How Much Should You Be Saving for Retirement? A Practical Framework for Setting Retirement Savings Goals
When clients ask, “How much should I be saving for retirement?” it’s a simple question with a surprisingly complex answer. There’s no one-size-fits-all number, but there are time-tested guidelines that can help you frame your goals and understand where you stand today — and what adjustments might be needed for tomorrow.
This is part two of our Retirement Planning Series. In part one, we explored the differences between traditional 401(k)s and Roth IRAs, including their tax benefits and how they can fit into a comprehensive retirement strategy. If you’re still deciding which option is best for you, be sure to check out part one.
A Rule of Thumb to Get Started
A helpful starting point is to look at savings as a multiple of your annual salary based on your age. While it’s not a precise science, this type of benchmark can offer useful guidance:
- By age 30: Aim to have saved 1x your annual salary
- By age 40: Target 3x your salary
- By age 50: Work toward 6x your salary
- By age 60: Strive for 8x to 10x your salary before retirement
This framework assumes consistent savings habits, long-term market growth, and the power of compounding over time.
But Everyone’s Path Is Different
Your retirement number is influenced by a variety of personal and financial factors, such as:
- When Do You Plan to Retire?
- Someone retiring at 62 will need more saved than someone working into their 70s.
- A longer retirement horizon generally means more years of income to fund.
- Will You Fully Retire — or Semi-Retire?
- Many clients today pursue phased retirements, part-time consulting, or passion projects that generate income into their 60s and 70s.
- That additional income can reduce the burden on your portfolio in early retirement.
- What Are Your Other Sources of Income?
- Social Security: For most, this forms the base layer of retirement income.
- Pensions: Less common today, but a valuable asset if you have one.
- Inheritances or Windfalls: These can be meaningful but are often uncertain.
- Your Lifestyle & Spending Habits
- Ultimately, your savings target should be based on the kind of retirement you envision — travel, hobbies, family support, charitable giving, etc.
- Understanding your monthly spending needs is essential to estimating your required nest egg.
Building a Personalized Retirement Plan
While rules of thumb are useful, we believe retirement planning should be customized. We work closely with clients to build tailored financial models that factor in:
- Current savings levels and investment allocations
- Expected retirement age and lifestyle preferences
- Inflation, healthcare costs, and life expectancy assumptions
- Legacy goals and estate planning
This approach helps bring clarity to a complex topic — and offers clients a sense of direction and control.
Thinking about your retirement goals?
Let’s have a conversation. Our team offers personalized retirement planning to help you stay on track and make informed decisions for your future. Reach out to us or visit our Wealth Management page to learn more.
As a research analyst, Joe’s primary responsibility is to conduct research and analysis on individual stocks and industries. He also coordinates our on-site company visits to portfolio companies and conferences as well as attending quarterly corporate earnings calls and maintaining fundamental and market-related data screens to aid in the investment process. Joe also serves as the primary portfolio manager on a number of client accounts.
Previously, Joe worked at Moody’s Investors Service, where he was an associate analyst, specializing in speculative-grade restaurants and specialty retailers. Earlier, he worked at Thomaston Savings as a credit analyst in commercial lending.
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