Redefining Retirement: Why Fixed Figures Are Yesterday’s News

Retirement planning can be a daunting task. With varying advice on how much to save, finding a strategy that works for your financial situation is essential. Here’s a comprehensive guide on how much you should set aside annually for a comfortable retirement.

The Traditional Retirement Savings Benchmark

Standard advice suggests saving up to 10 times your annual salary by retirement. To achieve this, aim to have three times your salary by age 40, six times by age 50, and eight times by age 60. But what should your yearly contributions look like to hit these targets?

Percentage Over Fixed Amount

A Northwestern Mutual study revealed that many Americans need around $1.27 million for a comfortable retirement. Some estimates are closer to $1 million, while others vary. However, there are better approaches than focusing on a fixed figure.

Joel Ohman, a certified financial planner and CEO of, suggests, “Instead of fixating on specific dollar amounts, it’s more practical to think in terms of saving a percentage of your income.” For someone with a millionaire’s lifestyle, retirement planning will differ significantly from someone with a $60,000 annual salary.

So, what’s the ideal percentage? Setting aside 10% of your income can pave the way for a fulfilling retirement. “Aiming to save 10% of your earnings is a commendable target for working individuals across all age groups,” adds Ohman.

Adjusting Your Savings Percentage Based on Your Start Time

While the industry standard provides a solid foundation, it assumes you’ve made consistent contributions throughout your career. Dennis Shirshikov, a finance, economics, and accounting professor at the City University of New York and head of growth at Awning, emphasizes the importance of personalization. He states, “The general advice revolves around saving 10-15% of your income. However, various factors come into play, such as age, current savings, and the kind of retirement lifestyle you envision.”

The Bottom Line

Moving beyond fixed figures and adopting a more flexible, percentage-based approach is crucial in the journey toward a comfortable retirement. By considering your current financial situation and future aspirations, you can determine the correct savings rate for you. Remember, it’s never too late to start, but the earlier you begin, the better your retirement prospects will be.