Are You Saving Enough for Retirement?

It’s an age-old question. The answer may start with estimating how much you should have saved already. Then, review at key checkpoints to identify and overcome possible savings gaps.

Retirement Checkpoints

A savings target can help you determine whether your retirement goal is on track. One way to gauge your progress is to estimate savings in relation to your age and income.

Age and Income Checkpoints Can Help You Gauge if You’re Saving Enough

Age You Should Have Saved Savings Range if You Make $50,000/year
30 half to full annual salary $25,000 - $50,000
40 2x - 3x your salary $100,000 - $150,000
50 4x - 5x your salary $200,000 - $250,000
60 6x - 8x your salary $300,000 - $400,000

Source: “How Much You Should Have Saved (By Age),” Investopedia, April 2019.

10-25%

What some financial planners suggest you save every year1

Reality for Many Retirees

image of a piggy bank with the text '10x'

Amount of your final pay that some retirement experts say you should have saved by age 67

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Amount the average worker may save during that time period2

image of a broken piggy bank with the value $105k

Potential shortfall for retirement for a salary of $50,000 per year

      

Coming Up Short? Use These Tips

1. Maximize Your Savings

  • Contribute the max to IRAs or your company’s retirement plan.
  • If that’s too much for your budget, try saving a few percent more each year. Or opt in to automatic contribution increases if your retirement plan offers.
  • If your company matches contributions, save at least enough in your retirement plan to get the full match. 

A Few Percent More a Year Can Add Up

Joe makes $50,000 per year.  Over 20 years, he could potentially earn:

a line drawing of an egg in a nest to signify 'nest egg'

$36,791 more

by saving an extra 2% a year

a line drawing of an egg in a nest to signify 'nest egg'

$91,979 more

by saving an extra 5% a year

Hypothetical calculation of $1,000 and $2,500 annual investment over 20 years at a 6% return rate. Assumes reinvestment of all gains, dividends and interest, and does not include fees, expenses, or taxes. If all taxes, fees, and expenses were reflected, the reported portfolio value would be lower. Source: American Century Investments, 2019, Future Value Calculator, dinkytown.net.

2. Play Catch Up if You’re Age 50 or Older

At age 50, you may be able to put extra money in your retirement account, called catch-up contributions.3 The extra amount you can contribute depends on the type of account you have.

2 thousand dollars image

a year catch-up contribution

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forty six thousand five hundred fifty nine dollars

more for your retirement

Hypothetical calculation of $2,000 annual investment over 15 years at a 6% return rate. Assumes reinvestment of all gains, dividends and interest, and does not include fees, expenses, or taxes. If all taxes, fees, and expenses were reflected, the reported portfolio value would be lower. Source: American Century Investments, 2019, Future Value Calculator, dinkytown.net.

3. Review Your Investments

Having the appropriate mix of stock, bond and money market investments may play a vital role in improving the odds of reaching your goal.

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Stocks

While riskier than other types of investments, stocks can potentially help your savings grow more over time.

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Bonds and Money Markets

These investments are less risky than stocks, but don't provide as much growth potential.  They might help lower the risk of losing money when the stock market fluctuates.

Check In On Your Savings

We’re here to help you determine
if you’re on the right track.

 

1-844-4AM-CENTURY

Additional Resources

Social Security for Women: What to Know

The rules for women and men are the same, but your strategy shouldn't be.

4 Facts to Know about Social Security

Get the facts now to make retirement easier down the road.

Women: Wield Your Financial Power

Nine out of ten women will be solely responsible for finances at some point. Develop a plan with these three considerations in mind.

    1Note that the 10-25% figure could include retirement plan contributions, employer match, cash savings and debt repayment. Source: “How Much You Should Have Saved (By Age),” Investopedia, April 2019.

    2Source: The Real Deal: 2018 Retirement Income Adequacy Study, Aon Hewitt.

    3The rules and amounts for catch-up contributions are set by the IRS each year. Check irs.gov or with your employer to see what you are eligible for in your account.

    This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

    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.