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Retirement Planning: Stay on track (or catch up) at any age

Everyone looks at retirement differently. Some people want to retire early, while others can't imagine leaving their careers, no matter their age. Since we can never know our future—or how we'll feel in the future—it's best to be prepared. As you save for retirement, regularly assess the age you plan to retire and the lifestyle you hope to maintain.

Retirement Savings Goals by Age—and How to Reach Them

Wondering if you're saving enough for retirement? Check out the goals by age below, including tips on how to reach them—even if you're falling behind.

Retirement Savings in Your 20s—Set Up Accounts

Goal for this decade: 1x your annual salary by the time you turn 30

  • Set up your first retirement account. If your job comes with either a 401(k) or a 403(b), then take advantage of it—especially if you have an employer match. Otherwise, look into an individual retirement account (IRA), a solo 401(k), or maybe even a simplified employee pension (SEP) IRA, depending on your employment situation.
  • Decide how much of your income you can funnel into your retirement account every month. Then set up automatic transfers or ask your employer to do so from your paycheck. Ideally, you'll start with 10%. Remember that, thanks to compound interest, even a little bit can go a long way when you start in your 20s. So start saving, even if you're still paying off debt and can't yet put away 10% each month; even $20 is better than $0.
  • By the time you turn 30, aim to save about 15% of your income as it comes in (including an employer match).

Retirement Savings in Your 30s—Ramp Up Savings

Goal for this decade: 3x your current annual salary by the time you turn 40

  • If you haven't yet set up your retirement accounts, don't stress. You're not alone, and you can use these years to focus and catch up.
  • If you can, set your automatic retirement contributions to equal 20% of your income each month. If you're able, increase that amount until you are caught up. If 20% feels too high, then buckle down on a budget, reduce your spending and aim for 15%.
  • To maximize your retirement contributions, consider investing. Want a simple way to start investing based on your target retirement? Consider a target date fund (TDF). TDFs automatically adjust your mix of bonds and stocks as you approach your expected retirement date.
  • Don't touch your retirement savings, even if you change jobs—here's what you can do with your 401(k).
  • Avoid lifestyle creep. As you receive raises, don't forget to increase your monthly automatic contributions before your monthly spending.

Retirement Savings in Your 40s—Stay Disciplined

Goal for this decade: 6x your current annual salary by the time you turn 50

  • Check in on your total savings and use an online retirement calculator to see where your total might land by the time you retire.
  • If you're not on track to reach your retirement savings goals, then re-assess on your lifestyle. Consider how you can save more as you make more, including saving at least a portion of any unexpected windfalls, such as tax refunds or inheritance money.
  • If you have children nearing college age, be realistic and wise about which schools they should consider and how they and you will cover the cost. The fact is, their expensive out-of-state dream school may only be financially possible if they earn a scholarship.
  • If you haven't yet, consider investing in stocks and bonds and adding a Roth IRA to your retirement portfolio.

Retirement Savings in Your 50s—Maximize Savings

Goal for this decade: 8x your current annual salary by the time you turn 60

  • Retirement catch-up contributions become an option once you reach your 50s. Take advantage of them. You can put away an extra $6,500 per person per year in your 401(k) and an additional $1,000 per year in an IRA. The amounts can change from year to year, so look up the allowable amount or ask a financial advisor.
  • Check your outlook based on current savings. Use an online retirement income calculator and be prepared to estimate your Social Security payout. You can log into the Social Security Retirement Estimator for an estimate based on your earnings history.
  • Decide whether downsizing your home is possible and could help your retirement outlook.
  • You can also downsize your lifestyle. Consider whether it's important to you to maintain your current lifestyle in retirement. If not, what can you change now in order to start adjusting your expectations and even adding to your savings?

Retirement Savings in Your 60s—Last Push Before the Reward

Goal for this decade: 10x your current annual salary by the time you turn 67 (adjust this goal up or down depending on when you plan to retire).

  • Consider how you will make sure your retirement savings last. Keep in mind that you could live to 90 years old—check out this longevity calculator—and that steady inflation never quits.
  • Prepare for retirement by de-risking your investments. If you haven't yet, start to get out of your riskier investments and opt for safer ones like bonds. This comes with an important caveat: Ask your financial planner how much of your investment portfolio should stay in stocks to cover inflation.
  • Decide on a target retirement age, aiming to delay your Social Security payouts until you're at least 70—not that you can't retire before then if you can afford it! Consider an annuity to help cover any income gaps.

Remember, each of these milestones is aspirational. You may not hit every one on time, but that's okay. Try to get close and keep an eye on the next goal to catch up.

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