How much money you need to retire at 35 and live on investment income alone until 90
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You’re Age 35, 50, or 60: How Much Should You Have Saved for Retirement by Now?
It’s important to make steady progress toward saving for retirement, no matter what your age.
Key Insights
- Savings benchmarks based on age and salary can serve as a helpful way to track progress against saving for retirement.
- Saving 15% of income per year (including any employer contributions) is an appropriate savings level for many people.
- Having one to one-and-a-half times your income saved for retirement by age 35 is an attainable target for someone who starts saving at age 25.
Roger Young, CFP ®
Thought Leadership Director
If you want to track your progress toward a goal, chances are there is an app that can do that for you. For example, you can track your steps, your packages, your diet, and even your family’s whereabouts.
But when it comes to saving for your retirement, how much time do you spend tracking your progress? And at what point in your life should you start paying attention?
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Retirement planning can be intimidating at any age—even more so early in your career. When retirement seems so far in the future, it’s hard to plan for it with so many competing priorities in the present. For example, in addition to your regular bills, you may have student loans to repay. Or you may be trying to save money to purchase a home or save for your kids’ college education.
Still, it’s important to make steady progress toward saving, no matter what your age. Moreover, taking stock of where you stand can help you plan with more intention based on your situation.
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What Should I Have Saved by Age 35, 50, and 60?
There is a lot of research showing that people tend to rely on approximations or rules of thumb when it comes to financial decisions. With this in mind, many financial firms publish savings benchmarks that show the ideal levels of savings at different ages relative to an individual’s income. A savings benchmark isn’t a replacement for comprehensive planning, but it is a quick way to gauge whether you’re on track. It’s much better than the alternative some people use—blindly guessing! More importantly, it can act as a catalyst to take action and start saving more. However, for the benchmark to be useful, it needs to be realistic. Setting the target too low can lead to a false sense of confidence; setting it too high can discourage people from doing anything. Articles on retirement savings goals have generated spirited discussion about the reasonableness of the targets.
What Percentage of My Income Should I Save for Retirement?
The amount you’ve already saved for retirement can help you determine the percentage of your income you’ll need to save going forward.
As a result, my colleagues and I have reevaluated how to calculate achievable benchmarks. We started with the goal in mind: determining the amount of assets needed by age 65. While that number depends on a lot of factors, income is the biggest one. Since higher earners will get a smaller portion of their income in retirement from Social Security, they generally need more assets in relation to their income. We estimated that most people looking to retire around age 65 should aim for assets totaling between seven and 13½ times their preretirement gross income. From there, we identified savings benchmarks at other ages based on a reasonable trajectory of earnings and savings rates. We didn’t presume that everyone starts saving our recommended 15% of their income immediately upon receiving their first paycheck. Rather, our hypothetical investor starts saving 6% at age 25 and ramps up savings by one percentage point each year until reaching an appropriate level. We found that 15% of income per year (including any employer contributions) is an appropriate savings level for many people, but we recommend that higher earners aim beyond 15%. So to answer the question, we believe having one to one-and-a-half times your income saved for retirement by age 35 is a reasonable target. By age 50, you would be considered on track if you have three to six times your preretirement gross income saved. And by age 60, you should have 5.5 to 11 times your salary saved in order to be considered on track for retirement. For example, a 35-year-old earning $60,000 would be on track if she’s saved about $60,000 to $90,000.
What Percentage of My Income Should I Save for Retirement?
The amount you’ve already saved for retirement can help you determine the percentage of your income you’ll need to save going forward.
Savings Benchmarks by Age—As a Multiple of Income
| Investor’s Age | Savings Benchmarks |
|---|---|
| 30 | .5x of salary saved today |
| 35 | 1x to 1.5x salary saved today |
| 40 | 1.5x to 2.5x salary saved today |
| 45 | 2x to 4x salary saved today |
| 50 | 3x to 6x salary saved today |
| 55 | 4.5x to 8x salary saved today |
| 60 | 5.5x to 11x salary saved today |
| 65 | 7x to 13.5x salary saved today |
Key Assumptions: Household income grows at 5% until age 45 and 3% (the assumed inflation rate) thereafter. Investment returns before retirement are 7% before taxes, and savings grow tax-deferred. The person retires at age 65 and begins withdrawing 4% of assets (a rate intended to support steady inflation-adjusted spending over a 30-year retirement). Savings benchmark ranges are based on individuals or couples with current household income between $75,000 and $300,000. Target multiples at retirement reflect estimated spending needs in retirement (including a 5% reduction from preretirement levels), taxes, and Social Security benefits based on the SSA.gov Quick Calculator. See Additional Disclosures.
The Benchmarks for Those Closer to Retirement
The range gets wider as you get older, so we also provide more detailed estimates for people approaching retirement. This helps someone find a realistic target based on income and marital status, which affect Social Security benefits.
A Closer Look at Savings Benchmarks Later in Your Career
| Married, Dual Income | Married, Sole Earner | Single | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Current Household Income | Age 55 | Age 60 | Age 65 | Age 55 | Age 60 | Age 65 | Age 55 | Age 60 | Age 65 |
| $75,000 | 5x | 6½x | 8x | 4½x | 5½x | 7x | 6½x | 8½x | 10½x |
| $100,000 | 5½x | 7½x | 9½x | 5x | 6½x | 8x | 6½x | 8½x | 10½x |
| $150,000 | 6½x | 8½x | 10½x | 6x | 7½x | 9½x | 7x | 9½x | 11½x |
| $200,000 | 6½x | 8½x | 10½x | 6½x | 8½x | 10½x | 7½x | 10x | 12½x |
| $250,000 | 7x | 9x | 11x | 7x | 9½x | 12x | 8x | 10½x | 13x |
| $300,000 | 7x | 9½x | 11½x | 7½x | 10x | 12½x | 8x | 11x | 13½x |
Assumptions: See “Savings Benchmarks by Age—As a Multiple of Income” above. “Dual income” means that one spouse generates 75% of the income that the other spouse earns.
How to Stay on Track
The point of benchmarks isn’t to make you feel superior or inadequate. It’s to prompt action, coupled with a guidepost to inform those actions, even if that means staying the course. If you’re not on track, don’t despair. Determine the percentage of income you may need to save going forward. Focus less on the shortfall and more on the incremental steps you can take to rectify the situation:
- Make sure you are taking advantage of the full company match in your workplace retirement plan.
- If you can increase your savings rate right away, that’s ideal. If not, gradually save more over time.
- If you have a company retirement plan that enables automatic increases, sign up.
- If you are struggling to save, many employers offer financial wellness programs or other tools that can help with budgeting and basic finances.
- If you’re age 50 or older you can make catch-up contributions in both your workplace retirement plan and individual retirement account (IRA).
Looking for more information on where you stand with your retirement savings? Visit the T. Rowe Price Retirement Income Calculator to test different scenarios.
Use these savings benchmarks to get more comfortable with planning for retirement. Then go beyond the rule of thumb to fully understand your potential retirement expenses and income sources. Beyond your savings, think about what you are saving for and how you envision spending your time after years of hard work. After all, that’s the reason why you are saving in the first place.
Past performance cannot guarantee future results. All investments are subject to market risk, including the possible loss of principal.
All charts and tables are shown for illustrative purposes only.
View investment professional background on FINRA’s BrokerCheck.
Next Steps
- Are you on track? Visit the T. Rowe Price Retirement Income Calculator to get and estimate on where you stand.
- Contact a Financial Consultant at 1-800-401-1819.
Learn More About How to Save for Retirement
Retirement Savings by Age: What to Do With Your Portfolio in 2023
Steps you can take at every age to put yourself in a stronger financial position.Answers to 5 of the Most Popular Retirement Savings Questions
Answering these five questions can help put the future you want within reach.Reasons Why You Should Aim to Save 15% for Retirement
A disciplined savings plan can set you up for future success.Additional Disclosure Benchmarks are based on a target multiple at retirement age and a savings trajectory over time consistent with that target and the savings rate needed to achieve it. Household income grows at 5% until age 45 and 3% (the assumed inflation rate) thereafter. Investment returns before retirement are 7% before taxes, and savings grow tax-deferred. The person retires at age 65 and begins withdrawing 4% of assets (a rate intended to support steady inflation-adjusted spending over a 30-year retirement). Savings benchmark ranges are based on individuals or couples with current household income approximately between $75,000 and $250,000. Target multiples at retirement reflect estimated spending needs in retirement (including a 5% reduction from preretirement levels); Social Security benefits (using the SSA.gov Quick Calculator, assuming claiming at full retirement ages, and the Social Security Administration’s assumed earnings history pattern); state taxes (4% of income, excluding Social Security benefits); and federal taxes. We assume the household starts saving 6% at age 25 and increases the savings rate by 1% annually until reaching the necessary savings rate. Benchmark ranges reflect the higher amounts calculated using federal tax rates as of January 1, 2022, or the tax rates as scheduled to revert to pre-2018 levels after 2025. Approximate midpoints for age 35 and older are rounded up to a whole number within the range. Important Information This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action. The views contained herein are those of the authors as of February 2023 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates. This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types; advice of any kind; or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision. Information contained herein is based on sources we consider to be reliable; we do not, however, guarantee its accuracy.
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How much money you need to retire at 35 and live on investment income alone until 90
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- To retire at 35 and live on investment income of $100,000 a year, you need at least $5.22 million invested.
- With an annual spending target of $65,000, you’ll need about $3.25 million invested.
- A certified financial planner recommends an “aggressive” asset allocation of 80% stocks and 20% bonds.
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Most Americans have been in the working world for at least a decade by the time they reach their mid-30s. For some people, that’s enough.
With an early retirement craze taking hold in the US, you’d probably be in the minority if you haven’t wondered, How much money do I need to quit my job and never work again? On a quest to crunch the numbers, we consulted Brian Fry, a certified financial planner and the founder of Safe Landing Financial.
Fry used a Monte Carlo simulation to estimate the starting balance someone would need in a taxable brokerage account the day they leave work to live on either $100,000 a year or $65,000 a year in dividends (fixed income from bond investments) and capital gains (income from equity investments), and principal, after paying taxes, until age 90.
To run the simulation for a hypothetical retiree, Fry had to make assumptions about the retiree’s investments and tax treatments. You can find the full list of assumptions at the end of this post, but in short, he used Right Capital, a financial-planning software that used JPMorgan long-term return estimates for investments; assumed a conservative 3% inflation estimate; assumed no state or local taxes; and did not factor in Social Security.
In addition, the investments are assumed to be held in a taxable investment account, not a retirement account like an IRA or 401(k), since you can’t withdraw money from those accounts without penalty before age 59 and a half.
How much you need invested to retire at 35
According to Fry’s calculations, an investor who leaves work at age 35 would need at least $5,225,000 in a taxable investment account on the day they retire in order to have an annual post-tax income of $100,000.
If the investor reduces their target annual income to $65,000, they would need about $2 million less — or $3,250,000 — invested on the day they retire.
Fry recommends investing 80% of the lump sum in stocks and 20% in bonds, which is considered an “aggressive” asset allocation, due to the age of the investor. However, he notes, it’s important the retiree update their financial plan yearly, or whenever they experience a significant life change.
“Investors tend to be their own worst enemy when experiencing investment losses,” Fry said. “If you don’t have the time, interest, discipline, and expertise, it’s better to work with a fee-only certified financial planner that can tailor your investments to track to your financial plan.”
Wealthfront is one of the best robo-advisor investing options for low-cost automated or self-managed portfolios. Read our Wealthfront investing review.
It’s worth noting that many early retirees, especially those who quit corporate life in their 20s or 30s, continue to earn income after leaving their 9-to-5.
In fact, some who earn passive income through real-estate investing, blogging, or some other monetizable hobby, consider themselves financially independent rather than retired, meaning they don’t need to earn a steady paycheck to afford their lifestyle.
Fry’s simulation also did not factor in potential Social Security income. Americans born in 1960 or later — age 63 or younger in 2023 — can retire with full Social Security benefits at age 67, so long as they worked at least 10 years.
The amount of a person’s Social Security benefit is equal to an average of monthly wages for their 35 highest-earning years, adjusted for inflation. The maximum monthly benefit for someone who retires at the current full retirement age of 66 is $3,627. The future of Social Security is uncertain, however, and some financial planners recommend their clients implement a saving and investing strategy to afford retirement without it.
Assumptions used to calculate starting investment balance for a 35-year-old retiree
Fry notes that the Monte Carlo simulation has two clear limitations: The outputs are only as good as the inputs and it does not factor in the behavioral aspects of finance, or how investors react to swings in the markets.
Here are the assumptions used in the simulation:
Investments
- All investments are in a taxable account
- Used $8,333/month for $100,000 target annual income and $5,417/month for $65,000 target annual income
- JPMorgan long-term return estimates used for investments, 3% inflation used for conservative amount
- Assumed younger investors can take on more risk than older investors
- 5% annual portfolio turnover
- $0 capital loss carry over
- No asset-under-management fees included
- Lump-sum is invested at start of simulation as cash with no built-in gains
Taxes
- No state or local/city tax factored in
- Standard deduction taken for a single filer
- No Social Security payments factored in for older investors
- Dividends — 85% are qualified dividends, 15% are non-qualified dividends
- Capital gains — 90% long-term capital gains, 10% short-term capital gains
- Tax law — TCJA sunset 2025: reflects all updated provisions related to TCJA, including the sun-setting of most individual income tax provisions in 2025
This article was originally published in August 2019.
Tanza is a CFP® professional and former correspondent for Personal Finance Insider. She broke down personal finance news and wrote about taxes, investing, retirement, wealth building, and debt management. She helmed a biweekly newsletter and a column answering reader questions about money. Tanza is the author of two ebooks, A Guide to Financial Planners and “The One-Month Plan to Master your Money.” In 2020, Tanza was the editorial lead on Master Your Money, a yearlong original series providing financial tools, advice, and inspiration to millennials. Tanza joined Business Insider in June 2015 and is an alumna of Elon University, where she studied journalism and Italian. She is based in Los Angeles.
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