Planning for the Future: Essential Steps to Secure Your Retirement

Is your retirement savings on track?

If you’re like most people, you may feel it’s not. In fact, concerns about running out of money in retirement are very common.^{1, 2}

Many people today believe they’ll need at least $1.5 million saved to retire comfortably.³ But is that number right for you? The real “magic number” varies widely depending on your current savings, future goals, and lifestyle plans.

A clearer picture of retirement readiness starts with understanding some general rules of thumb, strategies for calculating your personal “magic number,” and practical tips to help build a reliable nest egg for your future.

Retirement Savings Milestones: 5 Recommendations

Setting retirement savings milestones can help you determine what to save monthly and annually to stay on track. While these targets may vary, here are some helpful benchmarks to consider

1. Age 30 = Your Salary

By age 30, aim to save at least one year’s worth of your salary for retirement. Hitting this goal allows you to start benefiting from the power of compound growth.

2. Age 40 = 3x Your Salary

Though expenses may grow as families do, keeping pace with retirement savings goals may mean saving at least three times your salary by roughly age 40.

3. Age 50 = 6x Your Salary

As you get closer to retiring, look at ways to:

Pay down debt to enter retirement with minimal liabilities.
Maximize retirement contributions to reach about six times your salary by age 50.

4. Age 60 = 8x Your Salary

As you approach retirement, think about:

How and when you might transition to retirement.
Whether a part-time role could be part of your plan.
Aiming to have at least eight times your salary saved by age 60.

5. Average Retirement Age (67) = 10x Your Salary

If you plan to retire around age 67, which is the full retirement age for Social Security benefits, aim for about ten times your annual salary.⁴ For instance, a salary of $100,000 would suggest a target of $1 million by retirement.

Keep in mind:

These recommendations provide broad estimates for guidance and tracking progress.
As you gain experience and your salary grows, these milestones may shift as your income changes.
These benchmarks may not fit everyone’s personal retirement plans and should be adapted to individual goals.\

5 Personal Factors that Impact Retirement Savings Goals

While general savings milestones provide helpful guidelines, personal factors can greatly influence your actual retirement needs. Here are five key considerations to help you define your unique retirement target:

When Do You Want to Retire?
What age do you envision for retirement? Deciding when to retire can dramatically affect how much you’ll need, especially if you plan to stop working before becoming eligible for full Social Security benefits.

What Lifestyle Do You Want in Retirement?
Are you dreaming of frequent travel, a quiet life filled with hobbies, or something in between? The more you can clarify your lifestyle goals, the better you’ll understand the financial resources you’ll need to enjoy your future comfortably.

Where Will You Live?
Do you plan to stay put, downsize, or relocate? Your choice of location impacts cost of living, taxes, and potential housing expenses, including maintenance if you own a home. These variables can influence how much you should save.

Will You Retire with Debt?
Are there ways to limit the debt you’ll retire with? Ideally, entering retirement with minimal or no debt allows more flexibility with your income. The more debt you carry, the more challenging it may be to cover expenses comfortably in retirement.

What About Health Care When You Retire?
Health care and long-term care can be significant expenses. The average retiree may need upwards of $157,000 for health care alone, and those costs typically rise with age and inflation.⁵

While these may not be the only factors to consider, they’re valuable starting points for refining your “magic number” and setting a solid foundation for retirement.

Retirement Savings Tips: 7 Actionable Ideas

Reaching your retirement goals often requires more than knowing general milestones or understanding personal factors. Here are seven tips to help you stay on course and save strategically.

1. Start Saving Early & Maximize Compound Growth

The earlier you start saving, the more time your investments will have to grow. Even small contributions early on can balloon over time.

2. Maximize Employer Contributions

If your employer offers a match on your 401(k) or another retirement plan, aim to contribute enough to capture the full match. It’s essentially free money for your retirement.

3. Set Aside a Percentage of Your Salary

Commit a portion of your salary directly to retirement savings—ideally around 15% of your annual income, including any employer match. Hitting this target can keep you on track toward long-term goals.

4. Diversify Your Investments

Balance your portfolio with a mix of stocks, bonds, and other assets. Diversification can better insulate your retirement savings from volatility, especially as you get closer to retiring.

5. Reassess & Adjust Savings Regularly

As life changes, you may need to reassess your savings plan and retirement contributions. That’s why it’s important to regularly revisit your retirement savings strategies to make sure they still work for you and are the best options for achieving your objectives.

6. Plan for Unexpected Expenses

Life is full of surprises. Setting up an emergency fund can help you deal with any unexpected expenses, so you don’t have to dip into your retirement savings prematurely.

7. Keep Track of Your Retirement Income Sources

Estimate your monthly retirement income from Social Security, pensions, and personal savings. Then, compare this with projected monthly expenses in retirement to see if your income will meet your needs. This will give you a clearer picture of your future financial landscape.

Achieving Your Ideal Retirement: The Next Steps

Building the retirement you envision takes careful strategies and a steady commitment to saving. It requires understanding how retirement savings work, clarifying your goals, and adopting smart strategies to secure your future.

The good news? You don’t have to do it alone. Partnering with an experienced financial professional can provide valuable guidance, helping you discover effective strategies tailored to your unique retirement goals.

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