Here’s how much money you should have saved for retirement based on your age

Retirement is the dream of every worker, but it can also be a source of dread and anxiety because the money needed to do so in comfort is out of reach for many Americans.

According to a recent study by Northwestern Mutual, Americans felt they would need $1.26 million saved up in order to retire comfortably.

But most people have nowhere near that, even as they approach retirement. The median net worth (meaning all of the assets and minus liabilities) of Americans between 65-74 years old is $410,000, according to the Federal Reserve Board's 2022 Survey of Consumer Finances, which is its most recently available data. And that’s including everything they own — a home, savings accounts, and their retirement funds. For Americans under 35, the median net worth is just $39,040.

More than half of Americans surveyed (51 percent) told Northwestern Mutual that they think they are somewhat or very likely to outlive their savings.

Which is unsurprising considering the median average annual salary in the US is just $59,384, according to the Social Security Administration. So how are you supposed to save for retirement without winning the lottery or hoping for an unexpected inheritance? According the advice of numerous financial institutions, it's by setting savings goals early, sticking to them, and making sure your money makes money through compound interest and investments, even if you’re watching Donald Trump’s tariffs send the markets plummeting.

“I think whats important now — what happens every time we have a volatile market dip — is that people read the headlines and they get scared. The younger generation might see that and decide not to invest, and that's what I fear,” Catherine Valega, a Certified Financial Planner, told The Independent. “Look at this as an opportunity to buy stocks. Increase your contribution to your 401k or a Roth IRA. Don't let the markets scare you off, because I’ll tell you what — the billionaires are all buying while everyone else is selling.”

According to Fidelity Investments' retirement planning tips, a good rule of thumb for Americans looking to retire comfortably is to save 10 times your income if you're hoping to retire by age 67. That includes money in any retirement accounts or investments, CNBC reports.

Breaking that down further by decade, Fidelity recommends that by age 30, Americans should have the equivalent of your annual salary saved up. If you're making $55,000, aim to have $55,000 saved.

By the time a worker hits 40, they should, according to the investment company, have three times their income saved. By 50, that number should be six times their income, and by 60 it should be approximately eight times their income.

That breakdown tends to be the standard shared by many financial experts with some minor disparities.

Ally Bank's breakdown for retirement saving is similar to what's presented by Fidelity; at 30, have the equivalent of your annual income in the bank, by 40 have three times your income saved, at 50 aim for five times your income, and at 60 you're recommended to have seven times your income saved up for retirement.

“We want to save as much as we can, as soon as we can, and [be investing] as aggressively as we can,” Valega told The Independent. “It's never too early or too late to start investing, quite honestly. If you missed the boat, lets get on it now.”

Both Fidelity and Ally advise that it's important to keep in mind that those benchmarks are guidelines, and that an individual's retirement goals and personal circumstances must be factored in. And if you’re not on track, remember that most others aren’t either — 17 percent of Americans, regardless of age, have less than their annual income saved for retirement, according to Northwestern Mutual.

Lifestyle is another important consideration. If a worker wants to spend their retirement traveling the world, eating good food, lavishing their loved ones with substantial inheritances, those goals need to be accounted for in advance.

Where a person retires can be just as important. Some areas of the country are more expensive to live in than others. Some are more prone to disasters. Florida has long held a reputation for being the locale of choice for retirees, but repairing home and property damage caused by flooding and hurricanes can quickly eat into one's retirement savings if they don't plan for those potential costs.

“I'm in New England, and we used to advise people to retire with $2 million to have a comfortable retirement,” Valega said, who works with fairly wealthy clients. “Now I want my clients to have $3 and $4 million saved in their retirement accounts to maintain the type of life they're accustomed to. So it depends a lot on where you live, and where you want to live.”

Climate, activities, and proximity to loved ones all factor into those decisions, and thus must factor in to how one plans for their retirement. If a person has loved ones in several cities, they may want to plan to save up enough money to cover transportation for visits, or enough to afford a home or an apartment with a guest room.

In order to actually manage to save up all the money needed to retire in relative comfort, financial experts suggested using a 50/30/20 budget frame work. According to the 50/30/20 framework, people should, after taxes, take 20 percent of their income and put it toward savings and debt repayment, and 50 percent should go to needs, while 30 percent should go to wants.

The money set aside for savings ideally should be placed into high yield savings accounts, retirement accounts and investments into the stock market. Taking advantage of compound interest — that is, interest that builds on interest earned — is a top recommendation from virtually all of the major retirement planning experts.

“Given that we have more uncertainty than ever, I think it's so important to get money working for you in stocks and assets like real estate. You do want to be smart — if it comes down to someone enjoying a luxury like a trip or investing a few hundred bucks, I'd probably tell you to go with the investment,” Valega said.

A good place to start, according to Fidelity, is investing in a standard index fund that tracks the S&P 500, as its more diversified than buying individual stocks like a day trader might. Most major brokers have S&P 500 fund or ETF like Vanguard.

Perhaps the most important tip that financial experts have recommended has less to do with the technical side of budgeting and investing and more to do with perspective. All of this advice — saving more than a million dollars, hitting decade benchmarks, navigating the stock market — can seem daunting, but setting short term goals can help alleviate some of that stress, since the worst thing you can do is nothing at all.