Introduction
"How much should I have saved by now?" is the most common - and most stressful - retirement question. The anxiety is understandable: life paths differ, markets swing, careers take unexpected turns, and there is no single "right" number that applies to everyone.
Yet there are useful benchmarks and levers you can still control. This guide provides decade-by-decade savings targets, shows you how to translate your expected retirement spending into a concrete nest-egg goal, and offers playbooks for catching up if you feel behind. Whether you are 28 and just starting or 55 and accelerating, the principles are the same: save consistently, invest simply, keep costs low, and adjust as life evolves.
We will walk through the retirement math, age benchmarks, step-by-step planning, decade-specific playbooks, real-world scenarios, advanced strategies, common mistakes, and a final action checklist. Use EverydayBudd calculators alongside this guide to model your specific situation.
Retirement Math & Key Concepts
Before diving into age benchmarks, you need a shared vocabulary for retirement planning.
Target Nest Egg
Formula: Target nest egg = annual retirement spending x 25-30. This is based on a 3.3-4% initial withdrawal rate. For example, if you need $60,000/year in retirement, your target is $1.5M-$1.8M. The right multiplier depends on your retirement age, risk tolerance, and spending flexibility. Early retirees (before 60) often use 30x or higher; those with pensions or strong Social Security can use 25x or lower.
Funding Ratio
Formula: Funding ratio = projected nest egg / required nest egg. A ratio of 1.0 or higher means you are fully funded on your current trajectory. A ratio of 0.7-0.9 means you are behind but can likely close the gap with higher savings or modest adjustments. Below 0.7 indicates a more serious gap requiring significant changes - higher savings rate, later retirement, or lower spending target.
Savings Rate
Your savings rate is the percentage of gross pay saved for retirement, including both your contributions and employer match across all accounts (401(k), IRA, HSA used for retirement, etc.). Many households need 15%+ over a full career. Late starters may need 18-25% temporarily to catch up.
Tax Buckets
Pre-tax: Traditional 401(k)/403(b)/IRA - reduces taxable income now, taxed when withdrawn. Roth: Taxed now, tax-free qualified withdrawals. Taxable: No special tax treatment on contributions, but capital gains taxed at lower rates. Tax diversification - having money in multiple buckets - gives you flexibility in retirement to manage your tax bill each year.
Asset Allocation
Your stock/bond/cash mix aligned to your risk tolerance and time horizon. Stock-heavy portfolios may grow faster but swing more. Bonds and cash provide stability for near-term spending. If unsure, a target-date index fund automatically adjusts allocation as you age. A common rule of thumb: hold your age in bonds (30 years old = 30% bonds), though many prefer more aggressive allocations early on.
Sequence Risk
The risk that poor returns early in retirement - when your portfolio is largest and withdrawals are beginning - permanently damage your outcome. Two retirees with the same average return but different timing can have vastly different results. The one who experiences losses early may run out of money; the one who experiences gains early may end up wealthy. Mitigation: hold 1-3 years of withdrawals in cash/short-term bonds as retirement approaches.
On-Track Benchmarks by Age
These salary-multiple benchmarks assume retirement around 65-67 with typical Social Security and no pension. Adjust up for early retirement or high spending; adjust down if you have a pension or strong guaranteed income.
| Age | On-Track Savings | If Behind, First Aim For | Key Moves |
|---|---|---|---|
| 30 | ~1x salary | 0.5x by 32, 1x by 35 | Capture full match, reach 15% |
| 40 | ~3x salary | 2x by 42, 3x by 45 | Raise to 18-20%, consolidate accounts |
| 50 | ~6x salary | 4x by 52, 6x by 55 | Max catch-ups, de-risk gradually |
| 60 | ~8-10x salary | 7x by 62, finalize plan | Lock withdrawal plan, optimize SS timing |
These are guidelines, not pass/fail. Factors that push you above these targets: early retirement (before 60), high desired lifestyle, no pension, uncertain Social Security. Factors that push you below: strong pension, delayed retirement, frugal lifestyle, part-time work in retirement.
Use the Compound Interest calculator to see how your current savings project forward, and 401(k) Limits 2025 to translate your target savings rate into contribution amounts.
Step-by-Step Plan: From Today to Target
Turn Spending into a Goal
Estimate your annual retirement budget in today's dollars (housing, food, healthcare, travel, etc.). Subtract expected Social Security and any pension. Multiply the remainder by 25-30 to get your portfolio target.
Example: $70,000 spending - $28,000 Social Security = $42,000 x 28 = $1.18M portfolio target.
Map Target to Savings Rate
Use the Compound Interest calculator: input current savings, assumed return (often 6-7% real), and years to retirement. Adjust annual contributions until projected nest egg matches your target. This gives you the savings rate you need.
Allocate Across Accounts
Use 401(k) Limits 2025 to determine how much goes to workplace plans (capture full match first), then IRAs, then taxable if surplus. Example: 15% of $90,000 = $13,500/year. Split: 10% to 401(k) + 5% employer match = 15% total. If you can save more, add IRA contributions.
Check Paycheck Impact
Use Take-Home Salary to compare current vs target contribution rates. Ensure you can still cover rent, debt, childcare, essentials. If target feels impossible, start lower and ramp up with raises.
Automate & Escalate
Turn on automatic contributions and auto-escalation (+1% per year). Send half of each raise to savings before lifestyle creep sets in. Schedule an annual retirement check-in to re-run calculators.
Review Funding Ratio Annually
Each year, recompute: projected nest egg / required nest egg. If ratio is dropping, increase savings rate, adjust retirement age, or revisit spending assumptions. If ratio is rising, you are on track - stay the course.
Check Your Pace & Close the Gap
Model contributions, growth, and your after-tax paycheck. See how different savings rates change your age-65 nest egg and funding ratio.
Decade Playbooks
In Your 30s - Build the Engine
Your 30s are about building momentum. Time is your greatest asset - even modest savings now compound dramatically over 30+ years.
- Target 1x salary by 30, or set a plan to reach it by 35.
- Capture full employer match - this is free money.
- Reach 15%+ total savings rate (you + employer).
- Favor Roth if in lower brackets; split Roth/pre-tax otherwise.
- Build 3-6 month emergency fund so market dips do not derail contributions.
If you are behind:
- Start with whatever you can (even 5%) and escalate 1-2% each year.
- Prioritize high-interest debt payoff alongside matching contributions.
- Avoid waiting for a "perfect time" - start investing now.
In Your 40s - Close the Gap
Peak earning years for many. This decade often determines whether you retire comfortably or need to extend working years.
- Target 3x by 40, 6x by 50.
- Raise savings rate to 18-20%.
- Consolidate old 401(k)s, trim fees, avoid lifestyle creep.
- Increase savings with every raise; consider backdoor Roth if eligible.
- Retirement savings should generally come before college savings.
If you are behind:
- Push to 20-25% savings rate if possible.
- Consider extending target retirement age by 2-3 years.
- Review spending and cut discretionary categories to free up savings capacity.
In Your 50s - Catch-Up & De-Risk
Catch-up contributions become available at 50. This decade is about maximizing savings while gradually reducing portfolio risk.
- Use full catch-up contributions ($7,500 extra in 401(k), $1,000 in IRA for 2025).
- Reduce single-stock and employer-stock concentration.
- Explore Roth conversions in lower-income years.
- Map your retirement income plan - when will you claim Social Security?
- Plan for pre-65 healthcare if retiring before Medicare eligibility.
If you are behind:
- Max every catch-up available across all accounts.
- Consider working 2-4 extra years - this can dramatically improve outcomes.
- Downshift spending expectations and model lower retirement budgets.
In Your 60s - Lock the Plan
Transition from accumulation to distribution planning. Focus on securing income and managing sequence risk.
- Aim for 8-10x salary or confirm funding ratio covers 25-30x spending.
- Decide Social Security timing (delaying to 70 increases benefit ~8%/year).
- Plan Medicare enrollment and healthcare bridging if retiring before 65.
- Hold 1-3 years of withdrawals in cash/short-term bonds.
- Pick initial withdrawal rate (3.3-4%) and plan guardrails for adjusting.
If you are behind:
- Consider part-time work or phased retirement.
- Delay Social Security as long as possible for higher lifetime benefits.
- Downsize housing or relocate to lower-cost area if feasible.
Scenario Playbook: Different Starting Points
Here are four realistic personas with different situations and recovery paths.
Age 32, Starting Late but Motivated
Situation: $70k salary, $20k saved (0.3x), wants to retire at 65.
Strategy: Ramp savings from 8% to 15% over 3-5 years. Prioritize low-cost index funds. Use Roth while in mid brackets. Build 3-month emergency fund.
Tools: Compound Interest, 401(k) Limits, Take-Home Salary.
Age 45, Feeling Behind
Situation: $110k salary, $165k saved (1.5x vs 3x target).
Strategy: Increase to 20% savings rate. Use catch-ups at 50. Extend target retirement 2-3 years or trim spending goal. Consolidate accounts, lower fees.
Tools: Benchmarks table, 401(k) Limits, Tax Brackets guide.
Age 55, Late Push
Situation: $150k salary, $500k saved (3.3x vs 6x target).
Strategy: Max contributions + catch-ups ($30,500 in 401(k)). Shift allocation toward more conservative mix. Explore Roth conversions. Model flexible retirement dates.
Tools: 401(k) Max guide, Compound Interest, Tax Brackets.
Age 60, Pension + Social Security
Situation: $80k salary, $200k saved, but pension covering 40% of spending.
Strategy: Calculate remaining gap after guaranteed income. Optimize Social Security timing. Consider phased retirement. Build 2-year cash buffer.
Tools: Compound Interest for remaining portfolio, Take-Home for part-time scenarios.
Advanced Strategies
Three-Bucket Tax Design
Target a mix of pre-tax, Roth, and taxable accounts. In retirement, draw from each bucket strategically: taxable first (lower capital gains rates), then pre-tax to stay in low brackets, then Roth for tax-free income. This flexibility can save thousands in taxes over a 30-year retirement.
Mega-Backdoor Roth
Some plans allow after-tax contributions above the $23,000 employee limit, up to the $69,000 total limit. With in-plan Roth conversions, you can turn after-tax dollars into Roth. Not all plans support this - check with your plan administrator and consider working with a tax professional.
HSA as Stealth IRA
HSAs offer triple tax advantage: deductible contributions, tax-free growth, tax-free qualified medical withdrawals. Max the HSA, invest it in low-cost index funds, pay current medical expenses out of pocket, and let the HSA grow for future healthcare costs in retirement.
Glidepath & Guardrails
Gradually shift from aggressive to moderate allocation as retirement nears. In retirement, use guardrails: reduce withdrawals slightly after bad market years, increase modestly after very strong ones. This dynamic approach improves portfolio sustainability vs rigid 4% rule.
Annuity Layer
A simple income annuity (SPIA/DIA) can cover a portion of essential spending, reducing longevity risk. Keep it simple, low-cost, and only after core nest egg and emergency reserves are established. This can provide psychological comfort and floor income.
Mortgage Strategy
Entering retirement with a smaller or paid-off mortgage reduces required withdrawals and monthly stress. The trade-off: paying off mortgage early vs investing more. For most, reducing fixed monthly obligations before retirement provides peace of mind and lower withdrawal requirements.
Common Mistakes to Avoid
- Waiting to start - time in market beats timing the market. Even small contributions today matter more than larger ones later. Start now.
- Ignoring fees and taxes - a 1% fee drag can erase years of progress. Use low-cost index funds (under 0.10% expense ratios) and tax-efficient account placement.
- Stopping contributions during volatility - keep buying on schedule through downturns. You are buying shares on sale.
- Over-concentrating in employer stock - your job and portfolio should not depend on the same company. Diversify.
- No plan for healthcare - pre-65 coverage is expensive; Medicare IRMAA can increase premiums for high earners. Budget for it.
- Withdrawing too much early - sequence risk hurts most at retirement start. Begin conservatively and use guardrails.
Frequently Asked Questions
Frequently Asked Questions
How much should I save each year?
A lifetime average savings rate of about 15% of gross pay (your contributions plus employer match) works for many people who start early. If you begin saving in your 20s and maintain this rate consistently, you have a strong chance of reaching 8-10x salary by your 60s. However, if you started late or took breaks, you may need to push to 18-20% or higher, especially in your 40s and 50s. The key is to use the Compound Interest calculator to model your specific situation: enter your current savings, expected contributions, and years to retirement. If the projected nest egg falls short of your target (spending x 25-30), increase your savings rate or adjust your retirement age/spending assumptions.
Roth or pre-tax contributions?
The Roth vs pre-tax decision depends on your current tax bracket vs your expected tax bracket in retirement. If you expect higher future tax rates (early career, expecting income growth, or worried about future tax increases), lean toward Roth contributions - you pay taxes now at a lower rate and withdraw tax-free later. If you are in a high bracket now and expect lower taxes in retirement, pre-tax contributions reduce your current tax bill and you pay taxes later at the lower rate. Many people split contributions between both to create tax diversification - this gives you flexibility in retirement to draw from different buckets based on your tax situation each year. Use the 2025 Tax Brackets guide to understand your current marginal rate and model scenarios.
Am I behind if I am not at the benchmark?
Benchmarks are guidelines, not pass/fail tests. Life circumstances vary - career changes, family obligations, health issues, and geographic differences all affect savings trajectories. If you are modestly behind (say 0.7-0.9x where you should be), you can often close the gap by increasing your savings rate by 3-5 percentage points, using catch-up contributions after 50, and staying invested through market volatility. If you are significantly behind, you may need to consider a combination of higher savings, working a few extra years, or adjusting your retirement spending expectations. The Compound Interest calculator helps you model these trade-offs. The most important thing is to have a plan and take action - starting today always beats waiting for a perfect moment.
What is a safe withdrawal rate?
The classic 4% rule suggests withdrawing 4% of your portfolio in year one of retirement, then adjusting for inflation each year. However, many modern planners recommend starting more conservatively at 3.3-3.5%, especially for early retirees or those with long life expectancies. A 3.5% rate means your portfolio needs to be about 28-29x your annual spending. The key is flexibility: in years when the market performs poorly, reduce withdrawals slightly (guardrails approach). In strong years, you might take a bit more. Holding 1-3 years of withdrawals in cash or short-term bonds reduces the need to sell stocks in a downturn. Social Security and pensions can reduce the amount you need to withdraw from your portfolio, improving sustainability.
How does Social Security fit into these benchmarks?
The salary-multiple benchmarks (1x, 3x, 6x, 8-10x) assume you will receive some Social Security benefits. If you expect strong Social Security income (long work history, higher earnings), you may need slightly less in your portfolio. If you expect little or no Social Security (self-employed with gaps, planning to retire very early), you need more. To incorporate Social Security: estimate your annual retirement spending, subtract your expected Social Security benefit (check ssa.gov for estimates), then multiply the remainder by 25-30 to get your portfolio target. For example, if you need $60k/year and expect $24k from Social Security, your portfolio needs to cover $36k x 25-30 = $900k-$1.08M, rather than the full $1.5-1.8M.
This guide is educational only, not individualized financial, tax, or legal advice. Work with a qualified advisor for a detailed plan.
Conclusion & Action Checklist
You do not need perfect markets or perfect timing - you need a repeatable system: clear target, automated rising savings rate, low costs, and annual check-ins. Start where you are, use the benchmarks as guideposts, and adjust as life evolves.
- Estimate retirement spending and calculate target nest egg (spending x 25-30).
- Check where you stand vs the 1x/3x/6x/8-10x benchmarks for your age.
- Set or update payroll contributions to move toward target savings rate; turn on auto-escalation.
- Choose a simple, diversified investment mix (target-date index fund or 2-3 index funds) and rebalance yearly.
- If 50+, use catch-up contributions and start sketching a tax-smart withdrawal plan.
- Re-run your funding ratio and calculators at least once a year or after major life changes.
- Review the 401(k) Max Contribution guide if you want to push to IRS limits.
Get On-Track & Stay There
Set your savings rate, check take-home impact, and visualize your trajectory to your number.
Related Tools & Guides
References
- Social Security Administration - Benefit estimators and claiming strategies
- Bureau of Labor Statistics - Consumer expenditure surveys and retirement spending data
- SEC & FINRA - Fund fee disclosures and investor education
- IRS - 2025 contribution limits and catch-up rules
- Trinity Study / NBER - Research on safe withdrawal rates
Created by the EverydayBudd Retirement & Tax Team. Data referenced from SSA, BLS, SEC, FINRA, and IRS.
Educational only - not personalized financial, tax, or legal advice.