How Much Should You Save if You're Behind on Retirement?

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Conventional wisdom says it takes saving 10% to 15% of your income, starting in your 20s, to be on track for retirement. Fidelity also has some popular guidelines on how much you should have at various ages:

  • One times your yearly income at age 30
  • Three times your yearly income at age 40
  • Six times your yearly income at age 50
  • Eight times your yearly income at age 60

Most Americans don’t meet those guidelines. The average retirement savings was just $65,000 as of 2019, and those under 35 had an average of $13,000. If you’re behind on your retirement, you might be feeling worried and wondering if you’ll ever be able to retire. While this is a stressful situation, a good savings plan can help you get back on track.

How much to save if you’re behind on retirement

When you’re behind on your retirement savings, the first thing to do is set some clear goals. Ask yourself:

  • When do you want to retire? Pick a retirement age, and then do the math on how many years away you are.
  • How much annual income will you need in retirement? A common rule of thumb is that you’ll need about 70% to 75% of your salary in retirement.
  • How much money will you need in total? Fidelity recommends retiring with at least 10 times your yearly income.

Once you have goals in mind, plug your information into a retirement savings calculator. This will calculate how much you need to save to retire on time. The best-case scenario is that the amount you need to save per month is doable for you. But what if it’s not?


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Don’t feel like you need to make a massive increase in your retirement contributions right away. This usually doesn’t work out well. It’s hard to make such a big financial change all at once, and you don’t want to discourage yourself with an unrealistic goal.

Instead, bump up your retirement contributions by a reasonable amount. If you’re not contributing anything yet, start with 10% of your income. If you’re contributing 10%, try raising that to 15% or 20%. Having a goal you can reach every month helps you stay motivated. You can always save more if you still have money left over.

The good news is that even if you’re behind on retirement savings, it could be easier to save as you get older. Income goes up with age and normally peaks between 45 and 54, according to U.S. income statistics. As your income increases, you can save more towards retirement.

Keep in mind that in a worst-case scenario, you can always make changes to your retirement plans. Maybe you work a few extra years to save more and delay taking Social Security. Or, you could revamp your retirement budget and find ways to get by on less annual income.

Getting on track with your retirement savings

The amount you save for retirement is very important, but it’s not all that matters. There are also a few strategies you can use to maximize that money you’re saving. First and foremost, make sure you’re contributing to tax-advantaged retirement accounts. Options include:

  • 401(k) plans: This is an employer-sponsored retirement plan. Many employers will match 401(k) contributions up to a certain amount. The contribution limit for 401(k)s in 2023 is $22,500 if you’re under 50 and $30,000 if you’re 50 or older.
  • Individual retirement accounts (IRAs): This is a retirement account you can open on your own. The contribution limit for IRAs in 2023 is $6,500 if you’re under 50 and $7,500 if you’re 50 or older.

Both these accounts allow you to deduct contributions on your income taxes. For example, if you contribute $10,000 to a 401(k), it reduces your taxable income by $10,000. You don’t pay taxes on the money until you make withdrawals in retirement. There’s also another type of IRA, Roth IRAs, where you pay income taxes on contributions but get to make tax-free withdrawals.

Since retirement accounts help you save on taxes, it’s recommended to contribute to them first, until reaching the annual limits. If you want to invest more, you can do so through any of the best stock brokers.

Another key consideration is how you invest your money. Most retirement and brokerage accounts give you a range of options. Here are two of the best:

  • Target-date retirement funds: An investment fund designed for a specific retirement year. Asset allocation is optimized for that retirement year, so this type of fund does the work for you.
  • Index funds: An investment fund that tracks a market index. These tend to have very low fees. Total stock market index funds are popular because you get a diversified portfolio with great growth potential.

It’s stressful when you feel as if you haven’t saved enough for retirement, but it’s also fixable. What’s most important is making the necessary changes immediately. The sooner you start, the better your chances of catching up and being able to retire on schedule.


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