How much to put in savings to retire with a good amount?

Currently, millennials tend to start their careers early and be indebted with big student loans immediately. Given these circumstances, it is easy for this generation to completely ignore the significance of saving money for their future. In 2015, the Government Accountability Office conducted a study in which it was discovered that around 50% of total American households, aged 55 or more, had nothing saved for their retirement. This makes people question: “how much to put in savings to retire with a good amount?”

It can be a daunting experience to save money every month from your usual expenses for your retirement account. However, the new generation must be aware of how much to put in their savings accounts to save themselves from future misery.

Following are some guidelines that can help you in being financially equipped, so you can enjoy your retirement years.

How much to put in savings every decade?

Various factors decide when and how much to put in savings. These factors can be your age as well as your retirement plan. Following is a rough age map given that can assist you in saving money for your retirement through all of your working decades.

  • When you are in your 20s, your target should be to save approximately 25% of your entire yearly salary. This way you can benefit from compounding interest.
  • In your 30s, your savings should add up to your one year’s salary. Furthermore, you should save your total annual retirement income by 10%-15%.
  • After turning 45, your total saved sum should be 3 times greater than your one year’s salary. Your contributions towards your saving accounts (IRAs or 401(k)s) should be maxed so your retirement savings can grow.
  • In your 50s, saving for your retirement should be your biggest priority. Your retirement savings should be approximately 5 times greater than your annual income at the age of 55.
  • After hitting the 60s, you should be concerned with safeguarding all of the savings that you have gradually built over in the past decades. At the age of 67, your retirement savings should be approximately 8 times greater than the annual salary.
  • Fortunately, you can enjoy the golden years in your 70s. Although, ensure the safety of your total savings and avoid withdrawing excessive money unnecessarily so it can last longer.
retirement savings

How retirement savings can be built?

There are many ways you can make your retirement savings grow by following some simple steps. Even if you have not saved anything up till now, you can still start by following the given below strategies to save big for your golden years.

Direct contribution plans

The programs where a specific amount of income is saved in the savings account for retirement by the employees are called direct contribution plans. Typically, the majority of the US citizens save for their retirements through these plans and these are a good way to answer how much to put in savings.  

Given below are the few types of direct contribution plans that are mostly used in America.

  • 401(k), 403(b) or 457(b)

The most commonly utilized Direct Contribution Plans are the 401(k)s. If you work in the private industry full time, then it is most possible that you will be offered 401(k) by your employer. In case you are employed by a specific public sector industry or tax-exempt establishment, then a 457(b) or 403(b) plan will be offered to you by your employer.

Under the 403(b) or 401(k) retirement plans, a certain percentage of salary can be deferred by employees before taxes, this amount is then put in the 403(b) or 401(k) savings accounts. These plans can automatically help you save money for retirement. Everyone should set up yearly contribution amounts and exploit any match offered by your employer. This way that match can act as free money for you.

  • Individual retirement account (IRA)

Another commonly used method similar to the direct contribution accounts are the individual retirement accounts. Your chosen IRA type decides how much your savings will be subjected to tax in case you distribute money (traditional IRA) or contribute towards the fund (Roth IRA).


You can purchase annuities from insurance companies. Annuities guarantee a pre-agreed upon amount either at a decided date or immediately at the start of retirement. Some annuities also offer guaranteed pay-outs or fixed rates of interest. However, some annuities are variable, in which the payments depend upon the bonds or stocks.

Different investments

It is always wiser to make different kinds of investments if you are confused about how much to put in your savings. You can invest in real estate, bonds, and even stock. Although such investments don’t offer tax-deferred advantages that are offered by the retirement plans, they can constitute to be an overall effective strategy of retirement savings. If you pursue savings through government bonds or the stock market, then it is always useful to purchase a calculator that tracks savings.

Save money for non-retirement expenditures

Other than saving money for retirement, it is also important to ensure that you also have an emergency expenses fund in place. Because the question how much to put in savings has more than one answer and all depends on your needs. Moreover, you should also save for various big milestones of your life as well, for instance, a house, a car, a baby etc. all of these funds should be kept separate from the daily checking account. This way you can make sure that you don’t utilize your possible retirement savings for near-term expenses.

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