How Much Should I Save for Retirement? Rules of Thumb and How to Check Yours

There's no single right number for retirement savings. It depends on when you want to retire, how you want to live, and what other income you'll have, such as Social Security or a pension. Rules of thumb are useful starting points, and a projection tells you whether your current plan gets you close.

Common guidelines

• Save about 15% of pre-tax income, including any employer match, starting in your 20s or early 30s. Starting later generally means saving more.
• Replace about 70–80% of pre-retirement income from all sources combined, since some costs fall in retirement.
• Use a withdrawal rate of around 4% as a rough guide to how much a portfolio can support. Under this rule, $1,000,000 supports about $40,000 a year, adjusted for inflation. The figure comes from historical research, isn't a guarantee, and many planners use a range of rates depending on retirement length and market conditions.

Working backward

Suppose you'd like $60,000 a year in retirement and expect $24,000 from Social Security. The gap is $36,000. At a 4% withdrawal rate, that suggests savings of about $900,000 ($36,000 ÷ 0.04) in today's dollars.

Social Security estimates are available from your account on the Social Security Administration website.

Checking with a projection

Enter your age, salary, contribution rate, employer match and current balance into the 401(k) calculator. Turn on "Show in today's dollars" to compare the result with your target in present-day terms. If the projection falls short, test what changes close the gap: raising contributions, retiring a little later, or capturing the full match.

Why starting early matters

Compound growth rewards time. At a 6% annual return:

Start age	Monthly saving	Approx. balance at 65
25	$400	about $790,000
35	$400	about $400,000
45	$400	about $185,000

Starting ten years earlier roughly doubles the result, even though total contributions only rise by $48,000.

Levers you control

1. Contribution rate: increase by 1% a year, especially with raises.
2. Employer match: contribute enough to get all of it; see how a 401(k) match works.
3. Fees: lower costs leave more to compound; see how 401(k) fees affect your balance.
4. Retirement age: working a few more years adds contributions, adds growth and shortens the time savings must last.
5. Catch-ups after 50: see catch-up contributions.

Keep an emergency fund separate

Withdrawing from a 401(k) before age 59½ usually means income tax plus a 10% additional tax, unless an exception applies. A separate emergency fund in savings or CDs helps you avoid that; see the CD calculator.

Educational content only, not financial advice. Projections are estimates; returns aren't guaranteed.