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How Much Should I Be Saving for Retirement? Thumbnail

How Much Should I Be Saving for Retirement?

To answer that question, let’s begin with a common question we hear from people, “How do I compare to others in my preparedness for retirement?”  What they’re really asking is, “Am I behind the curve?”  “Am I on track?”  “Help me to have some confidence”. 

In answering how much you should be saving; we have some good news and we have some bad news from a national perspective.  

First, the bad news.  The National Institute on Retirement Security reports that almost 40 million people have no retirement savings at all. ¹ Zero!  Zilch!  Nada!  Meanwhile, the Employee Benefit Research Institute estimates that Americans have a retirement savings deficit of $3.68 trillion. ²

So, how are you doing compared to others?  Well, if you have anything at all in savings/retirement accounts, you’re ahead of 40 million Americans.  

That’s probably cold comfort but this blog is not all doom and gloom.  Here’s the good news: Many Americans are saving for retirement.  In fact, in May of 2022, Fidelity reported that the total 401K savings rate for Q1, 2022 reached a record of 14% of income, while the total number of Fidelity IRA accounts increased 11% over Q1, 2021.  Though there is still a large deficit, more Americans are thinking about retirement savings and taking this topic more seriously.

So, how are you doing in comparison?  The average 401K balance for those who have been saving for at least 10 years was slightly over $380,000.³

How Do I Know If I’m On Track to Retire?

Everyone’s situation is different but, according to Fidelity, there is a simple formula to help determine if you’re saving enough to retire.  If you want an average retirement, then this rule applies.  If you want above average, you know the minimum you will need to reach your goal.  Per Fidelity:

  • You should have the equivalent of one year’s income saved by the time you reach 30 years old.  
  • Fidelity estimates you should have 3X your annual income saved by age 40, 6X by 50, 8X by 60 with the ultimate goal of 10X your annual income by the time you retire.  
  • These recommendations are based on a person saving 15% of their income, starting at age 25 and investing at least 50% in stocks with a target retirement age of 67. ⁴
  • Saving more is ok too. When people ask me, “How much should I be saving?”  My response is usually, “As much as you can.  I’ve never had anyone reach retirement and tell me, ‘I saved too much’.”   That usually gets a chuckle, but it’s true.  On the other hand, something I have heard from retires is, “I wish I’d saved more”.

  • Our team can add the most value for people with investment portfolios of $500,000 or more.  If you have this much saved, and you want to make sure you’re on track or need help finding the right investment vehicles, the team at Callesen Wealth Management is here to help.


    (1): “The Continuing Retriement Savings Crisis NIRS (March, 2015).  www.nirsonline.org/reports/the-continuing-retirement-savings-crisis/

    (2): “Impact of the Covid 19 Pandemic on Retirement Income Adequacy: Evidence from EBRI’s Retirement Security Protection Model®. EBRI (April, 2020).  www.ebri.org/docs/default-source/ebri-issue-brief/ebri_ib_505_2020crisis-21apr20.pdf?sfvrsn=b3423d2f_4

    (3): “Building Financial Futures”.  Fidelity (May, 2022).  https://fmr.my.salesforce.com/sfc/p/#300000000ZLP/a/sJ0000007ufb/7BDIUFOPHcwb671dBcRLaWXaeX9bAvOZQf1_al9flGg

    (4): “How Much Do I Need to Retire?”  Fidelity (August, 2021).  https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire

    (5): Vanguard, 2019.  “Putting a Value on Your Value”.  https://advisotrs.vanguard.come/iwe/pdf/ISGQVAA.pdf

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