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How much should I save for retirement?

Key takeaways

  • Fidelity's guideline: Aim to save at least 15% of your pre-tax income each year for retirement, which includes any employer match.
  • Remember: Your personal target saving rate may vary depending on a variety of factors, including when you plan to retire, your retirement lifestyle, when you started saving, and how much you've already saved.

Who doesn't have a retirement dream? Yours may be as simple as sleeping late or riding your bike on a sunny afternoon, or as daring as jumping out of a plane at age 90. Living your retirement dream the way you want means saving now—and saving enough so you don't have to worry about money in retirement.

How much should I save each year?

Learn more about our 4 key retirement metrics—a yearly savings rate, a savings factor, an income replacement rate, and a potentially sustainable withdrawal rate—and how they work together in the Viewpoints Special Report: Retirement roadmap.

But how much is enough?

Our guideline: Aim to save at least 15% of your pre-tax income1 each year, which includes any employer match. That's assuming you save for retirement from age 25 to age 67. Together with other steps, that should help ensure you have enough income to maintain your current lifestyle in retirement.

How did we come up with 15%? First, we had to understand how much people generally spend in retirement. After analyzing enormous amounts of national spending data, we concluded that most people will need somewhere between 55% and 80% of their preretirement income to maintain their lifestyle in retirement.1

Not all of that money will need to come from your savings, however. Some will likely come from Social Security. So, we did the math and found that most people will need to generate about 45% of their retirement income (before taxes) from savings. Based on our estimates, saving 15% each year from age 25 to 67 should get you there. If you are lucky enough to have a pension, your target savings rate may be lower.

Here's a hypothetical example. Consider Joanna, age 25, who earns $54,000 a year. We assume her income grows 1.5% a year (after inflation) to about $100,000 by the time she is 67 and ready to retire. To maintain her preretirement lifestyle throughout retirement, we estimate that about $45,000 each year (adjusted for inflation), or 45% of her $100,000 preretirement income, needs to come from her savings. (The remainder would come from Social Security.)

Because she takes advantage of her employer's 5% dollar-for-dollar match on her 401(k) contributions, she needs to save 10% of her income each year, starting with $5,400 this year, which gets her to 15% of her current income.

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Is 15% enough?

That depends, of course, on the choices you make before retirement—most importantly, when you start saving and when you retire. Any other income sources you may have, such as a pension, should also be considered.

Now that you know a savings rate to consider, here are some steps to think about that can help you get to it.

1. Start early

The single most important thing you can do is start saving early. The earlier you start, the more time you have for your investments to grow—and recover from the market's inevitable downturns.

If retirement is decades away, it may be hard to think or care about it. But when you are young is precisely the time to start saving for retirement. Even though it can be a challenge to save for the future, giving your savings those extra years to grow could make the struggle worth it—every little bit you can save helps.

Assumes no retirement savings balance before starting age. See footnote numbers 2 and 3 below for more information.

2. Delay retirement

Our 15% savings guideline assumes that a person retires at age 67, which is when most people will be eligible for full Social Security benefits. If you don't plan to work that long, you will likely need to save more than 15% a year. If you plan to work longer, all things being equal, your required saving rate could be lower.

Other steps to take

The road to retirement is a journey, and there are steps you can take along the way to catch up. Here are 6 tips to get started:

  • Let Uncle Sam help. Make the most of tax-advantaged savings accounts like traditional 401(k)s and IRAs. Your contributions are made before tax, reducing your current taxable income, meaning you get a tax break the year you contribute. Plus, that money can grow tax-free until you withdraw it in retirement, when it will be taxed as ordinary income. With Roth 401(k)s and IRAs, your contributions are after tax, but you can withdraw the money tax-free in retirement—assuming certain conditions are met.4 If you have a high deductible health plan (HDHP) eligible for a health savings account (HSA), consider contributing to an HSA to cover current and future health care expenses. HSA contributions are pre-tax and tax-deductible. Plus, when you use money saved in an HSA on qualified medical expenses now or in retirement, the withdrawals—of contributions and any investment returns—are tax-free.5
  • Max and match. Got room to up your 401(k) and IRA contributions before you hit the relevant annual contribution limit? Increase your automatic contributions as much as possible. At the very least, take advantage of your company match if you have one. That's effectively "free" money. Learn more on IRA contribution limits
  • Take the 1% challenge. Upping your saving just 1% may seem small, but after 20 or 30 years it can make a big difference in your total savings. For example, if you are in your 20s, a 1% increase in your savings rate could add 3% more6 to your income in retirement. Read Viewpoints on Just 1% more can make a big difference
  • Catch up. If you are 50 or older, be sure to make the most of catch-up contributions to your retirement savings plans. For 2024, employees over 50 can contribute an extra $7,500 over the $23,000 limit for their 401(k), 403(b), or other employer-sponsored savings plans for a total of $30,500. If you have an IRA, in 2024 you can contribute an extra $1,000 in addition to the $7,000 contribution limit for a total of $8,000.
  • Size up your portfolio. Market movements can shift your investment mix. Too much in stocks can increase your risk of loss—too little can undermine growth potential. Aim to have a diversified mix of investments. At least once a year, take a look at your investments and make sure you have the right amount of stocks, bonds, and cash to stay on track to meet your long-term goals, risk tolerance, and time horizon.
  • Consider your investing style. If you don't have the skill, will, or time to manage your investments, consider an age-based target date fund or managed account, where professional managers do it for you. There are also target risk funds, or target allocation funds, that offer a diversified mix of investments across asset classes. You pick the level of stock market risk you'd like based on your risk tolerance and the fund managers do the rest.

To see how your age, savings, and income can influence your savings rate, try Fidelity's savings rate widget.

Make savings a priority

Keep your eye on your dreams. Do the best you can to get to at least 15%. Of course, it may not be possible to hit that target every year. You may have more pressing financial demands—children, parents, a leaky roof, a lost job, or other needs. But try not to forget about your future—make your retirement a priority too.

Are you on track for retirement?

Review your retirement savings plan and see how small changes could improve your outlook.

More to explore

Consider an IRA

Take advantage of potential tax-deferred or tax-free growth.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Diversification and asset allocation do not ensure a profit or guarantee against loss.

Investing involves risk, including risk of loss.

Target Date Funds are an asset mix of stocks, bonds and other investments that automatically becomes more conservative as the fund approaches its target retirement date and beyond. Principal invested is not guaranteed.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

1. Fidelity's suggested total pre-tax savings goal of 15% of annual income (including employer contributions) is based on our research, which indicates that most people would need to contribute this amount from an assumed starting age of 25 through an assumed retirement age of 67 to potentially support a replacement annual income rate equal to 45% of preretirement annual income (assuming no pension income) through age 93. The income replacement target is based on Consumer Expenditure Survey (BLS), Statistics of Income Tax Stats, IRS tax brackets, and Social Security Benefit Calculators. The 45% income replacement target (excluding Social Security and assuming no pension income) from retirement savings was found to be fairly consistent across a salary range of $50,000-$300,000; therefore the savings rate suggestions may have limited applicability if your income is outside that range. Individuals may need to save more or less than 15% depending on retirement age, desired retirement lifestyle, assets saved to date, and other factors. See footnote 3 for investment growth assumptions. 2. For a starting age of 30 with no existing retirement savings and a retirement age of 67, the savings rate target increases to 18%. Similarly, the target increases to 23% for a starting age of 35 and a retirement age of 67. See footnote 3 for investment growth assumptions. 3.

Fidelity has developed a series of salary multipliers in order to provide participants with one measure of how their current retirement savings might be compared to potential income needs in retirement. The salary multiplier suggested is based solely on your current age. In developing the series of salary multipliers corresponding to age, Fidelity assumed age-based asset allocations consistent with the equity glide path of a typical target date retirement fund, a 15% savings rate, a 1.5% constant real wage growth, a retirement age of 67 and a planning age through 93. The replacement annual income target is defined as 45% of pre-retirement annual income and assumes no pension income. This target is based on Consumer Expenditure Survey (BLS), Statistics of Income Tax Stat, IRS tax brackets and Social Security Benefit Calculators. Fidelity developed the salary multipliers through multiple market simulations based on historical market data, assuming poor market conditions to support a 90% confidence level of success.

These simulations take into account the volatility that a typical target date asset allocation might experience under different market conditions. Volatility of the stocks, bonds and short-term asset classes is based on the historical annual data from 1926 through the most recent year-end data available from Ibbotson Associates, Inc. Stocks (domestic and foreign) are represented by Ibbotson Associates SBBI S&P 500 Total Return Index, bonds are represented by Ibbotson Associates SBBI U.S. Intermediate Term Government Bonds Total Return Index, and short term are represented by Ibbotson Associates SBBI 30-day U.S. Treasury Bills Total Return Index, respectively. It is not possible to invest directly in an index. All indices include reinvestment of dividends and interest income. All calculations are purely hypothetical and a suggested salary multiplier is not a guarantee of future results; it does not reflect the return of any particular investment or take into consideration the composition of a participant’s particular account. The salary multiplier is intended only to be one source of information that may help you assess your retirement income needs. Remember, past performance is no guarantee of future results. Performance returns for actual investments will generally be reduced by fees or expenses not reflected in these hypothetical calculations. Returns also will generally be reduced by taxes.

4. A distribution from a Roth IRA or Roth 401(k) is federally tax free and penalty free, provided the five-year aging requirement has been satisfied and one of the following conditions is met: age 59½, disability, qualified first-time home purchase, or death. 5.

With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.

6. Fidelity's suggested total pretax savings goal of 15% of annual income assumes a starting age of 25 through an assumed retirement age of 67, to potentially support a replacement annual income rate equal to 45% of preretirement annual income, which includes any employer match. Using the same assumptions, contributing 1% of income every year from age 25 to age 67 was found to generate 3% more income in retirement. See footnote 3 for investment growth assumptions.

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