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How much should I save for retirement? Your top questions, answered

What we'll cover

  • How to calculate how much money you’ll need to retire

  • The factors that influence how much you’ll need

  • Savings strategies for retirement


When you think of your lifelong bucket list, what does it include? Adventures across another continent? Courtside tickets to watch your favorite NBA team play? No matter what dreams you’re chasing, one essential item probably sits at the top of your list: retirement. While it might not sound as exciting as traveling the world, retiring is the ultimate financial goal and ensuring you can tick off that box starts with saving now. But if “how much do I need to retire?” has been keeping you from getting started, you’ve come to the right place. 

Calculate how much you'll need to retire

You may often hear that you need to save somewhere between $1 million and $2 million for retirement, but this is just a ballpark range. The real number you need depends on the age you plan to retire, when you will begin taking Social Security benefits and your desired lifestyle (hobbies, where you’ll live, travel) as a retiree.  

Use this calculator to find out how much money you’ll need to retire.

Retirement savings rule of thumb

While you can determine how much you need to save for retirement more precisely by using the calculator, you can also follow some useful rules of thumb to get a good estimate. One such guideline is to have 10 to 12 times your annual income at retirement age. So, if you currently earn $100,000, you will need 10 times that amount, or $1 million, at retirement. 

Another common rule of thumb is to save enough to spend between 60% and 100% of your pre-retirement salary each year in retirement.  

Here are some examples of what that might look like if you plan to spend 80% of your pre-retirement salary each year:  

Pre-Retirement Salary Table
Pre-Retirement Salary Retirement Income
$50,000 $40,000
$80,000 $64,000
$100,000 $80,000
$120,000 $96,000
$200,000 $160,000

To figure out how much you’d need to save in total, you can also use the 4% rule, which implies you should only use 4% of your total retirement savings each year in order to not run out of money. To use this formula, you divide your predicated annual spending by 4% — so if your predicted annual spending is $80,000, divide that by .04 to get a total of $2 million.

It’s important to note that the 4% rule should be used strictly for estimating your retirement needs. Depending on any investments and annual investment yields, as well as your Security Benefits and length of retirement, your actual amount will vary. Think of the 4% rule as a tool for setting general goals.  

How much to save for retirement by age

The thought of saving a couple million dollars by your 60s or 70s can sound daunting, we know. That’s where breaking up your retirement savings with age-based benchmarks may help. By looking at your savings in five- or 10-year increments, it’s easier to plan financially and put actionable savings steps in place. One popular age-based savings recommendation is that you should aim to save one times your salary by age 30 and increase your savings by your annual salary every five years. 

Age based benchmark Table
By Age... You Should Aim to Save...
30  1 x your income 
40  3 x your income 
50 5 x your income 
60 7 x your income 
70 9 x your income 

Using this method, you should have saved seven times your income once you’ve reached 60 years of age. But some recommend ramping up savings even further in your 50s and beyond, so that by the time you’re 67, you have 10 times your income in your nest egg. 

Just remember, these are ambitious benchmarks and you may not meet each one. Life is unpredictable and there’s a pretty good chance you’ll have some other big goals to save for on your way to retirement. If you have to slow your retirement savings for a couple years, you can always take action to catch up later (we’ll discuss how in a bit). 

Savings strategies to help you get started. 

So, how do you begin to aim for these goals? It starts by saving as early as you can. That’s because the longer your money is invested in the market, the more time and opportunity it has to benefit from compounding interest and hopefully generate returns. Plus, when you are in your 20s and 30s (and still have a few decades to save), you have more time to weather market ups and downs, meaning you may be able to invest with a more aggressive asset allocation. In other words, you might choose to invest more heavily in securities like stocks, ETFs and mutual funds , rather than fixed-income securities like bonds

It’s often recommended to save between 10% and 15% of your pre-tax income in a tax-advantaged retirement account (like a 401 (k), 403(b) or an IRA) starting in your early-to-mid 20s, all the way until retirement. But this isn’t always possible — and that’s okay. 

Fifteen percent of your pre-tax income can feel pretty significant, so when you begin, start with a percentage you can manage — even if it’s only 2% or 3%. From there, aim to up your contributions by 1% each year until you reach 15%. 

If your employer offers a contribution match for your 401(k) , that can help you reach that 15% goal even faster. For example, your company may match 50 cents for every dollar you contribute up to 6% of your salary. In this case, if you set aside 6% of your salary, with your employer match, you’d be at 9% total. It’s a great idea to take advantage of matching as soon as you can — it’s basically free money for your retirement fund! Keep in mind, company-sponsored retirement plans vary, so make sure to discuss yours with your employer. 

Ways to catch up

While it’s true it’s never too early to start saving for retirement, it’s also never too late. If student loans, a rocky job market, debt or any other reason kept you from saving in the past, that doesn’t mean you can’t get your savings on track and make the most of your retirement fund.

First things first: Like we mentioned earlier, if you have an employer-sponsored plan that offers a match, make sure you are taking advantage of it fully. That may be a way to give your savings a big boost. 

Next, take advantage of automation — whether that means automatically diverting a portion of your paycheck into your 401(k), setting up monthly transfers from your checking account to your IRA or perhaps turning on recurring transfers for your Savings Account retirement bucket . By putting your contributions on autopilot, you won’t have to worry about remembering to fund your retirement account.

Finally, aim to work your way up to maximizing your contributions, as retirement accounts have contribution limits. Make sure to visit the IRS website to stay up to date on current limits. 

2023 Annual Contribution Limits:

2023 Annual Contribution Limits
  Under Age 50 Age 50+ Catch-Up Limits
Traditional/Roth IRA $6,500 $7,500
401(k) $22,500 $30,000

Not yet 50, but want to save even more ? You might consider storing additional retirement funds in a high-yield savings account like our Ally Bank Savings Account, or Money Market Account. That way your funds will be FDIC-insured up to the maximum allowed by law, while still earning interest at a competitive rate. 

Or you might consider an investment account to accompany your other retirement savings accounts. With a Robo Portfolio , you can give your money the opportunity to perhaps better benefit from compound interest over time while you invest hands-free. 

Save for your golden years away

No matter where you are in life or what you envision for your future, retirement is a worthy goal to work towards and one you can achieve. So, don’t let financial fears, either future or present, hold you back from getting started — because the sooner you start, the less you’ll have to worry later. By thinking realistically about your lifestyle, mapping out achievable benchmarks and taking advantage of all the savings tools around you, you can set yourself on a path toward a bucket-list topping retirement. 

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