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How much is enough for retirement? Fidelity offers savings milestones

Your income provides a starting point, but retirement timing and lifestyle help determine the right target

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Mark Huffman
Reporter

Mark Huffman has covered consumer issues since 2004, with a special focus on protecting and empowering older adults. A former news correspondent for the Associated Press Radio Network, Westwood One, and ConsumerAffairs, Mark brings decades of journalistic experience to RetirementLiving.com. He is passionate about giving consumers a voice and helping them make informed decisions. Mark has also created educational content, including Senior Scam Alert, a video resource designed to help seniors recognize and avoid fraud. He holds a B.A. from the University of Kentucky and lives with his family in Richmond, Virginia.

Updated:

key insights:

  • Fidelity suggests having eight times your annual income saved by age 60 and 10 times by age 67.
  • Your retirement date and expected spending can substantially change your savings target.
  • Workers who are behind can consider increasing contributions, trimming expenses, or postponing retirement.

For workers nearing retirement, Fidelity’s savings guidelines offer a way to assess their progress: Aim to accumulate 10 times your annual pre-retirement income by age 67.

The company’s benchmarks also suggest saving three times annual income by 40 and six times by 50. These are planning targets, rather than guarantees that a particular balance will cover every retiree’s needs.

The underlying assumptions matter. Fidelity’s model assumes saving 15% annually beginning at 25, including employer contributions, and investing more than half of savings in stocks, on average, over a lifetime.

For illustration, someone approaching retirement with annual earnings of $70,000 would have a $700,000 target under the 10-times guideline.

Retiring earlier changes the calculation. Fidelity’s examples suggest 12 times income for retirement at 65, compared with eight times for someone retiring at 70. Spending plans also matter: Downsizing may lower the target, while extensive travel could raise it.

Turning a target into a savings plan

In related guidance, Fidelity recommends working toward saving at least 15% of pretax income annually. Employer contributions count toward that total. For example, a worker contributing 10% who receives an employer contribution equal to 5% of pay would reach the guideline.

However, someone who started saving later may need a higher contribution rate. Pension income, existing savings, and the expected retirement date can also affect how much a household needs to set aside.

Fidelity estimates that many people need roughly 55% to 80% of their pre-retirement income to maintain their lifestyle. Social Security and any pension can supply part of that income, with personal savings helping cover the remaining expenses.

For someone approaching retirement, a practical next step is to translate the savings benchmark into a household budget. Estimate monthly expenses, subtract expected income from Social Security and pensions, and calculate how much savings would need to provide. 

That exercise makes a broad benchmark more useful for an individual retirement decision.