This Is How Much Money You Need to Save By Every Age to Retire Happily

This Is How Much Money You Need to Save By Every Age to Retire Happily

How much to have saved by every age is a perennial personal finance question, right up there with how to create a budget and how to start investing. But like most money-related decisions, there’s unfortunately no single magic number that’s going to apply to each person.

Fidelity suggests having your yearly income saved at 30, three times your income at 40, seven times your income at 55, and 10 times your income at 67. It uses your salary as a metric in order to “simplify your planning, and help you determine if you are on track throughout your working life”.

Morgan Stanley, too, subscribes to this rule of thumb, suggesting three times your salary at 40, six times at 50, eight times at 60, and 10 times by 67.

For many people, those numbers just aren’t feasible. Many people in their 30s, 40s and even 50s have no retirement savings. (A 2014 Australian study found that only 53 per cent of couples and 22 per cent of single people were on track to reach a comfortable retirement income.)

Fidelity acknowledges that they’re more guideposts than hard-and-fast rules. Perhaps a better way to think about retirement savings isn’t in terms of your current salary, but rather what your expenses are and will be: Do you want to maintain your current lifestyle? Downsize? Will you work at all? How much will your superannuation payout be?

It’s a lot to consider. Another option is to aim to put away 12 to 15 per cent of your salary each year, as Vanguard advises, or to use this slightly more complex formula from Morgan Stanley.

No blueprint is right for everyone, but they all get at the same thing: At least have a frame of reference for how much money you’d like to have, and work toward it. Personally, I keep these figures in the back of my mind, but recognise that I likely won’t hit all of them. What about you? Do you follow any of these, or have you made up your own?

This article has been updated since its original publication. 



  • “Another option is to aim to put away 12 to 15 per cent of your salary each year”

    This is just superannuation. As long as you’re working, you’re already doing this.

    • Well you’re putting away 9.5% with compulsory contributions. You need to top that up with voluntary contributions to get 12 – 15%.

      The Government Money Smart website has a decent calculator on retirement saving.

  • I think the comment about working towards what your expenses will be is a very important one.

    If you own your place, a single person can live quite comfortably off $500 a week, which isn’t all that much in super after a full career. If you don’t, you can double that just because you still need to pay rent, or something similar.

    I got lucky so will be set when I retire, but for a lot, that’s going to be the challenge. Having enough to cover expenses, and still do what they want to in retirement. If you can own your place though, you should get close (or be above) that sort of goal just on compulsory contributions.

    But for me, that was always the goal. To own my place and be debt free, which I will be about 5 years before I plan on retiring thanks to taking advantage of a couple of bits of luck along the way.

    If people want a number, its 500. That’s it. Living on $500 a week (in 2018 dollars) after housing expenses is plenty, and as good a target as anything. If you can get housing costs (which is mortgage or rent, not rates, strata, etc) to nil, then a ~$25k pension isn’t a hard target to get to.

    If you cant, adjust that number upwards accordingly so you have that ~$25k after housing costs.

  • The rule of thumb I was taught way back when I first started working is that whatever age you start contributing to your pension should be divided by 2 and that’s the percentage of your salary you need to put aside each year until retirement.

    That ties in pretty well with the super guarantee rate, is that by design or coincidence? Although as it’s ever harder for people to get that first job and living costs continue to increase perhaps that rule of thumb no longer holds true.

  • Financially speaking, If you want to live a comfortable life after retirement. Not only should you be saving money, but also look at investing into properties. My goal is to have at least 2 or 3 properties and rent them out.

    Not everyone will be fortunate enough to own that many houses/apartments but, buying your first home is not that hard.

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