when there's much less time to recover from market downturns. But do keep in mind your life expectancy: If you think you've got two or three (or more!) more decades to go, some growth is still important.
Check in with your financial advisor to run the numbers and see how you're doing compared with your goals so you can make any final adjustments. Be sure to incorporate planning for healthcare costs and other needs like living expenses, leisure and housing. (Home maintenance doesn't stop when you stop working!) Also, be sure you understand how Social Security works and the best time to start your benefits.
As for those living expenses, remember that you can extend your savings if you reduce your costs. For example, if you have a large home, downsizing to a smaller one or moving to a retirement community can help you save on everything from decorating to energy costs. Finally, have a solid strategy for retirement savings withdrawals so that your money lasts as long as you need it to.
READ MORE:Should I Work 5 More Years—or Retire?
Final Thought: Future You Is Counting on You Now
At the end of the day, your retirement won't fund itself. You have to make it happen. Life will throw distractions, expenses and perfectly reasonable excuses not to save at every stage. But if you keep your long-term goals in focus and stay consistent even through the chaos, you're setting your future self up for freedom, not regret. Start now, stay the course and give yourself the retirement you actually want—not just the one you settle for.
