Retirement: Are You on Track?

Even for millennials, retirement will be here before you know it.  So, how are you doing?  Yes, I mean you personally.  Below is a crude measuring stick you can use to see if you are on track for saving enough money so that you don’t have to take a huge cut in income during your retirement years.  Since it’s your paycheck that drives your lifestyle, I’ll use it as the basic measuring stick for the money you need to accumulate.

Age 30: 1 times your salary.  In order to be able to say you’re even on the path to financial freedom, you need to be saving a minimum of 10% of your gross paycheck.  If you did this from your very first post-college paycheck starting at age twenty-two, you’ve had eight years of 10% contributions plus earnings and should easily have reached this goal.  Take a look at personal savings and investment accounts plus your company retirement account balance and compare the total to your current annual earnings.

Age 40: 3 times your salary.  Assuming you hit your age 30 marker, that pot of money has been growing plus you’ve added ten more years’ worth of contributions and hitting this age forty marker should not be a problem.

Age 50: 6 times your salary.  At age fifty, you’re at the beginning of the home stretch.  If you’re way off of your target, there’s still plenty of time but you’ll need to make purposeful and significant adjustments in your spending and saving patterns.  Do not postpone taking the necessary action needed to get you on track for significant progress.  Consider getting help from a fee-only Certified Financial Planner, a professional who can expertly guide you.  Visit to find a CFP near you.

Age 60: 9 times your salary.  Assuming you’ve hit this marker, you should be pretty much on auto-pilot for meeting your retirement cash flow goals.  Continue to contribute 10% of gross salary knowing that when you retire, the combination of a 4-5% withdrawal from your investments when combined with social security payments should be enough to do the job.

It’s important to develop a customized plan for yourself, and these markers are just guidelines for giving you a sense of if you are on track for creating a retirement lifestyle similar to your lifestyle when you were working.  If you’re way low of these markers, use it as an incentive to take action, either on your own or with the help of a professional.

Note: We ran a hypothetical case for a twenty-two-year-old who earned $50,000 annually and started saving 10% from his very first paycheck, continued that pattern until retirement at age sixty-seven at which time he began taking social security.  We assumed his salary rose at a rate of 3% per year and he earned 7% on his investments; meaning he invested predominately in stocks.  At age sixty-seven, he had accumulated $2.3 million which was approximately twelve times his ending salary of approximately $189,000.

If you’d like to have me answer your financial question email me at and place in the subject line.  Consult your own professional legal, tax or financial advisor before acting upon this advice.