Securing enough retirement savings is crucial to enjoying it. But how much is enough to retire comfortably? The suggested amount varies depending on age. Here, we have broken things down by decade and added a few tips for solace.
20’s
You may have just begun thinking about retirement. Graduates carry student loan debts upwards of $300-$400 monthly. For someone just starting out, this and other living expenses leaves little room for savings. Enrolling in a savings plan through an employer, such as a 401k or 403b fixes that. Employee contributions to these accounts are often matched by the employer, potentially doubling the amount saved. It’s highly recommended to put aside 15% of your salary per year for retirement if just starting.
30’s
Your career and financial status have settled, giving a clearer financial picture, and hopefully a higher annual income. By now, your retirement account should match one year of your salary, followed by twice the amount by 35 and three times by age 40. The recommended amount is 18% of your salary per year for someone just starting, or 23% at age 35. Saving almost a quarter of your salary per year can be hard with living expenses and unexpected repairs, serving as a reminder of the importance to save early.
40’s
Student debts are paid off and your financial status is optimal, but where have you left your retirement? It has been reported on average Americans have saved approximately $63,000 for retirement by now. With a recommended amount equaling three times your annual salary by age 40, this can be alarming. Four times your salary is expected by age 45 and six times that amount by 50. Falling behind in your retirement at this age is detrimental to your retirement.
50’s-60’s
Many retirement savings plans give benefits to those aged 50 and above. You may now save an extra $6,000 a year in your 401k and $1,000 in an IRA. This limit increase is considered a retirement “catch-up” contribution towards the suggested eight times salary goal. Social security benefits are also available in your 60’s increasing income. Those looking towards retirement but are in a tight spot now should consider downsizing or gathering any non-monetary assets to increase their savings.
A few tips to remember in your preparation for retirement no matter your age include, maxing out your 401k to get the most benefits from your employer, consider getting an IRA and max out this as well. Also, invest in an HSA account. Not only does this account help cover medical expenses every year, you may also withdraw from it once you have reached 65 without penalties. All-in-all, starting early and staying consistent is key in retiring comfortably.
For assistance with your retirement planning, contact M&A Wealth today to speak with a retirement planner in Houston. Our financial advisors are here for you.
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