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How Much Should You Be Saving for Retirement?

“How much should I have saved for retirement?”

This is a question we’ve all asked ourselves at one point or another. Unfortunately, there’s no one right answer. How much you should have saved depends on a variety of factors—five, to be exact. Take a look in detail below.

Five Key Factors to Help You Save for Retirement

1. When You Plan to Start Saving

Obviously, the earlier you start saving, the better. Someone who’s started putting money into a retirement savings account at 25 may be well ahead of you if you’re starting in your mid- to late 30s or 40s, but that doesn’t mean you’re out of the race: slow and steady always wins in the long run. While a good rule of thumb is to try to allocate 10% of your gross annual income towards retirement, if you’re playing catch-up, you may want to work towards saving a little more.

2. When You Plan to Retire

People today are living longer, and because they’re living longer they’re working longer, too. The average retirement age today is 62 years old. For perspective,it was 59 only a few years ago, and in 20 years it may well be around 70. Another thing to consider is your Social Security benefits. Since Social Security only starts kicking once you’re 65, delaying retirement a few years may help increase the amount you’re able to put away. Plus it may give you more time to help beef up your savings

3. How Much You’re Actually–Not Hypothetically–Able to Save Every Month

Because the key to saving efficiently is setting goals for yourself, make sure you’re setting goals you can actually meet. While setting high goals for yourself may sound promising on paper, if you can’t meet them, they’re useless.Make sure you’re setting goals you can actually meet. If that means you’re only able to save $100 this month, so be it. That’s $100 more than you had before. There’s nothing wrong with starting small and working your way up.

4. Your Expected Growth Rate

Assuming you’re actively contributing to a 401(k) (if you’re not, you should. Look at our retirement advice page for more information on retirement accounts), your rate of return could be exponential. Under the Rule of 72, a rule created by financial advisors to help gauge the time it takes for an investment to double, saving a few thousand a year could easily turn into tens of thousands over the course of a few decades. Use this calculator to help see how long it will take for your money to double based on your investments.

5. How Long You’re Planning on Staying in Retirement

This is a tricky one. Keep in mind that the average life expectancy today in the U.S. is about 79 years. By 2020 this number is projected to be 82, and by 2030 it will be 84. While it may feel a little odd, they’re worth considering when you’re calculating how much you should have saved.

So, How Much Should I Have Saved for Retirement?

As you can see, how much you should have saved depends on a variety of factors: your starting age, when you plan on retiring, how much you’re saving, your expected growth rate and how long you plan on staying in retirement.

While different factors contribute to how much you should be saving, there is one thing that connects them all: how important it is to start saving as soon possible.

For more retirement advice, also see:

Retirement and 401k

Retirement Advice to Prepare for Your Future

A Simple Guide to Planning for Retirement

What Are the Average Retirement Savings by Age?