Are You On Track for Retirement?

401k, Retirement, Roth, Saving

November 16, 2023

Saving for retirement is a big challenge. But the even bigger challenge is whether you are saving enough.


There are all sorts of factors that go into figuring out how much you will need to have saved up by retirement to live comfortably. Your lifestyle (the income you think you will need), your longevity, and the return on your retirement investment portfolio.


And let’s be honest: all of those are sort of hard to pin down. That’s where a simple rule of thumb can be a big help to get a sense of whether you are on track. Fidelity has crunched all sorts of numbers and made a bunch of reasonable assumptions to come up with just such a cheat sheet.


As a general rule of thumb, the advice is to have:

  • 1 times (1x) your current income saved by age 30.
  • 3x by age 40.
  • 6x by age 50.
  • 8x by age 60
  • 10x by age 67.

If you’re on track, that’s great news!  And if you find you’re a bit behind, that’s great news too. No, I have not lost it. The good news is that now you have a sense that you really should up your savings game.

For 2023, the maximum contribution to an IRA is $6,500 if you are younger than 50, and $7,500 if you are at least 50 years old. The contribution limit for workplace retirement plans such as 401(k)s is $22,500. In 2024, the limits will rise to $7,000 for IRAs ($8,000 if you’re at least 50 years old) and $23,000 for 401(k)s.

If those upper limits seem out of reach, that’s okay. Your goal, for the rest of this year, and for 2024 and beyond is to just save more. If you are contributing 6% to your workplace retirement plan, raise that to 7% or 8%. If you saved $4,000 in a Roth IRA last year, can you scour your spending to find a way to add another $1,000 or $2,000? Don’t automatically tell yourself no. Increasing your Roth IRA savings by $2,000 a year works out to less than $40 a week, or $5.50 a day. Saving $5,000 more a year works out to $100 a week, or less than $14 a day.

I hereby challenge you to gift yourself more retirement security by increasing your contributions to your retirement accounts.


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