Are You Saving Enough for Retirement?

When it comes to retirement, the question most people ask isn't, "Should I save?"—it's "Am I saving enough?" With rising costs of living, increasing life expectancy, and the uncertainty around Social Security and pensions, preparing for retirement has never been more critical—or more confusing.

In this guide, we’ll unpack what “enough” really means, how to calculate your retirement needs, and what steps you can take today to get back on track or supercharge your progress.

Why Retirement Saving Is More Urgent Than Ever

Gone are the days when a company pension could cover your golden years. Today, Americans are largely responsible for building their own retirement safety net. Here's why this matters:

• Longevity is increasing: You may spend 25–30+ years in retirement.
• Healthcare costs are rising: Fidelity estimates a retired couple may need over $315,000 for medical expenses alone.
• Social Security is not enough: The average monthly benefit is around $1,900—a far cry from covering full expenses.

How Much Should You Be Saving?

There's no one-size-fits-all answer, but several rules of thumb and tools can help you estimate your target.

Rule of 25

Multiply your desired annual retirement income by 25. For example, if you want $50,000 a year in retirement, aim for a nest egg of $1.25 million.

4% Rule

This popular guideline suggests you can safely withdraw 4% of your retirement savings per year without running out of money over a 30-year retirement. This aligns with the Rule of 25.

Income-Based Savings Benchmarks

• By age 30: Save 1x your annual salary
• By age 40: Save 3x your salary
• By age 50: Save 6x your salary
• By age 60: Save 8x your salary
• By age 67: Save 10x your salary

These benchmarks are suggested by Fidelity and assume consistent saving and investing throughout your working years.

How to Calculate Your Retirement Number

Use these steps to get a personalized estimate:

1. Estimate your annual expenses in retirement. Consider housing, food, healthcare, travel, and hobbies.
2. Adjust for inflation. A $50,000 budget today might require $100,000 in 30 years.
3. Subtract guaranteed income. Factor in expected Social Security or pensions.
4. Multiply the gap by 25. This is the amount your portfolio needs to generate.

Are You On Track?

Compare your current savings to your target. Here’s a quick self-assessment:

• Have you started saving yet?
• Are you contributing at least 15% of your income?
• Do you know your estimated retirement number?
• Have you taken advantage of tax-advantaged accounts (401(k), IRA)?

If you answered “no” to any of these, you’re not alone—but it’s time to take action.

Ways to Supercharge Your Retirement Savings

1. Maximize Employer Contributions

If your job offers a 401(k) match, contribute enough to get the full match. It’s free money, and not taking it is leaving thousands on the table.

2. Automate Your Savings

Set up automatic payroll deductions or bank transfers. Making it automatic removes the temptation to spend instead of save.

3. Use Catch-Up Contributions

Are you 50 or older? The IRS allows you to contribute more each year to retirement accounts—$7,500 extra for 401(k)s and $1,000 extra for IRAs.

4. Increase Contributions Gradually

Boost your savings rate by 1% each year or whenever you get a raise. Small, incremental increases won’t sting but make a big impact over time.

5. Consider Roth Accounts

Roth IRAs and Roth 401(k)s offer tax-free withdrawals in retirement, making them powerful tools if you expect your tax rate to be higher later in life.

Don’t Forget These Hidden Retirement Costs

• Long-term care: Assisted living and nursing homes can cost $50,000–$100,000+ per year.
• Healthcare premiums: Medicare isn’t free. Budget for Parts B, D, and supplemental coverage.
• Inflation: Your money loses buying power over time if it's not growing.

What If You’re Behind?

Don’t panic—but don’t delay either. Try this action plan:

• Start now: Even small amounts compound over time.
• Cut expenses: Redirect savings into retirement contributions.
• Delay retirement: Each year you work adds savings and reduces withdrawal years.
• Downsize: Consider a smaller home or more affordable area to free up cash.

Final Thoughts

Retirement might feel far away, but it sneaks up faster than you think. The good news? You don’t need to be perfect—just consistent. Know your target, use the right tools, and check in regularly.

Whether you’re 25 or 55, the best time to prioritize retirement savings is right now. Your future self will be glad you did.

Written by Emily Carter