No matter how old you are, everyone asks themselves “Am I putting enough aside for retirement?”. It can be hard to determine if you are on track. In this article, we will go over different retirement goals by age. These are very generalized mile markers to help you stay on track to reaching your retirement goals.
80% Rule
A simple way to calculate your total retirement goal is with the 80% rule. According to this rule, your annual retirement income needs to be about 80% of your current income. So, if you make $100,000 a year, you would need about $80,000 a year for each year of your retirement. If you expect to have a life expectancy of 85 and you retire at 67 you would need a total nest egg of at least $1,440,000. You should adjust this amount to consider your health and desired retirement lifestyle. Also, keep in mind that life expectancy keeps increasing. You may need to plan for a longer retirement than you think.
Multiply Your Salary
One of the easiest ways to set your retirement goals by age is multiplying your salary based on your current age. Here are the goals by decade:
- 20s- You should try to save between 15% and 25% of your salary during your 20s. Try to fully utilize your 401k and repay debt. The younger you are when you begin to develop good saving habits, the better off you will be.
- 30s- By your 30s you should have the equivalent of one year’s salary saved.
- 40s- You should have 2 times your current salary saved.
- 50s- 4 times your current salary should be put away.
- 60s- You should have 6 times your salary saved.
- 67- By 67 you should have at least the equivalent of 8 times your salary put away.
Financial Planning
The most precise way to determine your retirement goals by age is to get a financial plan. A financial plan is not just a generalized guesstimate. It will give you precise goals, a definitive timeline, and detailed steps on how to reach your goals. Financial plans take into account life expectancy, taxes, current investment earning, future investment earnings, and much more. Think of a financial plan as a roadmap to reach your desired destination of a successful retirement. Do not think that you are too young to need a financial plan. As with most aspects of your finances, the sooner you get it done the better off you will be.
Reaching Your Goals
No matter your age, you should try to put into practice good saving habits as soon as possible. The younger you begin to save, the more likely you will be to reach your main retirement goal. Utilize the 80% rule and multiply your salary rule to help you get a general idea of what you need to save. Then get a financial plan to help you solidify your plan and increase your chances of success. You can reach your retirement goals by age!
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