Set a target
A common rule of thumb is that you can take about 4% of your savings each year in retirement. Turned around, that means you need about 25 times the yearly income you want from your savings:
| Income you want from savings | Target pot |
|---|---|
| $20,000 a year | $500,000 |
| $30,000 a year | $750,000 |
| $40,000 a year | $1,000,000 |
That’s on top of Social Security, which you can estimate in your my Social Security account. The Social Security calculator shows how much the age you claim changes it, and the retirement withdrawal calculator how long your savings would last.
Start as early as you can
The same habit adds up to very different amounts, because money saved early has longer to grow:
- Starting at 25 About $30,660 a year at 4%
- $766,512
- Starting at 35 About $18,801 a year at 4%
- $470,014
- Starting at 45 About $10,471 a year at 4%
- $261,779
Starting at 25 instead of 45 gives you about 2.9 times as much
Assumes 3% pay rises a year and steady average growth after fees. Today’s money takes off inflation, so the figures show what the savings would buy now.
Turned around, here’s what a $1 million target takes each month, depending on when you start:
- Starting at 25 $232,384 put in
- $461/mo
- Starting at 30 $283,028 put in
- $637/mo
- Starting at 35 $342,751 put in
- $893/mo
- Starting at 40 $412,598 put in
- $1,273/mo
- Starting at 45 $493,574 put in
- $1,870/mo
- Starting at 50 $586,600 put in
- $2,875/mo
- Starting at 55 $692,482 put in
- $4,809/mo
Before inflation and fees. Your employer’s match counts towards the monthly amount.
Try your own numbers:
After 30 years you’d have
$200,903
- You put in$72,000
- Growth$128,903
Start ten years later and you’d have $92,408: $108,495 less, though you’d only put in $24,000 less.
Returns aren’t guaranteed and vary from year to year. This assumes the same return every year, before fees and tax.
How much to put in
- At least enough for the full match. A common match is 50% of what you put in, on up to 6% of your pay. Put in less and you miss part of it.
- Raise it by 1% a year, or each time you get a raise, until you reach a level you’re happy with.
- Use the tax breaks. A 401(k) takes much more than most people put in, and an IRA lets you put in up to $7,500 more in 2026:
| Your age in 2026 | Most you can put in | |
|---|---|---|
| Under 50 | $24,500 | The standard limit |
| 50 to 59, or 64 and over | $32,500 | With $8,000 of catch-up |
| 60 to 63 | $35,750 | With $11,250 of catch-up |
If your wages last year were over $150,000, catch-up contributions have to go in as Roth.
Which accounts to use
- 401(k) first, up to the match. It’s an instant return on what you put in.
- Then an IRA or more 401(k). A Roth IRA or Roth 401(k) suits you if you expect a higher tax rate later; traditional if you expect a lower one. See Roth vs traditional.
- An HSA, if you have a high-deductible health plan. It’s tax-free going in, growing and coming out for medical costs, which retirees have plenty of. See the HSA calculator.
If you’re starting late
It’s not too late at 45 or 55. You have catch-up contributions from 50, your highest-earning years ahead, and a few more years of work can make a big difference: each one is another year of saving and growth and one less year to pay for. Delaying Social Security from 67 to 70 also raises your benefit by 24%, for life: see the Social Security calculator.
Work out your own number
Our 401(k) calculator shows what your savings could grow to, how much your employer adds, and what saving 1% more would do.