Here’s your annual savings targets by the age
We all know by now the longer you wait to save and invest for retirement, the harder it is to catch up.
But what should your annual savings targets be by the age?
I have a take on that but I’ll defer my opinions until later in this post.
According to Fidelity, to be “on track” for a healthy retirement:
- You should have x1 your annual salary saved up for retirement by age 30.
- You should have x3 your annual salary saved up for retirement by age 40.
- You should have x6 your annual salary saved up for retirement by age 50.
- You should have x8 your annual salary saved up for retirement by age 60.
- You should have x10 your annual salary saved up for retirement by age 67.
These annual savings targets by certain ages are in addition to what Fidelity and many personal finance experts suggest: keeping 3-6 months of cash on hand for emergencies.
These Fidelity numbers above are U.S. targets.
Is the math similar here in Canada?
Kinda. Here in Canada though, we get detailed when it comes to how much is enough.
According to an older Financial Post article I read, Canadians figure they need $756,000 to retire well at age 65. Even though “…up to 90 per cent (surveyed) don’t have a formal plan on how to get there…” that’s what we figure we need.
More retirement savings estimates
MoneySense did some work on this a while back:
The “Deluxe” version, couples or singles, assumes you’re buying new cars every few years and travelling abroad for multiple months per year, every year, for decades on end.
There are also a number of case studies to check out on this page – folks that have been there, done that.
Do you really need this much?
Certainly anything higher than “Deluxe” in the bank at age 65 is a wildly large number unless you want to live like a rockstar. For 99.9999% of us it’s insane to assume you might need anything like $5 million to retire on like Suze Orman suggests.
But as always when it comes to money stuff, including my own projections, the correct answer for everyone is: it depends.
So, sure, if you aspire for an upper-middle-class retirement at age 65, without any employer defined benefit or defined contribution pension plan, I think you’ll probably need at least $500,000 to $1 M to retire well.
You’ll also need to be debt-free.
Do I believe in any annual savings targets by a certain age then?
This is largely because we’re all different.
We all have different financial circumstances throughout our lives.
We have different expenses.
We have different goals.
We see and experience the world in different ways.
Some people just don’t need very much to live on since they are good with money.
Just because someone (including any personal finance expert) “says” you should have a certain amount of savings or net worth by a certain age – doesn’t mean you should.
My advice to you is to never take any savings targets by the age too seriously.
Don’t beat yourself up when you read this stuff. It’s your financial journey. Your mileage will always vary.
In closing I’m glad we don’t take any annual savings targets by the age too seriously ourselves. We wouldn’t be where we are today if we always followed what other people thought our life should be.
What do you make of any annual savings targets by the age reports? Do you believe in them? Do you care? What help do you need in determining your retirement enough number?