How to Save for Retirement by Decade

November 2, 2018

Saving for retirement for daunting. When you’re saving for something like a down payment on a house or a new car, you can have a pretty accurate figure in mind. But when you’re saving for retirement, it’s hard to know how much you’ll need. There are so many unknowns: How old will you be when you retire? Will you have any major health issues? What will your tax rate be? How long will you live?

It’s easy to want to throw up your hands and decide to worry about it later, but that is the exact wrong thing to do. Thanks to the power of compound interest, it’s important to start saving as early as possible and keep saving for as long as possible.

Not convinced? Look at the numbers. Assuming an 8 percent rate of return, if you start investing $250 a month at age 25, you will have $878,570 by age 65. If you start at age 35, you will have $375,073. And if you wait until age 45, you will have $148,236.

It’s time to stop procrastinating and develop a savings plan.

If you’re the type who likes to have an exact target, we have good news. Fidelity Investments has developed age-based milestones to help you travel the road to retirement. By biting off your savings plan into manageable chunks, you can keep track of where you are and feel more confident that you’ll get to where you need to go.

Fidelity recommends you aim for the following targets by age:

  • By age 30: Have saved the equivalent of your annual salary
  • By age 40: Have saved three times your salary
  • By age 50: Have saved six times your salary
  • By age 60: Have saved eight times your salary
  • By age 67: Have saved 10 times your salary

The ultimate goal is for you to have saved enough by age 67 to be able to maintain your current lifestyle in retirement. Your personal goal may vary; if you’re planning on living modestly in retirement, you may need to save less, and if you’re planning on traveling extensively, you may need to save more.

The age at which you retire also plays an important part in your planning. If you want to retire earlier, at age 65, you will need to have saved 12 times your salary. If you wait to retire until age 70, you will need to have saved eight times your salary.

Those numbers probably still sound daunting, but they’re a good starting point. After all, the hardest part can be taking that first step.There are a number of ways you can save for retirement, including participating in a 401(k) plan offered by your employer and/or contributing to a separate IRA. No matter how you do it, be sure to store all your important retirement documents at That way, when it’s time to sit back and enjoy the fruits of your labor, you’ll know how to access all the money you’ve painstakingly saved for years.

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