Ready for Retirement? Here’s What You Should Have Saved, And When – Tips to Get It Done

Every family is different, and it’s important not to measure yourself too closely against others — to strive to a fault to keep up with the Joneses, so to speak. 

San Francisco-based financial advisor Daniella Rand encourages prospective clients to work with an expert — or, better yet, a financial advisory and wealth management team — willing to take the time to tailor customized financial plans to clients’ needs, and to adjust those plans regularly as client needs and circumstances change.

Still, every investor can and should follow some basic best practices to prepare for retirement. One of the most important of these: maintaining a savings rate sufficient to increase their long-term financial plan’s chances of success, and achieving a rate of return on investment sufficient to maintain their present lifestyles in retirement.

With that in mind, let’s take a closer look at what experts say about how much you should have saved by key age milestones. Are you on track?

By Age 30

Statistically, you’re likely to be a couple years into marriage by the time you hit the big 3-0. You may be thinking about buying a home. How much should you have in the bank for retirement?

Opinions vary, but half your annual salary is a good baseline; an amount equal to your annual salary is the ideal. At this point in your life, you have more pressing life goals to save for, so be sure not to mix funds set aside for, say, a down payment on a home with your retirement nest egg.

By Age 40

Your savings rate should really kick into high gear during your 30s, when your kids’ college tuition bills (if any) are still years off and you’re likely to earn more than you did in your 20s. By age 40, the rule of thumb is three times your annual salary earmarked for retirement — again, not including nearer-term buckets like emergency or education savings.

By Age 50

From age 40 through age 60, you’ll want to shoot to increase your retirement nest egg (through savings and growth) by an amount equivalent to your annual salary every five years. So, by age 50, you’re looking at a nest egg equal to seven times your annual salary. 

By Age 60

By age 60, nine times your annual salary is a good retirement savings benchmark. Remember, this is the target you’ll want to shoot for to maintain your present lifestyle after you retire, and while it may not reflect pension or Social Security eligibility, you shouldn’t bank on public or private entitlements for support after you hang up your hat.

Are You Keeping the Pace?

Saving for retirement is a marathon — not a sprint. As anyone who’s run a marathon (or tried) knows, you can’t cram everything you need to do to prepare for the day you hang up your hat for good into a single year, let alone a weekend.

Does that mean your retirement ship has already sailed — that you’re doomed to a reduction of your standard of living once you stop working, or to an extended career stretching well into your 70s?

Not at all. No matter where you’re at in life or what your personal finances look like, you can take steps today to create a sustainable financial plan that includes ample room for a productive, fulfilling retirement.

It’s on you to take the first step. Are you ready?

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