Retirement Saving for Any Age

What if you woke up on your 65th birthday and realized you couldn't afford to retire? For millions of Americans, this isn't a hypothetical scenario - it's a looming reality. But it doesn't have to be your story.

Retirement planning can seem complex, especially when juggling multiple financial priorities, and there can be a host of reasons why making or updating your plan is a better project for another day. But your future self begs to differ.

With the right strategies and consistent effort, building a secure financial future is possible. But how do you get started?

Determining Your Retirement Savings Goal

Let's tackle a crucial question: how much income do you need in retirement, and how much do you need to save? While there's no one-size-fits-all answer, several methods can help you estimate your target:

The 80% Rule

To estimate your income requirements, this guideline suggests you'll need about 80% of your pre-retirement income to maintain your lifestyle in retirement. For instance, if you currently earn $100,000 annually, you might aim for $80,000 annually in retirement.

The 25x Rule

One approach to estimating a savings goal is multiplying your desired annual retirement income by 25. This calculation is based on the 4% withdrawal rule, which suggests you can withdraw 4% of your savings each year in retirement with a low risk of running out of money. If you want $80,000 per year in retirement, you'd aim to save $2 million (80,000 x 25).

Savings Targets by Salary

If the 25x rule seems unobtainable, another approach championed by Fidelity Investments suggests setting savings goals by age. For example:

• By age 30 - Save 1x your income
• By age 35 - Save 2x your income
• By age 40 - Save 3x your income
• By age 45 - Save 4x your income
• By age 50 - Save 6x your income
• By age 55 - Save 7x your income
• By age 60 - Save 8x your income
• By age 67 - Save 10x your income

Remember, these are general guidelines - the suggested account balance of the 25x rule is about twice that of the salary target method, for example! And there are many other approaches. Your specific retirement savings goal will depend on factors like your desired lifestyle, health, life expectancy, and whether you plan to leave an inheritance.

Creating a Plan

Now that we've covered how to determine your savings goal in general, let's explore strategies for creating a plan.

This week, we'll cover strategies to help maximize savings – no matter your age.

• Your 20s and 30s - Why starting early is crucial and how to balance retirement savings with other financial goals.

• Your 40s - Strategies to maximize your contributions and manage your growing assets.

• Your 50s - How to take advantage of catch-up contributions and reassess your investment risk as retirement draws closer.

• Your 60s - How to navigate the shift from saving to spending.

• Retirement and Beyond - Once you're in retirement, managing your portfolio becomes crucial. We'll explore strategies for balancing growth and safety, and discuss various withdrawal methods to help ensure your savings last as long as you need them.

• Assessing Your Retirement Plan - Key milestones for checking your progress at any age.

No matter how much or little you've saved so far, this series will provide you with actionable strategies to boost your nest egg and work toward a secure financial future. From leveraging employer matches in your 20s to optimizing Social Security benefits in your 60s, we've got you covered.

Successful retirement planning isn't about timing the market or making risky bets. It's about consistent saving, smart investing, and regularly reassessing your goals and strategies.

Above all, remember that working with a financial advisor to create a personalized retirement plan is often helpful. While a generalized approach can be good for getting a plan off the ground, it can't account for the nuances of your personal financial situation.

That said, let's get started!