We all know we need to be saving for retirement. The Department of Labor (DOL) says we should be saving 12-15% of our income to replace 80% of our current salary for our retirement years, that 80% income replacement ratio includes Social Security.
The 12-15% savings rate is assuming we are perfect savers, meaning we start contributing to our retirement in our mid-20s and consistently save that same percentage all of our working years until we are in our mid-60s. Unfortunately, this is not the case for most Americans. See the chart below from Fidelity that assumes a 15% saving rate and retiring at age 67.
The chart is showing a multiplier of your current salary you should have saved in your 401(k) account by a certain age. For example: If I currently make $50,000/year and I am 30 years old, I should have 1x my salary or $50,000 saved in my account.
This chart is probably shocking for most of you. Everyone’s situation is different but this gives a good general idea of how much someone should have if they plan to retire in their mid-60s. It’s important to take some time to figure out where you currently stand and how you can make positive changes to secure the financial future for you and your family.
Mark Laughton, Vice President