By Jim Probasco Updated Mar 14, 2019

Knowing how much you should have saved toward retirement at each stage of your life will help you answer that all-important question: “Have I put aside enough?” Here are some useful formulas that can help you set age-based savings goals on the road to retirement. (For more see: Set Specific Goals to Manage Your Wealth Better.)

Retirement Income: The 80% Rule

Most experts say your retirement income should be about 80% of your final pre-retirement salary. That means if you are making $100,000 annually at retirement, you will need an income of at least $80,000 per year to have a comfortable lifestyle after leaving the workforce. This amount can be adjusted up or down depending on other sources of income, such as Social Security, pensions and part-time employment, as well as your health and your desired lifestyle.

Total Savings: The 4% Rule

To determine the amount you will need to have saved to generate the retirement income you want, one easy-to-use formula calls for dividing your desired annual retirement income by 4%. To generate the $80,000 cited above, for example, you would need a nest egg at retirement of about $2 million. This assumes a 5% return on investments (after taxes and inflation), no additional retirement income (i.e., Social Security) and a lifestyle similar to the one you would be living at the time you retire.

Multiples of Your Salary

To figure out how much you should have accumulated at various stages of your life, thinking of a percentage or multiple of your salary at that time can be a very useful tool. Fidelity suggests you should have 50% of your annual salary in accumulated savings by age 30. This requires saving 15% of your gross salary beginning at age 25 and investing at least 50% in stocks. Additional savings benchmarks are as follows:

  • Age 40 – two times annual salary
  • Age 50 – four times annual salary
  • Age 60 – six times annual salary
  • Age 67 – eight times annual salary