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Retirement Savings: A Comprehensive Guide by O1ne Mortgage

Planning for retirement is crucial, and understanding how much you should save at different stages of your life can help you stay on track. At O1ne Mortgage, we are here to guide you through the process. For any mortgage-related needs, feel free to call us at 213-732-3074.

Average Retirement Savings by Age

The amount of retirement savings you should have varies based on your age and income. According to the Federal Reserve, the average retirement savings in 2019 ranged from $30,170 for those under 35 to $426,070 for individuals aged 65 to 74. However, the median savings, which is often a more practical measure, provides a clearer picture:

• Under 35: Average $30,170, Median $13,000
• 35–44: Average $131,950, Median $60,000
• 45–54: Average $254,720, Median $100,000
• 55–64: Average $408,420, Median $134,000
• 65–74: Average $426,070, Median $164,000
• 75 or older: Average $357,920, Median $83,000

Retirement Savings Guidelines by Age

Investment firm Fidelity suggests saving a certain multiple of your annual salary by specific ages:

• By age 30: Save the equivalent of your current annual salary.
• By age 40: Save three times your annual salary.
• By age 45: Save four times your annual salary.
• By age 50: Save six times your annual salary.
• By age 55: Save seven times your annual salary.
• By age 60: Save eight times your annual salary.
• By age 67: Save ten times your annual salary.

These guidelines are based on the assumption that you will need to cover 45% of your gross preretirement income annually, with the rest coming from Social Security. Your specific goals may vary based on your retirement age and desired lifestyle.

How to Save for Retirement

Starting early is key to maximizing your retirement savings. Here are some account options to consider:

401(k) or 403(b)

These employer-sponsored accounts allow you to contribute directly from your paycheck. Contributions to traditional 401(k)s are pre-tax, while Roth 401(k)s are post-tax, allowing for tax-free withdrawals in retirement. Many employers offer matching contributions, which can significantly boost your savings.

Traditional IRA

If you don’t have access to a 401(k), a traditional IRA is a great alternative. Contributions are tax-deductible, and withdrawals are taxed as income. SEP IRAs and SIMPLE IRAs are available for self-employed individuals and small business owners.

Roth IRA

Roth IRAs are funded with post-tax income, allowing for tax-free withdrawals in retirement. Diversifying your savings with both traditional and Roth accounts can provide tax advantages.

Brokerage Account

Investing in a brokerage account offers flexibility without the contribution limits of retirement accounts. However, earnings are subject to capital gains tax.

Social Security

While not sufficient for a luxurious retirement, Social Security can supplement your income. Use the Social Security Administration’s Quick Calculator to estimate your benefits based on your projected retirement date.

The Bottom Line

Starting your retirement savings plan early and sticking to it is essential. Your needs and priorities will evolve, but a solid foundation will ensure a secure retirement. At O1ne Mortgage, we are here to help you achieve your financial goals. For any mortgage-related inquiries, call us at 213-732-3074.

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