Here is how much you should have saved for retirement by now

how much you should have saved for retirement

How much should I have by my current age?

A lot of material crosses my desk in a given week, but one thing that caught my eye recently was a retirement report from J.P. Morgan.  One of the charts in the report was titled Retirement Savings Checkpoints.  If you’ve ever wondered “How much should I have saved by now?” this chart can give you a rough idea.

Just find your current salary on the top and your age on the left and then draw a line from each until they intersect.  The number at the intersection point is how many multiples of your salary you should have saved by now.  For example, if you make around $75,000 and you’re 55 years old then you should have about 4.1 times your salary (or about $307,500).

How much you should have saved for retirement

How much should I have by 65?

There is a general rule of thumb that says that most people need about 85% of their pre-retirement income during retirement in order to maintain their standard of living.  Research done by Charles Farrell and Aon Hewitt shows that the average person can achieve that 85% replacement rate as long as they have Social Security plus 11-12 times their annual income in savings when they retire (for more on this topic read “The 15 minute retirement readiness review”).  So the chart above can give you a rough idea of how much you should have saved for retirement based on your current age and income, but your ultimate goal will be to have around 12 times your annual income in savings when you retire.

That’s just an estimate of course, but it can be a helpful way to quickly gauge your progress.  Ideally you’ll want to factor in the specifics of your unique situation when estimating how much you’ll need for retirement.  You can do that by working with a trusted adviser or using a tool like our Ideal Retirement Design Guide.

Note:  Sorry for the “radio silence” last week at the site.  I was on the road visiting clients in Illinois and then spending some time in Tennessee during our daughter’s spring break.  We’re trying to get her to all 50 states and Tennessee was number 22.  Props to all of our Tennessee readers.  We had a great time in Nashville, Franklin and Memphis.

~ Joe


5 Responses to “Here is how much you should have saved for retirement by now”

  1. Deb Daigle March 25, 2015 at 9:51 am #

    I am one of the fortunate ones with a pension to provide some of my retirement income. I have calculated the value of this pension to be the amount that would be needed to produce the same income at a 3% distribution. For example, $30,000 pension would be worth $1,000,000 of savings in these calculations. Do you think this is a valid way to calculate? Would you suggest another way to valuate?

    • Joe Hearn March 25, 2015 at 11:09 am #

      Hi Deb. Yes, I think that’s a good way to look at it. Assuming a 3% distribution, your pension would be the relative equivalent of having $1 million. Assuming a 4% distribution it would be similar to having $750,000. The main difference (and it’s an important one) is that you can only use your pension as it arrives. With a portfolio of assets you could use it at whatever time and in whatever amounts you needed. Hope that helps. Thanks for touching base!

  2. Matt March 25, 2015 at 9:53 am #

    Thank you Mr. Hearn, I so enjoy reading your newsletters.

    Should a paid for house be included in the “amount saved”?


    • Joe Hearn March 25, 2015 at 11:12 am #

      Hi Matt. That depends. I usually include it in a client’s net worth calculation, but I only include it in their retirement funding calculations if they plan on selling it and using the proceeds to fund retirement. I think you can also include a portion of it if you plan on downsizing to a smaller house and cashing out a portion. For example, if you sell your $300,000 house at retirement and buy a $200,000 house, you could include the $100,000 in cash that you pulled out in your retirement funding calculations. Hope that helps. Thanks for touching base!


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