Retirement Goals for Life – How Much Should You Be Saving for Retirement?

Few people save and invest enough for retirement.  Few people even consider saving for retirement seriously until they are in their fifties or sixties and it is much more difficult.  Unless you make more than $200,000 per year and plan to spend your last fifteen years before retirement living and spending like a college student, starting to save at fifty is not a good strategy (although your parents might not mind you moving back in since they’re probably need help changing light bulbs and things).

The trouble is that there is always something else getting in the way of saving and investing.  When you are 20 you want to get a nice car, save for a house, and fund club hopping and beach trips.  When you are 30 you are paying for a big house (bigger than you really should have bought), paying for all sorts of baby things you never thought of, trying to get in a family trip here and there (and my, those airfares are expensive when you’re flying four), and probably getting the unlimited data plan and cable with the sports package.  When you’re 40 you start worrying about paying for college and are still paying on that pricey house.  You’ve also remodeled the kitchen and the bath and taken out another loan to pay for it.  At 50 you’re paying for college, supporting an adult child you thought would be on his own by now, and still paying for those loans.

One day you wake up at 55 with $50,000 in a 401K that you’ve borrowed $20,000 against, a couple of thousand dollars in the bank, and maybe $80,000 in home equity.  If you’re lucky you may get $150,000 in home equity and only owe $70,000 on the house by retirement, have $500,000 in the 401K by saving like crazy and working over, and maybe $10,000 in other assets.  This leaves you very dependent on Social Security, unable to take any risks with your investments and therefore getting a very small income from your 401k, and generally worried about running out of money throughout your retirement.

To have a better retirement, you need to start saving early.  By the time you are 55 it really shouldn’t matter anymore if you put anything away for retirement or not because you already have so much saved.  You should be taking the trips to Europe and Cancun and buying a get-away cabin while your peers are starting to sweat their retirement savings.

To do this when you are young it is easier to look at short-term goals rather than that huge pile of cash you will need in fifty years.  If you are meeting the goals, you’ll know you’re on track.  If you’re beating them handily, more the better – maybe you can let off a bit and add more luxuries to your life.  If you’re behind, it’s time to cut back on lifestyle a bit and see if you can catch up.  If you’re young it might just be a matter of eating out a few less times a week, cutting off the cell phone for a while, or trading down in car so you can redirect a few car payments.

Here are some goals to shoot for at different stages of life.  Things can happen, but if you meet these goals you’ll be much better off than most people.  You will greatly increase your chances of a worry-free retirement.

Age 23-25:  An emergency fund of $10,000 in the bank and 10-15% of gross pay going into a combination of 401k’s and IRAs before employer matches.

Age 30-35:   Beyond the original emergency fund, investments of $20,000-50,000 that can be tapped to help with buying cars and home repairs, and retirement savings of $50,000-$100,000.  A home with at least 20% equity paid.  $500,00o – $1M in 15- year level term life insurance.

Age 40-45:  Investments of $50,000-$100,000 and retirement savings of $250,000-$500,000.  At least 80% equity in the home with only a few years’ worth of payments remaining.

Age 50-55:  100% debt free, including the house.  $300,000-$500,000 in investments and $500,000-$750,000 in retirement savings.  You are now financially independent with plenty of cash flow for investments and expenses.

Age 60-65:  Still debt free with perhaps a vacation home, bought with cash.  $1-$2 million in investments and $2-$4 million in retirement funds.   Home equity of $250,000-$500,000

Next time I’ll discuss the options that having $4-$8 million in retirement savings will allow, versus having the bare minimum of $1-2M.

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Disclaimer: This blog is not meant to give financial planning or tax advice.  It gives general information on investment strategy, picking stocks, and generally managing money to build wealth. It is not a solicitation to buy or sell stocks or any security. Financial planning advice should be sought from a certified financial planner, which the author is not. Tax advice should be sought from a CPA.  All investments involve risk and the reader as urged to consider risks carefully and seek the advice of experts if needed before investing.


  1. Useful post ! Planning for life after retirement is an important task. We have to attain some goals for different stages of life. All the steps are really helpful as calculating needs, savings, investments etc.

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