How Much Should I Have in My 401(k) at 30?

Learn How Much You Should Have Saved for Retirement at Age 30

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Saving for retirement can seem like a challenge no matter how old you may be. But going through the process of trying to figure out how much you will need to save for retirement can really be frustrating when you’re in the early stages of your career. In fact, estimating how much you’ll need to live the retirement of your dreams is even difficult for soon to be retirees. Fortunately, there are some helpful retirement planning benchmarks and guidelines to help you see if you are on the right track or not.

If you are in your 20's and just getting started with your retirement savings plan the best guidance is often to save as much as you possibly can. But you may be looking for a better way to track your progress over time.

Here are some general guidelines you can use to determine how much you should have in your retirement accounts by age 30:

Use benchmarks to help track your progress on the journey to financial independence. 

Fidelity conducted a study estimating ideal retirement savings amounts at certain ages. In order to retire at age 67, they estimated how much you will ideally need to save to maintain your same comfortable lifestyle during your retirement years. Fidelity recommends achieving a savings factor of 1 times your salary at age 30. The assumptions built into this estimate are that you save at least 15 percent of your income per year beginning at age 25, invest over half of your savings on average in stocks over the course of your lifetime, retire at age 67, and plan to maintain your current lifestyle.

Learn how your savings factor compares to other age groups. 

In order to retire at age 67 using the same set of assumptions, you would need ideally want to have 10 times your salary saved for retirement. Here are some other suggestions for different ages.

 

Retirement Saving Benchmarks by Age and Savings Factors

If Your Age is...Your total retirement savings to be "on track" to retire @ 67 should be approximately...
301 times your annual income
352 times your annual income
403 times your annual income
454 times your annual income
506 times your annual income
557 times your annual income
608 times your annual income
6710 times your annual income

Source: Fidelity Investments

Other retirement planning benchmarks:

T. Rowe Price takes a slightly different approach when calculating retirement saving benchmarks. Using their benchmark system, a 30-year-old would be considered on track if he or she had saved half of their annual salary.

J.P. Morgan Asset Management’s 2018 Guide to Retirement uses a similar benchmarking process that also factors in an important variable—household income. This is an important consideration because income replacement rates for Social Security are generally higher for households with lower total income. What does this mean for retirement savings? The more you earn the lower percentages of your income will be replaced by Social Security. As a result, retirement savings factors gradually increase based on these income increases.

For example, a 30-year-old with $50,000 gross annual income (before tax and savings) would be “on track” with 0.3 times their income ($15,000) saved in retirement accounts. If their annual gross income is $100,000 the savings factor jumps to 1.2 times their income ($120,000) to be deemed “on track”.  

$50,000 – 0.3 times income

$75,000 – 0.9 times income

$100,000 – 1.2 times income

$150,000 – 1.7 times income

$200,000 – 2.1 times income

$250,000 – 2.4 times income

$300,000 – 2.5 times income

Source: JP Morgan Asset Management

What can you do if you’re not currently on track?

If your current retirement savings falls short of these benchmarks, don’t panic. There are some important steps you can take to get your plan on the right track. First, focus on your overall financial wellness and the things you have control over in your financial life. Building your financial foundation often means establishing emergency funds, paying off high interest debt, and at least saving enough in your retirement plan to capture any employer matching funds.

Next, determine how much you can potentially save. Most financial planners recommend saving between 10 percent to 20 percent of your income per year for retirement. Keep in mind these are just benchmarks and don’t factor in your own personal financial plans.

Participating in automatic rate increase programs offered by employer sponsored retirement plans is another great way to make small contribution increases over time that may help you bridge any savings gaps.

The best way to determine your ideal savings rate is to run a basic retirement calculation. It is especially important to rely on more detailed retirement estimates if you don’t plan on retiring in your 60’s. This is due to the fact that most retirement planning benchmarks use a retirement beginning date of 65 or 67 in their estimates. 

While you should never rely on benchmarks alone to measure your retirement savings progress, they do provide some helpful guidelines that can help you during the early stages of your working life.