Personal Finance

The 4 Easiest Ways to Know If You’re On Track for Retirement or Not

Maurie Backman

Published: February 7, 2025 9:41 am

A lot of people worry about retirement not just in the years leading up to it, but throughout their careers. There’s a lot of pressure to save for retirement, and doing so steadily is a good way to end up in a solid position later in life.

You may be wondering if you’re on track for retirement based on your age. Here are a few ways to find out.

1. Use established guidelines to see how your savings stack up

As a general rule, it’s a good idea to allocate 15% to 20% of your income toward retirement savings each year. If you can save beyond that point, even better, though for some people, that may not be possible without making serious sacrifices.

It may be that you got a later start than you wanted on retirement savings. Or maybe you’ve been contributing since the moment you first started working, but due to limited wages, your initial IRA or 401(k) contributions were minimal.

You could go online and look up the average retirement savings balance in general or by age. But the problem with that data is that it’s not income-specific. And it’s not really fair to compare your IRA balance at age 35 to someone who makes three times as much as you do.

That’s why it could be a good idea to fall back on Fidelity’s guidance for retirement savings. Fidelity says that you should try to have 1x your income saved for retirement by age 30, 3x by 40, 6x by 50, and 8x by 60.

What works about this guidance is that it’s based on what you earn — not what the broad population earns. So you can apply it to your situation specifically.

If you’re behind Fidelity’s milestones, one strategy to employ going forward is saving your raise for retirement on top of the amount you’re already saving. However, that could be tricky if your living costs rise a lot from year to year.

Also, if you have a 401(k), make sure you’re contributing enough to get your full employer match. That way, you’re not leaving free money for retirement on the table.

2. Use an online retirement calculator — but know its limitations

There are numerous online calculators that will tell you whether or not you’re on track for retirement based on your age, your level of savings to date, and the amount of money you intend to contribute toward retirement for the rest of your career.

These tools are good to use as starting points. But you should know that they have limitations.

Some of these online retirement calculators make assumptions about the length of your retirement or the returns your portfolio will generate. Others make assumptions about the amount of replacement income you’ll need during your senior years.

It’s okay to use these tools to get a basic sense of how you’re doing. But don’t panic if they don’t give you the answer you want. And also, don’t be shocked if two different calculators tell you two very different things.

3. Figure out what you want retirement to look like

It’s hard to know if you’re saving enough money for retirement without asking yourself what you want to do in retirement, where you want to live, and what goals you have. It may be a difficult thing to picture yourself retired when you’re in your 20s or 30s. But as you get older, you may begin to get a sense of how you want your senior years to play out.

That’s important, because if your goal is to live in a bit city and go out to eat a lot, you might need more money than if you were to retire in a more rural area and cook most of your own food. And if you want to travel to Europe three times a year, it’ll require more savings than if you’re someone who prefers local day trips.

So spend a little time thinking about what you want retirement to look like. And then, try to estimate some of the costs you might incur.

4. Consult with a financial advisor

It can be a difficult thing to know if you’re on track for retirement. There are so many variables to consider when planning for your senior years, from inflation to healthcare costs.

That’s why it’s a good idea to consult with a financial advisor way ahead of retirement. Not only can a financial advisor tell you whether you’re on track or not, but they can also give you guidance that helps you work toward your goals.

Remember, too, that investing in the right assets is a big part of attaining financial security as a retiree. And your approach to investing should change over time.

When you’re younger, you can afford to take on more risk in your portfolio. As retirement nears, it’s often wise to scale back that risk. A financial advisor can oversee your portfolio at every stage of the game, which could not only lead you toward success, but provide you with more peace of mind along the way.