How Much Should I Save in my Retirement Accounts?

From an early age, many of us are taught the concept of saving money. We put our extra change in piggy banks and watch them fill up. And as we get older and go through different life stages, saving becomes more and more important to our financial well-being. That piggy bank has turned into bank accounts and retirement savings accounts. 

When retirement nears, your savings becomes essential and can be the difference between being prepared for retirement or not. So, how do you know how much you need to save to be prepared? Let’s explore some options.

When retirement nears, your savings becomes essential and can be the difference between being prepared for retirement or not.

The 80 Percent Rule

A common formula to follow when it comes to deciding on your retirement income amount is 80 percent of your pre-retirement salary. So, if you’re making $100,000 a year, you would need a retirement income of $80,000 a year to live comfortably. 

The Multiply by 25 Rule

When it comes to how much you need to have saved before you retire to generate the necessary amount of retirement income you want, you may want to consider the multiply by 25 rule. Take the amount of annual retirement income you want, multiply it by 25, and you have how much you might need. So, if we use our $80,000 example from above and multiply it by 25, you would have to have $2 million saved. 

Age Benchmarks

Now let’s talk about age benchmarks. While the exact amount will vary depending on your retirement goals and financial situation, many financial professionals recommend saving 15 to 20 percent of your annual income, beginning in your twenties. By age 30, they recommend having your annual salary in savings. 

Then when you hit your 40s, the goal is to have three times your annual salary saved. As you get older, the recommended amount continues to grow, with six times your salary at age 50, eight times at age 60, and 10 times by age 67. But don’t let these numbers worry you. These are usually best-case scenario situations, and, in reality, your savings may not add up to these numbers. Life events can get in the way and cause you to not be able to save as much. 

How to Get There 

In addition to those benchmarks and how much you have saved, it also matters where you have it saved. To maximize your funds for retirement, you want to make sure that it’s in accounts and funds that are tax efficient. 

Social Security, retirement accounts such as IRAs or 401(k)s, investments, pension plans, annuities, and even part-time employment are all common sources of income in retirement, but not all of them are created equal. 

A good first step may be to fully fund your 401(k), especially if your employer matches your contribution. Once you’ve done that, another way to maximize your savings is to consider individual retirement accounts (IRAs). IRAs allow you to save money for retirement in a way that’s tax-advantaged, and they’re available as Traditional IRAs or Roth IRAs. 

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A third option to consider is an annuity. They provide you with guaranteed income, which is a consistent payout, regardless of market behavior. You put the funds in the annuity, and when you’re ready to start collecting your payout (usually once you’re retired), you begin receiving the payments either all at once, or on a regular basis. Apart from Social Security and pensions, annuities are the only other financial product that can provide guaranteed income for life, and they’re primarily purchased through a financial professional. 

All of these retirement income options are available for you to start putting your savings in today. All you have to do is take the first step. Regardless of your age or life stage, saving is important and essential to maintaining your preferred standard of living and being prepared for when life events happen. 

Retirement is a life event that requires saving, strategizing, and thought. To kick off your retirement savings and strategy, consider meeting with a financial professional to get an overall picture of your financial situation and get on track to retire with the right amount of savings and income. 


Annuities are long term financial products designed for retirement income and may not be suitable for everyone. They involve fees, expenses and limitations, including surrender charges for early withdrawals. Some include optional riders and benefits that may come at additional cost. Annuity product and feature availability may vary by state. 

Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing company. With variable annuities, guarantees do not apply to the performance of the variable subaccounts which fluctuate with market conditions. Withdrawals are subject to ordinary income tax, and if take prior to age 59-1/2 may be subject to an additional 10% federal penalty. 

Investing involves risk, including possible loss of principal.

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