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How Much Should You Save for a Comfortable Retirement?

How much should you save to ensure you have a comfortable retirement? Fidelity Investments' latest report reveals the figures you need to commit to memory when building up your nest egg.

How much should you save to ensure you have a comfortable retirement? Fidelity Investments’ latest report reveals the figures you need to commit to memory when building up your nest egg.

Most retirement savers should save eight times their annual salary, according to Fidelity Investments. To stay on track with that sum, they should have about a year’s pay put away by age 35, three years’ pay saved by 45, and five years’ pay saved by 55.

Before you begin bemoaning your current finances, hear this: Boston College’s Center for Retirement Research has done its own research on the subject, and director Alicia H. Munnell notes that the “eight times” figure isn’t a one-size-fits-all measure. It’s most accurate for those who earn $100,000 or more annually. “If you’re in a low-income group and you’re going to get most of your money from Social Security, you don’t need that high a multiple,” Munnell explains. Instead, she recommends those who earn $50,000 a year to save about six times that by the time they retire, while those who earn $25,000 a year should save four times that for retirement.

Fidelity’s research is based on some optimistic assumptions; for example, that workers contribute between 6 percent and 12 percent of their pay to retirement accounts starting at age 25, that they have a 3 percent annual employer contribution, and that their salary grows each year over general inflation. Still yet, this model gives investors a rough estimate of what they’ll need to save for a comfortable retirement.

Do You Know What You're Worth?

Are you on track to save eight times your annual salary by the time you retire?

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