How much should you have in your retirement fund at age 30, 40, 50 and 60


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In your 20s, as you start your career and earn real money for the first time, your spending changes. After living with mom and dad or in a college dorm, you can afford a place of your own and might want to splurge on the place with the amazing rooftop terrace. You might have disposable income for the first time – even after making the monthly payment on those student loans – and want to have a weekend away every month with friends.

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Before signing this apartment lease or booking a hotel for this getaway, don’t forget to add a monthly “bill” to your budget: a contribution to your retirement account. The best time to start saving for retirement is when you are starting to make money.

The amount you should save depends on the type of life you want to lead later. Do you envision yourself as a world traveler when you retire or a homebody? Setting goals and milestones for your 30s, 40s, 50s, and 60s will help you have money to live on when you no longer bring that weekly paycheck.

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There is no one recipe for success when it comes to retirement planning. Each plan is unique, depends on your lifestyle, and is best designed with the help of a financial planner. However, some general guidelines exist.

Last updated: July 20, 2021

alvarez / Getty Images

alvarez / Getty Images

30 years old: the 1X recommendation

By age 30, you should have saved an amount equal to your annual salary for retirement, as recommended by Fidelity and Ally Bank. If your salary is $ 75,000, you should have $ 75,000 set aside. How are you doing that?

“At the start of your career, commit to automatically saving 20% ​​per year on your 401 (k). This will discipline you to live and give over the remaining 80%, ”said Jason Parker of Parker Financial in the Seattle area, author of “Sound Retirement Planning” and host of the “Sound Retirement Radio” podcast.

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iStock /

30 years old: planning begins in your twenties

Many Americans don’t sign up for a 401 (k) in their twenties, which means they miss out on a potential match with an employer.

“Employer correspondence on your 401 (k) is free money, but about a quarter of employees leave free money on the table by not taking advantage of their correspondence,” said Brian Walsh, financial planner certified and responsible for financial planning at SoFi.

He added that in some cases, planning for retirement can take precedence over paying down debt.

“A lot of the young people we work with hate being in debt and are trying to pay off their debt as quickly as possible,” he said. “It’s admirable, but sometimes it just doesn’t make sense to aggressively pay off debt instead of saving. While eliminating debt is important, you should also prioritize saving for your future. We consider any debt with an interest rate of less than 7% to be good debt and suggest saving some of your money before you aggressively pay off that debt. “

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Pekic / Getty Images

Pekic / Getty Images

40 years old: the 3X recommendation

Fidelity and Ally Bank both recommend setting aside three times your annual salary for retirement at age 40. If you don’t have a retirement savings strategy as part of your overall financial plan at this point, don’t delay, an expert said.

“Every household, regardless of their net worth or stage of life, has a responsibility to create a comprehensive and individualized financial plan,” said Drew Parker, creator of The Complete Retirement Planner.

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Drazen Zigic / Getty Images / iStockphoto

Drazen Zigic / Getty Images / iStockphoto

40 years old: resist the temptation

“The most common mistake people make is that people let their expenses increase in proportion to their new salary. For example, people move into a bigger apartment or buy a more expensive car or house to reward themselves for receiving the money. increase, “said Dr. Robert R. Johnson, professor of finance at Creighton University’s Heider College of Business. “What happens is that they are unable to improve their financial situation because they spend everything they earn. People are wise to effectively invest the money of a raise as if you did not receive the raise. That is, continue to live the same lifestyle you led before receiving the raise and investing the difference. “

“An example will help illustrate how investing a raise can help build real wealth over the long term. Suppose one receives an annual raise of $ 5,000 at the start of his career. If you just invest that $ 5,000 a year in an investment account that grows at an annual rate of 10%, you will have accumulated over $ 822,000 in 30 years.

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Inti St Clair / Getty Images

Inti St Clair / Getty Images

50 years: the 5X recommendation

Ally Bank recommends that 50-year-olds save five times their annual income, while Fidelity is more aggressive with a recommendation of six times the salary.

If you find that you’ve fallen behind in your retirement savings because the money has been diverted to other expenses, such as your children’s school fees, you can make a “catch-up contribution”. Once you turn 50, you can make an additional contribution to a tax-efficient retirement account each year. The Internal Revenue Service determines the amount, which is $ 6,500 in 2021. It’s a per person figure, so couples can double the contribution.

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Sean Locke Photography /

Sean Locke Photography /

50 years: reducing costs

When you turn 50 – or in the early years of that decade – your kids might be out of the house, and you might not need this four-bedroom Colonial anymore. It might be time to downsize. If you’ve owned your home for years, there’s a good chance you have some equity that you can put aside for retirement. Or, with today’s attractive interest rates, you could buy a cheaper home and lower your monthly mortgage payments.

And if you haven’t already, Walsh advised you to review the fees you pay to maintain your retirement account.

“Fees impact every age, but as you get older your balance will start to rise and those fees will really add up,” he said. “Let’s face it – the fees are confusing and many average investors don’t really understand what fees they are paying. A 1% or 2% fee might seem like a small number, but it works out to $ 5,000 to $ 10,000 per year though. you have $ 500,000 Rather than paying high fees for your investments, consider using an active investment product that allows you to buy and sell investments on your own without paying any commissions or proceeds. automated investment that invests your money for you with no advisory fees.

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PeopleImages / Getty Images

PeopleImages / Getty Images

60 years old: the 7X recommendation

By age 60, you should have seven times your annual income saved for retirement, recommends Ally Bank. Fidelity, again, is more aggressive and recommends eight times the amount.

This is also the time to make an effort to repay your debts in order to retire with the minimum possible. Live within your means and pay your bills, especially high interest credit card debt. If you don’t, those monthly payments will eat into your retirement savings later. It will also increase your credit score and lower your credit utilization rate, making it easier to refinance your home at a lower interest rate.

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Goodboy Picture Company / Getty Images

Goodboy Picture Company / Getty Images

60 years old: reducing the risks

Johnson said people within five years of retirement – so no later than their early 60s – should start minimizing risk to their retirement accounts.

“A sharp drop in the market just before retirement can have devastating effects on the standard of living of an individual in retirement. The exact time that a person retires can have a huge impact on the quality of their retirement if their assets are concentrated in the stock markets, ”he said.“ Take, for example, someone who has retired. retirement at the end of 2008. If he had been invested in the S&P 500, he would have seen his assets fall by 37% in one year. The five years preceding retirement can be considered “retirement”. Red zone.’ And, just as a football team cannot afford to return the ball and not score points when it is inside the opponent’s 20-yard line, the retired investor can’t afford a big slowdown in the red zone of retirement. “

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This article originally appeared on How much should you have in your retirement fund at age 30, 40, 50 and 60

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