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Strategic Retirement Savings by Age: A Comprehensive Guide

Planning for retirement can seem daunting, but with the right strategies and milestones, you can ensure a comfortable and secure future. In this guide, we’ll explore how much you should aim to save at different stages of your life and provide actionable tips to help you reach your retirement goals. And remember, for any mortgage service needs, O1ne Mortgage is here to assist you. Call us at 213-732-3074.

What Is the Average Retirement Savings by Age?

According to the Federal Reserve’s 2019 Survey of Consumer Finances, the average retirement savings vary significantly by age. Here’s a breakdown:

Retirement Savings by Age Guidelines

Investment firm Fidelity suggests saving the equivalent of your current salary for retirement by age 30 and 10 times your final salary by age 67, with several milestones in between. Here are their recommendations:

• By age 30: Save the equivalent of your current annual salary.
• By age 40: Save three times your annual salary.
• By age 45: Save four times your annual salary.
• By age 50: Save six times your annual salary.
• By age 55: Save seven times your annual salary.
• By age 60: Save eight times your annual salary.
• By age 67: Save ten times your annual salary.

How to Save for Retirement

Starting early and saving consistently are key to building a robust retirement fund. Here are some types of accounts where you can save and invest money for retirement:

401(k) or 403(b)

A 401(k) is a retirement account sponsored by an employer that allows you to contribute directly from your paycheck. If you work at a nonprofit or a public school, it’s called a 403(b). Contributions are made before they’re taxed, and traditional 401(k)s require you to pay income tax when you make withdrawals in retirement. With a Roth 401(k), you make contributions with money that’s already been taxed, and can then withdraw it tax-free.

Traditional IRA

If you don’t have access to a 401(k), or you want to save extra for retirement, you can open an individual retirement account (IRA). These also come in traditional and Roth versions, and the income qualifications and tax treatment differ between the plan types. Traditional IRAs are taxed upon withdrawal.

Roth IRA

Like Roth 401(k)s, Roth IRAs are funded with post-tax income. You may decide to diversify your savings’ tax treatment and open a traditional 401(k) and a Roth IRA, or vice versa. An accountant can help you decide which type of IRA is best for your situation.

Brokerage Account

Once you’re working toward saving for retirement with a 401(k) or IRA, you can also invest in a brokerage account—potentially with a robo-advisor or the help of a financial planning firm. Compared with dedicated retirement accounts, investing in a non-retirement brokerage account can let you skip certain restrictions on how much you can contribute and when you can withdraw money for retirement.

Social Security

Social Security won’t be enough to allow for a lavish lifestyle after retirement, but it can still be a major contributor to your income. Use the Social Security Administration’s Quick Calculator to estimate how much you’re entitled to based on your projected retirement date.

The Bottom Line

The most important element of retirement saving is making and following your plan as early as possible. Over the years, your needs, priorities, and preferences will shift. But setting a solid foundation and sticking closely to experts’ guidelines will give you the security of knowing you’re on pace for a retirement you can look forward to.

As you take action to plan out your future, it’s also important to keep an eye on your credit. Flush savings will open up opportunities for you in retirement, and robust credit can help you attain goals throughout your life.

For any mortgage service needs, O1ne Mortgage is here to assist you. Call us at 213-732-3074 to discuss how we can help you achieve your financial goals.

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