Checkpoints

Have I Saved Enough?


The amount you need (for retirement or any other goal) depends on how much you have now, how much you plan to save over time and the average return of your investments.

How Much Is Enough?

CURRENT SAVINGS + FUTURE INVESTMENTS + GROWTH

Want a quick estimate of how much you need? Here are some basic guidelines for young investors through retirees.


Current Savings

Am I ahead…or behind?

One way to gauge your progress is to look at your account balance in relation to your age and income.

YOU SHOULD HAVE SAVED 

Half to full annual salary

What does that look like?

If you make $75,000/year
$37,500 – $75,000

 

If you make $100,000/year
$50,000 – $100,000


Future Investments

How can I keep up?

Commit to saving a set portion of your income. Haven’t saved enough? Look for tips to boost your savings.

Savings Goal 

5–10% of annual income
 

Next Checkpoint

Gradually increase your savings to 10–15% of your salary.

Tips for Boosting Savings

  • Invest the "free money" of employer 401(k) matches. 
  • Bump up contributions when you get a raise.
  • Pay off high-interest debt.

Current Savings

Am I ahead…or behind?

One way to gauge your progress is to look at your account balance in relation to your age and income.

YOU SHOULD HAVE SAVED 

Two to three times your annual salary

What does that look like?

If you make $75,000/year
$150,000 – $225,000

 

If you make $100,000/year
$200,000 – $300,000


Future Investments

How can I keep up?

Commit to saving a set portion of your income. Haven’t saved enough? Look for tips to boost your savings.

Savings Goal 

10–15% of annual income
 

Next Checkpoint

Gradually increase your savings to 15–20% of your salary.

Tips for Boosting Savings

  • Invest the "free money" of employer 401(k) matches. 
  • Bump up contributions when you get a raise.
  • Pay off high-interest debt.
  • Use tax-advantaged accounts (IRAs, health savings accounts) to save.

Current Savings

Am I ahead…or behind?

One way to gauge your progress is to look at your account balance in relation to your age and income.

YOU SHOULD HAVE SAVED 

Four to five times your annual salary

 

What does that look like?

If you make $75,000/year
$300,000 – $375,000

 

If you make $100,000/year
$400,000 – $500,000


Future Investments

How can I keep up?

Commit to saving a set portion of your income. Haven’t saved enough? Look for tips to boost your savings.

Savings Goal 

15–20% of annual income
 

Next Checkpoint

Gradually increase your savings to 20% or more of your salary.

Tips for Boosting Savings

  • Continue investing the "free money" of employer 401(k) matches. 
  • Make “catchup” IRA contributions if you’re age 50 or older.
  • Take advantage of traditional and Roth IRA contributions and tax benefits, depending on your current and future income.
  • Consider health savings accounts (HSAs) for even more tax benefits.

Current Savings

Am I ahead…or behind?

One way to gauge your progress is to look at your account balance in relation to your age and income.

YOU SHOULD HAVE SAVED 

Six to eight times your annual salary

 

What does that look like?

If you make $75,000/year
$450,000 – $600,000

 

If you make $100,000/year
$600,000 – $800,000


Future Investments

How can I keep up?

Commit to saving a set portion of your income. Haven’t saved enough? Look for tips to boost your savings.

Savings Goal 

20%+ of annual income
 

Next Checkpoint

Gradually increase your savings if you’re still working.

Tips for Boosting Savings

  • Keep contributing: Even if you can withdraw from retirement plans and IRAs at age 59½, try to avoid it.
  • Maximize Social Security benefits by working longer and increasing your wages.
  • Look for extra money from raises, bonuses, tax refunds, inheritance or settlements to further pad your savings.

Current Savings

Am I ahead…or behind?

One way to gauge your progress is to look at your account balance in relation to your age and income.

YOU SHOULD HAVE SAVED 

Nine to ten times your annual salary

What does that look like?

If you make $75,000/year
$675,000 – $775,000

 

If you make $100,000/year
$900,000 – $1,000,000


Future Investments

How can I stay there?

Map out a retirement income strategy, to help maintain your lifestyle and avoid running out of money in retirement. 

Spending Rate

~4% a year, depending on other income  

Income Checkpoint

As a rule of thumb, you may need 70-80% of your preretirement salary as annual income in retirement to maintain a similar lifestyle. Many experts recommend withdrawing about 4% a year to provide a steady income without depleting your savings. Actual amounts depend on your current situation and future spending plans. 

Tips for Steady Income

  • Total return strategy. This might look like your current portfolio, where the goal is to continue earning money throughout retirement without taking on too much risk.
  • “Bucket” strategy. Divide your money into short-term (with less risky investments) and long-term (riskier) categories. The goal is to get income from the short-term bucket and refill it from the long-term.
  • Income floor strategy. Divide your expenses into essentials (housing, vehicles) and discretionary (travel, entertainment). Combining the strategies above, you rely on the more conservative bucket for essentials and use the riskier investments for extra expenses.



How Much of Your Income Should You Save?

Source: American Century Investments. The examples indicate hypothetical savings increases over time, which will differ depending on an investor’s own income and current savings.

 

 

 


Saving vs. Investing

While these terms are often used interchangeably, they’re not the same.

Saving

Putting aside money you’ll need soon, with little to no growth potential.
Examples: Bank savings accounts, money markets

Investing

Buying and holding assets for long-term results, with varying growth potential and the risk of losses.
Examples: Stocks, bonds, mutual funds


Growth

How do I make sure my money can grow?

Looking for 5%, 10%, 15% growth? There’s no guarantee your money will grow at a certain rate. Instead, the best thing to do is to plan for long-term growth potential.


Stocks: The Engine for Growth Potential

Growth of $10,000


Hypothetical value of $10,000 invested at the beginning of 1980. Assumes reinvestment of income and no transaction costs or taxes. This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

Source: FactSet. U.S. stocks are represented by the S&P 500 Index. U.S. bonds are represented by Barclays Capital U.S. Aggregate Bond Index. T-Bills are represented by the FTSE 3-Month U.S. T Bill Index. The indices are not investment products available for purchase.

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Did You Know?

Historically, stocks have outpaced bonds and cash. Stocks can gain and lose value, but their average returns over time have acted as the long-term growth engine for many investors’ portfolios.

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.

You could lose money by investing in a mutual fund, even if through your employer's plan or an IRA. An investment in a mutual fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Please consult your tax advisor for more detailed information regarding the Roth IRA or for advice regarding your individual situation.

Taxes are deferred until withdrawal if the requirements are met. A 10% penalty may be imposed for withdrawal prior to reaching age 59½.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

This information is for educational purposes only and is not intended as a personalized recommendation or fiduciary advice. There are different options available for your retirement plan investments. You should consider all options before making a decision. Our representatives can help you evaluate all of your distribution options.

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