How Much Should I Be Saving for Retirement?

Determining the savings rate for a comfortable retirement depends on many factors: your current age, desired retirement age, expected lifespan and lifestyle, inflation, other sources of retirement income (such as Social Security) and investment returns. However, the common rule of thumb in the retirement industry is for you to save between 10-15% of your pre-tax income1 over the course of your working life to be able to replace 75% of your last salary through retirement.  Even if you cannot save 10% of your salary, it is important to save something today for your retirement tomorrow. Here’s why:

  • Maximize Employer Contributions: a 10% savings rate can seem daunting but remember that this should include any contributions that your employer makes.  If your company makes a $1.00 for $1.00 match up to 6% of salary, your 6% deferral plus the 6% match you receive from your company gives you a 12% retirement savings rate; well within the recommend range.  Even a 5% deferral rate, when matched, will get you to a 10% total retirement savings. 
  • Earlier is Better: every dollar you save today is 40% more valuable than the same dollar you save ten years from now.  As is shown in the chart2 below, given the same savings rate ($200 per month) until age 65, the person who starts at age 25 is estimated to have twice as much saved as the person who starts at age 35.  Start saving something today.  Developing the habit and being consistent is as important as the amount.    




  • Stay Invested: Yes, financial markets can be volatile, but if you’ve started early, you have time on your side to ride out the inevitable down-market cycles. And, as the chart below shows, it does not take many days out of the market to seriously dent your retirement savings returns. 


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  • Where to Start: Social Security is estimated to replace about 37% of your earnings at the end of your working life3. As such, it is a smart move to start saving for retirement no matter what your age and no matter what the amount. Start now, save consistently, and stay invested. If you can’t save 10%, save 1% because one percent is better than “none” percent.

The information contained herein is not intended as financial, legal or tax advice, and may not be suitable as required by specific circumstances. Please consult your financial planner, attorney and/or tax adviser as needed.

1“Here’s What Saving 1% More Could Mean for your Retirement”, Empower Institute, 01/18/2024.
2 The two charts are from the “Guide to Retirement 2024”, JPMorgan Asset Management, 02/26/2024.
3“Top Ten Facts about Social Security”, Center on Budget and Policy Priorities, 04/17/2023.