Personal Finance

If you make $500k per year, this is how much you should already have banked by age 35

David Beren

Published: January 12, 2025 2:01 pm

When someone earns a higher salary, especially at a younger age, there are plenty of questions about how to put away money for a later date. However, if you make a high salary, there should never be a question about putting away money for retirement, as long as you have the proper spending habits. 

One of the best ways to know where you stand for retirement is to learn what you should have put away by a certain age based on your salary history. In this case, we’re looking at what someone making approximately $500,000 a year should have tucked away by the time they turn 35 years of age. 

Were You Should Be

By the time the clock turns midnight on the day you turn 35, there is an approximation of where you want and should be retirement-wise. According to research, if you wanted to maintain a similar level of spending as you do now while retired with a $500,000 household income, you should have approximately $1.79 million set aside at 35. 

This estimate accounts for a couple of things, including the idea that this number includes a 15% pre-tax retirement contribution, a 28% effective tax rate, and an annual portfolio return of 6% before retirement and 5% post-retirement. This number also allows you to start taking Social Security benefits at 65, a few years before Full Retirement Age. 

Of course, it’s essential to know that this number already includes adjustments for inflation. In addition, this $1.79 million approximation also accounts for anticipated market volatility to make this number as impactful as possible during the golden years of your life. 

What To Do If You Are Behind

Let’s assume for a second that you are making $500,000 annually but don’t have this $1.79 million number saved and are already 35 (or older). The good news is that it’s never too late to catch up, as retirement saving is something you should consider a marathon and not a sprint. 

The good news is that you can likely adjust your budget enough to allow yourself to make sure you are hitting your pre-tax contribution of 15%. If you cannot hit this number with some adjustments to your budget, then you are likely overspending and need to do some soul-searching on what is most vital for you and your family. 

If you work in a corporate or business scenario where 401(k) matching is possible, ensure you take full advantage of employer matching. Most employers will offer up to 6-7% of your total contribution, of which you participate for up to $23,500 in 2025. This is essentially free money from your company, so don’t ignore how much it will add up over time. 

If you need to, consider that paying for retirement is one of your most important monthly expenses, as important as your mortgage and utility bills. Before you take money out for entertainment or travel, “pay yourself first,” as it’s commonly known, and put the money away. 

How To Accelerate Your Position 

If you have exceeded $1.79 million in savings by the time you turn 35, congratulations, you’re doing very well! The good news is that if you have come this far financially, you should put your foot down even harder on the gas and keep going so you are well and truly set up for a wonderful retirement lifestyle. 

Ultimately, you should be in an excellent position to accelerate your retirement earnings as long as you max out your 401(k) contributions and take full advantage of employee matching. However, you should go beyond this if you have additional disposable income and set up either a Roth IRA or a Traditional IRA account. While you should talk with a certified account about the tax differences between IRA accounts and 401(k) withdrawals, this is objectively a great way to set aside money that can be used at 65. 

While additional income probably isn’t necessary if you’re already saving up well, you could re-evaluate your budget and see if any unnecessary expenses can be cut without dramatically impacting your lifestyle. If there is something, consider reinvesting that money into a retirement account to help accelerate your savings even more.