Do you find yourself wondering if your savings are on track for retirement? Measure against a benchmark by age and income to see if you are saving enough for retirement in your 401k and retirement accounts.
How much do I NEED in Retirement?
The short answer is as much as possible but everyone’s situation is different. It’s difficult to predict what the future even holds. This makes it almost impossible to actually plan for how much you’ll need in retirement. Because of that my approach today is try and exceed even what I think I may need in retirement.
To get a close target amount read our Guide to Retirement and see how much you may potentially need in retirement.
How much should I HAVE saved for Retirement?
The short answer again here is as much as possible but as early as possible. The potential for setbacks always exists in life and I like to play it safe when I can. This means I’ll always put more money towards retirement at the beginning of the year if I can afford to do so. According to research by J.P. Morgan Asset Management and using hypothetical situations:
John is a recent MBA graduate (33 years old). He is single and earns $100,000 a year. John’s benchmark is to have at least $130,000 saved towards retirement. By 40, he gets married and has 2 kids and their total household increases to $250,000. According to J.P. Morgan Asset Management, John and his spouse should have at least $1,025,000 saved retirement in their 40s.
Tom works in the servicing industry (26 years old). He is single and earns $40,000 a year. Tom’s benchmark would be to have close to $20,000 saved for retirement by the time he reaches 30 years old. If Tom gets married in this 30s and their household income raises to $100,000, it’s recommended they have at least $260,000 saved for retirement by age 40.
Sally is a lawyer (32 years old). She is married and their household income is $350,000 a year. With their household income it’s recommended have $1.26 million by the time they reach 40 years old.
Retirement Savings Checkpoint
(source: research by J.P. Morgan Asset Management)
According to J.P. Morgan Asset Management, I am not saving enough for retirement by my current age. However, we all face unexpected circumstances and those situations creates new paths that does not easily clear the way upward in a straight line. Often, we pivot to a new road or even have to go backwards. Since everyone’s personal situation is different, you may be pacing slower or faster in savings based on what you are facing today.
Your health, family , the economy, where you live, your hobbies, and more will all factor into how much you really need to retire in addition to how much you have saved today. And although all these factors make it difficult to relate at a personal level with these trackers, I still like to measure my progress against benchmarks.
Comment below and share if you are saving enough for retirement and your thoughts about retirement trackers like the one published by J.P Morgan Asset Management.