Saver should save at least 15% of his/her pre-tax salary for retirement according to Fidelity. Most financial advisors also recommend a similar pace for retirement savings. This figure is backed by studies from the Center for Retirement Research at Boston College.

To retire comfortably by following the 15% rule, you’d need to get started at age 25 if you wanted to retire by 62, or at age 35 if you wanted to retire by 65.

Fidelity offers the following retirement savings guidelines by age to help individual benchmark his/her retirement saving progress:

AgeMultiple of Annual Salary Saved

There are two types of saving that hold priority over everything else: retirement and emergency funds. They serve two different purposes, one is an insurance policy while the other is a full income replacement strategy, and everyone’s life has different needs.

Here are some general rules to apply that can help preserve your future:

  • Establish an emergency fund of 3-6 months of expenses first, as a safety net.
  • Put away 10-15% of your gross income at minimum for retirement planning, and more if you wish. The later you wait, the higher you’ll need to adjust to meet your retirement goals. 
  • Contribute to your company’s 401k, especially if they offer an employer match. It may seem like a small percentage, but that free money compounds over decades. 
  • Based on your income, consider also opening an IRA or Roth IRA. Go for an IRA if you plan to withdraw the funds at a later date when your tax bracket is lower, and consider a Roth if you predict your tax burden will be higher in the future than it is now.

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Therefore, a key part of retirement planning is to answer the question: “How much do I need to retire?” The answer varies by individual, and it depends largely on your income now and the lifestyle you want in retirement.

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