Saving regularly from the beginning of your career to the end has always been the prescription for a comfortable retirement. To retire at 67, for instance, Fidelity Investments recommends that you set aside 15% of your salary, including any employer contribution, starting at age 25 and continuing throughout your career, resulting in a retirement stash of 10 times your final income. The formula assumes you'll replace 45% of your preretirement income with savings, with the rest of your income coming from Social Security. To replicate your standard of living and retire at 62, you'd have to save 25% of your salary starting at age 25, says Fidelity.
As with all long-term goals, however, life has a way of intruding, in the form of kids, mortgages and college costs. If you start saving for retirement late or cut back on saving for a few years, you'll have to double down to get back on track. That's challenging but not impossible, says Kevin Reardon, a certified financial planner in Pewaukee, Wis. "We get clients who are in their early fifties, the kids are out of the house and they're past the college expenses. Now they're able to sock away a big chunk of money." Uncle Sam gives you a boost: If you are 50 or older, you can make annual catch-up contributions of up to $6,000 to your 401(k), for a total of $24,000 in 2017, and up to $1,000 to your IRA, for a total of $6,500.
You may realize that your post-career plans—hanging with the grandkids or enjoying long walks in the woods—don't require 10 times your preretirement income, or that retiring a year or two earlier than scheduled is worth skipping the ski trips to Gstaad later on. Savings benchmarks are a guide, not an imperative, says Jeanne Thompson, a senior vice president at Fidelity. "When people decide they're ready, they take stock of what they have and make it work."
Tim and Mary Joyce of Muskego, Wis., have always lived modestly. "We're very conscious of budgets and saving, and we're not extravagant. We don't incur much debt, and we paid our house off quite a few years ago," says Tim, 64. When Mary, 63, a longtime employee of General Electric, was offered early retirement, the couple assessed their resources and realized they could retire whenever they chose. She took the offer and left her career job at 56; Tim retired a few years later, at 59. "We retired early because we could," he says.
And they have no regrets. Financially, "our lifestyle hasn't changed at all," says Tim, but now they have more time to pursue their hobbies (he restores old cars, and they are renovating their vacation home, a log cabin in northern Wisconsin). They are also able to contribute to college-savings accounts for each of their four grandchildren.