Retirement savings by age: Smart goals for every stage

Knowing where you should be in your retirement savings plan can sometimes be challenging, as it depends on a range of factors. But, it's good to have retirement savings goals by age so you can assess your progress towards them. Here, we explore goals for retirement savings by age to help you gauge your position.

Why retirement savings goals matter

Saving for retirement is incredibly important if you want to enjoy your post-working years leisurely. And it's important to start early to keep your financial future on track. The earlier you can start putting money away into a 401(k), individual retirement arrangements (IRAs), or other investments, the more time will be on your side. Generally, the stock market always increases over time, so as your retirement investment accounts grow, you'll have more time to reinvest dividends to see compound (additional) returns.

Moreover, your savings needs may evolve over time as you have kids or experience unexpected challenges in life. By starting early, you'll have a greater chance of building wealth in your retirement funds that could one day support a child's education, help you navigate a significant health event, and more.

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You're not going to save all the money you need for a great retirement at once. It's going to take time, so it's important to break down your retirement planning into manageable milestones so you don't get overwhelmed.

Retirement savings goals by age

When you start early, you'll have a better chance of reaching significant savings milestones at different ages. Let's break down some of the most common goals for different age groups. Remember, these are general guidelines, and your unique savings goals should be tailored to your personal income, lifestyle, and retirement plans.

Introduction to money: First steps for kids and teens

When you're just starting out, you're probably not working at jobs that offer retirement savings accounts like 401(k) plans or IRAs, but that doesn't mean you can't still think about savings goals, even at this life stage. It's never too early to start saving, and resources like Greenlight can help you learn positive savings and financial management habits that can support you through your entire life. Whether you just want to understand how retirement accounts work or you're already considering retirement savings goals to support a comfortable retirement, Greenlight offers extensive resources to educate you and support your financial future.

Laying the foundation: 20s and 30s

In your early career, it's important to start saving, even if it's a small amount. Focus on building good habits and aim to save about 5 to 10% of your income each year as retirement contributions. By the time you reach 30, most financial advisors agree that you should aim to have about 1x your annual income saved. Remember, you'll also be paying into Social Security, which can support your retirement goals later, too.

Strategic growth: 40s

As you get into the prime of your career, you're likely earning more money and have a more diverse investment portfolio. Your retirement accounts should still be a central component of your investment strategy, however, and you should aim to have saved about 3x your annual salary by age 40. If you aren't already, this is a crucial time to speak with a financial professional about wealth-building strategies that can support your family for the long haul.

Pivotal moves: 50s

By age 50, you should aim to have saved 6x of your annual income. Not everybody knows how to retire at 50, but the most important step is putting aside a significant portion of your income every year.

Final stretch: 60s

The more you put away in the earlier parts of your life, the more income for retirement you can expect to have. As you get closer to retirement age, it can be difficult to make up the ground you lost by failing to invest early. At this point, you should aim to have 8x your annual salary saved, and by the typical age 67 retirement age, most financial advisors suggest you should have 10x your annual salary saved.

This final stretch is the time to make any catch-up contributions you can.

Tips for staying on track: Reviewing and adjusting

The one constant in life is change. While there are plenty of tips to retire early out there, they don't happen in a vacuum. It's crucial to regularly audit your finances and adjust your savings based on income changes, market conditions, or changes in your personal life. For instance, if you have to drain an emergency fund, you may need to pull back from retirement contributions for a little while.

It's a good idea to consult a financial advisor for optimized strategies and to better understand regulations that impact your retirement. A financial advisor can help with:

• Regular reviews of your retirement plan and making adjustments as needed

• Diversifying your portfolio to effectively manage your risk

• Adjusting your retirement savings plans based on the impact of inflation

Bear in mind that once you reach retirement, you'll need to make your retirement savings last. The 4% rule is a valuable guideline to follow. This rule says you should only withdraw 4% of your retirement savings annually, which should give you enough to last for about 30 years. 

Working with tools and resources like retirement calculators and investment tracking apps like the Greenlight app can help you effectively plan and stay on top of your goals.

How Greenlight helps families build a secure financial future

With Greenlight, you can get the guidance you need to save for a comfortable retirement right in your pocket. Set goals, monitor your progress towards them, and get expert guidance when you need it during life's big changes. 

Teach smart saving habits. From rounding up purchases to setting savings goals — Greenlight's award-winning money app helps families save. Try Greenlight, one month, risk-free.†

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