Key Takeaways

- Fidelity's rule of thumb: Aim to save at least 15% of your pre-tax income each year for retirement.

- The good news: This 15% goal includes any contributions you may get from your employer.

- Remember: Your personal target saving rate may vary depending on a variety of factors, including when you plan to retire, your retirement lifestyle, when you started saving, and how much you’ve already saved.

Who doesn’t have a retirement dream? Yours may be as simple as sleeping late or riding your bike on a sunny afternoon, or as daring as jumping out of a plane at age 90. Living your retirement dream the way you want means saving now—and saving enough so you don’t have to worry about money in retirement.

But How Much Is Enough?

Our rule of thumb: Aim to save at least 15% of your pre-tax income each year. That’s assuming you save for retirement from age 25 to age 67. Together with other steps, that should help ensure you have enough income to maintain your current lifestyle in retirement.

How did we come up with 15%? First, we had to understand how much people generally spend in retirement. After analyzing enormous amounts of national spending data, we concluded that most people will need somewhere between 55% and 80% of their preretirement income to maintain their lifestyle in retirement.

Not all of that money will need to come from your savings, however. Some will likely come from Social Security. So, we did the math and found that most people will need to generate about 45% of their retirement income (before taxes) from savings. And saving 15% each year, from age 25 to age 67, should get you there. If you are lucky enough to have a pension, your target savings rate may be lower.

While 15% may seem like a lot, if you have a 401(k) or other workplace retirement account with an employer match or profit sharing, that counts toward your annual savings rate.

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