Have You Saved Enough to Retire?

Aug 13, 2018 Dave Homan Posted in Articles, Featured

Will you be able to maintain your lifestyle after retiring?

According to research, significant numbers of working families are “at risk” of failing to maintain their standard of living once they stop working. Decades ago, most employees put in the required years of service to achieve their desired income goal and collect a check in the mail each month.

Today, the questions are much more complex:

  • How much savings do you need to achieve your retirement income goals?
  • How much must you save now to achieve that goal?
  • What’s the best way to invest retirement savings?


As with all financial decisions, there is no “one size fits all” solution to realize your desired income in retirement. However, here are several factors that you should take into consideration to reach adequate retirement savings by around age 65: How much should you be saving today? Your desired savings rate can be approximated by age and current household income. The older and higher the income level, the higher the required savings rate. If you start saving in your 30s, you can obtain your goals at a savings rate of 10 percent–15 percent, 20 percent–30 percent in your 40s, and an astonishing 40 percent–50 percent of your gross income is required if you delay retirement savings into your 50s. As you can see, it really pays off to start saving for retirement early! What other streams of retirement income will you receive? Remember to factor in any social security, pension, or fixed annuity payments into your retirement income goals. Based on today’s figures and improving longevity, most people will be better served over the long-term by delaying that urge to collect social security until at least full retirement age, preferably to full delayed retirement age 70 when credits have been maximized.


How should your invest your retirement savings? This is a function of your time horizon and willingness to accept the risk of the stock market. A higher investment rate of return requires more stocks, and more stocks equals more volatility. However, investors willing and able to withstand the short-term ups and downs of the stock market are rewarded over the long-term! As a guideline, 80 percent of investments should be in stocks in your 30s, 70 percent stocks in your 40s, and 60 percent stocks in your 50s.


Each year, J.P Morgan completes an annual Guide to Retirement with detailed research on the retirement savings challenges and current opportunities. Based on their latest research, your household should have the following multiples of household income in dedicated retirement savings to maintain your current standard of living when you retire:

  • 30s: 1x–2x
  • 40s: 3x–4x
  • 50s: 5x–7x
  • 60s: 7x–10x

As a rule, higher-than-average income requires a higher-than-average savings account retirement balance. Of course, your personal retirement savings needs and goals are unique and much more complex than can be summarized with a few rules of thumb. Working with a financial planner can help provide more clarity and guidance when planning for your personal retirement savings needs.