The sooner you start saving for retirement, the better.
As the distance of retirement seems to be very long in the future, many people postpone saving in their retirement life, but experts say that starting saving early will have a huge impact on your final savings.
To help you know if you are on the right track, Fidelity, a retirement plan provider, sets a benchmark for how much you should save for each age group. Fidelity recommends cutting your salary to three times by the age of 40.
If your annual income is $50,000, your goal should be to have $1
How much retirement savings does a 40-year-old actually have?
According to data from the Fidelity retirement platform, as of the fourth quarter of 2020, the average 401(k) balance for Americans between the ages of 40 and 49 is $120,800.
Americans in this age group contribute 8.9% of their wages on average.
Saving three times your salary may seem daunting, but starting with saving even 1% or 2% of your salary and gradually increasing this number over time will help you accumulate savings for retirement.
Also, if your employer provides a match, please try to contribute your salary to meet the criteria for a complete match. It is essentially free money.
How much should you save for retirement?