How Much You Should Have in Your Retirement Fund at Ages 30, 40, 50, and 60


Financial planners generally recommend that you have adequate retirement savings at age 65 to replace 70% of your annual income during your golden years. Unfortunately, no one can be certain exactly how many years that will be. Life expectancy in the U.S. is roughly 80 years old, but health care advances and technology could lengthen that.

Assume you’ll need 20 years of income after you retire. You’ll want to pay off debt before you get there, of course, so make that a priority. As for retirement savings, beginning that process in your 20s is recommended, but you can catch up if you start late. We’ve made a list of milestones you should try to hit along the way.

Retirement funding goals at age 30

By the time you’ve reached the age of 30, you should have saved the equivalent of one year’s salary for retirement. This is easily achievable if you enroll in a 401(k) with an employer match while you’re still in your 20s. Young people don’t always take advantage of this, which is a mistake. Thirty is a good age to reevaluate that.

Thirty also happens to be an age when college graduates are paying off student loan debt, which is often prioritized before retirement savings. The order of importance for these two actions is debatable, as both are important. Student loan debt accrues interest. Retirement savings earns capital gains. Balance the two for the best results.

Retirement funding goals at age 40

By age 40, if you’ve planned and managed money properly, student loan debt should be paid off and retirement savings should be three times your annual salary. If you’re in this position, you’re doing better than most. Keep up the good work. You might be able to retire early if you continue down this path.

Life in your mid-30s and early 40s can be filled with responsibilities, obstacles, and life events that make savings difficult. Marriage, children, home ownership, and job changes are common during this time, so it requires a higher level of commitment to maintain a retirement savings plan. Don’t waiver. You’re doing well.

Retirement funding goals at age 50

At 50 years old, we suddenly realize we’re running out of time to save for retirement. The IRS understands that, so they lift the maximum retirement contribution rate for individuals over 50. Check your accounts. At this point, you should have five times your annual salary put away for that glorious day, which is only about 15 years away.

Even if you hit this milestone, increase contributions to your 401(k) or IRA. The limit for the former was $19,500 in 2020, but you can add another $6,000 after age 50. IRA limits go from $6,000 to $7,000 per year. In some cases, the contributions are tax-deferred. You’ll pay taxes on distributions after retirement, but at a lower rate.

Retirement funding goals at age 60

With five years left, you should have a nice nest egg worth seven times your annual income. A conservative 5% gain on that will earn you 35% of your current salary without touching the principal. You could conceivably retire early if you want to, but you’re not mandated to take distributions for another 10 years.

This is a time when you can ease off the gas pedal or seriously accelerate going toward the finish line. It’s also a good idea to start watching the market for uptrends and downtrends. Retiring on a down cycle could shorten your runway after age 65. Speak to a financial advisor for more on that.

Kevin Flynn

Kevin is a former fintech coach and financial services professional. When not on the golf course, he can be found traveling with his wife or spending time with their eight wonderful grandchildren and two cats.



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