As retirement approaches, many people wonder whether they’ve saved enough. Comparing your progress to general benchmarks can provide perspective and motivation, but it’s important to remember that every financial situation is unique.
Savings targets can help you gauge whether you’re on track, while also highlighting opportunities to adjust before it’s too late.
Savings Goals by Age
Financial planners often suggest aiming for specific multiples of your annual income by certain ages. By age 50, many recommend having saved about five to six times your income.
By age 55, the target increases to seven times, and by age 60, it approaches eight to nine times. By the traditional retirement age of 65, the goal is often 10 times your income.
These are guidelines, not guarantees. Your personal benchmark may vary depending on lifestyle expectations, health, and whether you’ll receive a pension or other income sources.
To learn more about positioning your money wisely, see The Best Investments for People in Their 50s and 60s.
Factors That Influence Savings Needs
Benchmarks are helpful, but they don’t tell the whole story. Healthcare costs, debt, expected longevity, and even where you plan to live in retirement all affect how much you’ll need. Someone planning a modest lifestyle may need far less than someone envisioning extensive travel or supporting family members.
Considering these factors ensures your plan reflects your real life, not just general rules.
For more on staying protected financially, see How to Age-Proof Your Finances Against Scams and Fraud.
What to Do If You’re Behind
It’s common to feel like you’re not where you should be. The good news is that even in your 50s and 60s, you can catch up. Take advantage of IRS catch-up contributions to retirement accounts, which allow those over 50 to save more each year.
Delaying retirement by even a couple of years, paying down debt, or reducing expenses can also strengthen your financial position. Minor, consistent improvements add up, and it’s never too late to make progress.
For strategies to boost savings late in the game, check How to Catch Up on Retirement Savings After 50.
Building Confidence in Your Plan
Benchmarks are best used as starting points, not finish lines. Regularly reviewing your savings, adjusting your budget, and considering professional advice can help you feel more confident.
Financial planning isn’t about matching someone else’s number. It’s about creating peace of mind and ensuring your money supports the retirement you envision.
Using Benchmarks as Motivation
Benchmarks can be powerful motivators when viewed as progress markers rather than strict requirements. Seeing how far you’ve come compared to general targets may encourage you to keep saving or make adjustments.
Instead of feeling discouraged, use benchmarks as a tool to set realistic, achievable short-term goals that bring you closer to long-term security.
Adjusting for Your Unique Situation
Not all retirees fit neatly into income-multiple formulas. If you live in a lower-cost area, have paid off your mortgage, or expect to downsize, your target may be lower than standard benchmarks.
Conversely, higher medical costs, supporting dependents, or late entry into retirement savings may necessitate additional expenses. Personalizing benchmarks ensures that your plan aligns with your life.
The Bottom Line
Benchmarks provide a helpful yardstick, but they should never define your success. Actual retirement readiness comes from aligning your savings, lifestyle, and goals.
By using benchmarks wisely and adapting them to your specific circumstances, you’ll build confidence in your plan and stay focused on creating a retirement that aligns with your vision.
