24/7 Wall St. Key Takeaways:

• Starting saving late can be intimidating. However, the key is to start now. 
• By saving a significant portion of your income and making smart decisions with it, you can still save towards a comfortable retirement. 
• Take this quiz to see if you’re on track to retire ^(Sponsored)

Most retirement planning assumes that you’ve been planning for decades. Trying to start saving in your 50s can seem overwhelming, especially since much of the “usual” retirement advice likely doesn’t apply to you. 

But that doesn’t mean you can’t start!

The key is understanding how much you need to save to secure a comfortable future. Let’s break down what you need to save based on your income and age. We’ll be using a report by J.P. Morgan to help us out. 

Some Basic Assumptions

The table you’ll find below is based on some basic assumptions. It probably won’t match what you’ll need to do exactly. However, it should be close enough for you to make a few necessary adjustments based on your situation and then hit the ground running. 

Here are the assumptions you need to know:

• Retirement Age: 65 for the primary earner and 63 for a spouse
• Years in Retirement: Estimated at 35 years
• Pre-Retirement Investment Strategy: A 60/40 stock-to-bond portfolio
• Post-Retirement Investment Strategy: A 40/60 stock-to-bond portfolio
• Inflation Rate: 2.5% annually
• Goal: Maintain your current lifestyle in retirement
• Current Income: Assumed as gross (before taxes)

Not planning to retire at 65? That’s fine. You can adjust the numbers below to fit your situation. 

How to Use This Graph

Don’t look at this graph and panic! To find out how much you need to save to maintain your current lifestyle in retirement, locate your income level and follow the savings rate recommendation for your age. 

Our chart assumes you have absolutely nothing saved. If you do, you may be able to get away with a small savings amount. 

For example:

A 50-year-old earning $60,000 would need to save 27% of their annual income each year from now until retirement.

Savings Rates by Income for 50-Year-Olds

Household Income	Savings Rate
$30,000	13%
$40,000	21%
$50,000	24%
$60,000	27%
$70,000	31%
$80,000	33%
$90,000	36%
$100,000	42%
$125,000	48%
$150,000	51%
$175,000	54%
$200,000	56%
$250,000	60%
$300,000	63%

Why Are These Savings Rates So High?

If you’re starting late, you don’t have as much time to take advantage of compound interest. Therefore, you’ll need to throw more money into your retirement accounts. As you approach retirement, your portfolio needs to grow fast enough to ensure you can replace your income for retirement. That won’t happen with interest alone. 

Action Plan for Late Savers

If you’re feeling overwhelmed, here’s how to get started:

• Max out retirement accounts: Take advantage of 401(k) catch-up contributions (which allow you to put in more money each year) and fully fund IRAs.
• Consider working longer: If these savings rates are too high, consider delaying retirement for a few years. This can reduce the total savings you need, help you save more, and boost Social Security payouts. 
• Adjust your spending: Is there any way you can downsize your lifestyle?
• Invest Aggressively: With a 60/40 portfolio, you’ll have some risk, but it’s necessary to grow your wealth over time.
• Seek Professional Help: A financial advisor can help you optimize your savings and investment strategy. Everyone is different, and sometimes a professional is the best route. 

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