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How Much You Should Have Saved for Retirement By Age

Many Americans worry they’re not saving enough for retirement, and rightfully so.

A 2021 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.1

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.2

A recent Vanguard study found that, on average, a $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.3

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Investing involves risk and no situation is the same. This is in no way intended as a personal recommendation and investment decisions are solely those of the reader.

So, What Should My Savings Be?

The amount you should have saved for retirement typically depends on 3 things: your age, your lifestyle, and when you'd like to retire. According to the U.S. Census Bureau, the average retirement age in the United States is 65 for men and 63 for women. This means that typically, someone in their 50s or 60s should have more saved for retirement than, say, someone in their 20s or 30s. 

Here are some rough guidelines to follow based on your age, according to Fidelity. 

By the time you're 30, you should have about half your salary saved. So, if you're making $60,000 a year by age 30, you should have $30,000 saved for retirement. 

By the time you're 40, your recommended savings will naturally increase as you draw nearer to retirement. It's recommended you save 2 times your annual salary by age 40. So, if you're making $80,000 by age 40, you should have $160,000 saved for retirement. 

By the time you're 50, that recommended number doubles again, up to 4 times your salary. So, if you're making $120,000 by the time you're 40, you should have $480,000 saved for retirement. 

By the time you're 60, you guessed it, that number goes up again. By this age, it's recommended you have 6 times your salary saved. So, if you're making $160,000 by age 60, you should have $960,000 saved for retirement.


The Best Way to Boost Your Retirement Savings

While the guidelines above are helpful for knowing where you should stand, no two financial situations are exactly the same. One of the best ways to understand what you'll need to save for a comfortable retirement lifestyle is by working with a financial advisor.

As previously mentioned, research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.2

Chances are, there are several highly qualified financial advisors in your town. However, it can seem daunting to choose one. 

SmartAsset's no-cost tool makes it easy to find a reliable, reputable advisor so you can make an informed decision and choose the right one for you. All of the financial advisors on SmartAsset’s matching platform are registered fiduciaries, meaning they're obligated to act in your best financial interest.

Now you can get matched with up to three local fiduciary investment advisors that have been rigorously screened through our proprietary due diligence process.

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This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest. 

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We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.

Sources:
1. Northwestern Mutual study
2.
 Journal of Retirement Study
Vanguard (2019), Putting a Value on Your Value

Assuming 5% annualized growth of $500k portfolio vs 8% annualized growth of advisor managed portfolio over 25 years. Source: Vanguard Research

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