Retirement Savings Benchmarks for 2024: How Do You Compare?
Pursuing financial freedom is nuanced, but understanding how your unique circumstances align with the latest retirement “benchmarks” is essential. This comprehensive blog post will explore a range of financial benchmarks tailored to different income levels and ages, offering more specific insights and strategic considerations for anyone above the age of 30.
Source: Northwestern Mutual
Tailoring Your Retirement Savings Goals:
Setting a Personalized Retirement Savings Goal:
While conventional wisdom suggests aiming for 70-80% of your pre-retirement income, this number can vary depending on the lifestyle goals you've set for your post-work years. Collaborate closely with your financial advisor to establish a retirement savings plan that aligns with your desired standard of living, accounting for luxury expenditures, travel plans, and philanthropic aspirations.
The 25x Rule for High Net Worth Individuals:
Consider surpassing the standard 25x rule, especially if you have a high salary. The table provides detailed benchmarks that showcase the expected savings range at different ages and salary levels. For instance, by age 60, the recommended savings range for a $200,000 salary is $2,225,000 - $2,725,000.
Maximizing Tax-Advantaged Accounts:
With higher incomes, optimizing tax-advantaged accounts becomes even more critical. Strategies like backdoor Roth conversions, strategic withdrawals, and effective estate planning can help minimize tax implications and maximize wealth preservation.
Age-Based Savings Benchmarks:
Tracking your progress against age-based savings milestones ensures you stay on the right path. By age 50, experts recommend having the equivalent of your annual salary saved. By age 65, the savings range for a $150,000 salary is $1,855,000 - $2,245,000, emphasizing the need for consistent contributions and adjustments.
Fidelity also suggests a timeline to use in order to get to that magic number:
By 30: Have the equivalent of your salary saved
By 40: Have three times your salary saved
By 50: Have six times your salary saved
By 60: Have eight times your salary saved
By 67: Have 10 times your salary saved
Key Takeaways for Elite Retirement Planning:
Holistic Financial Planning:
Craft a comprehensive financial plan beyond retirement savings to encompass tax planning, estate planning, and potential healthcare costs.
Professional Guidance:
Engage with financial professionals to navigate the complexities of retirement, seeking advice on investment strategies, tax optimization, and wealth preservation.
Regular Review:
Periodically reassess your retirement plan for income, expenses, or investment performance changes. Flexibility is crucial to adapt to evolving circumstances.
Celebrating Milestones:
Acknowledge and celebrate your achievements as you reach savings milestones. Your commitment to financial well-being deserves recognition.
The above chart shows that U.S. residents 35 and under have an average of $30,170 in retirement savings; those 35 to 44 have an average $131,950; those 45 to 54 have an average $254,720; those 55 to 64 have an average $408,420; those 65 to 74 have an average $426,070; and those over 70 have an average $357,920. (Source: Federal Reserve Survey of Consumer Finances: https://www.federalreserve.gov/econres/scfindex.htm)
With a strategic blend of personalized financial planning, age-driven benchmarks, and a keen eye on the future, you can ensure a retirement that not only preserves your wealth but enhances your lifestyle and leaves a lasting legacy. Work closely with your financial advisor to turn these benchmarks into a tailored roadmap for your extraordinary retirement journey.