At your age, do you have enough retirement savings?

Question: I am in my mid-40s and have around $700,000 in retirement savings. Is that sum in the upper range for somebody my age and does it put me on track toward a safe retirement?

I don’t think there’s any uncertainty that your $700,000 puts you ahead of some people your age. The newest figures from the EBRI (Employee Benefit Research Institute) shows that the average IRA balance for individuals 45 to 49 years old is a bit over $72,000, while 401(k) investors in their 40s who have been at their jobs for over 20 years (and therefore most likely to have invested in their retirement plan for a long time) have an average balance of approximately $159,000.

The question is, will your savings be able to sustain your current living standards during retirement — which, after all, should be your main goal, right? – This is a different question, and the answer is dependent not just on the amount of cash you have in your retirement accounts at a certain age, but a variation of factors; your earnings, the age at which you will retire, whether you will qualify for a pension, the lifestyle you want during retirement, how and if you are able to prolong your savings in retirement without having to reduce your assets sooner than expected.

You can see your retirement savings performance by using a calculator such as Fidelity’s Retirement Savings Factors calculator.

fidelity-retirement-savings-factors

This helps you approximate the ratio of your yearly salary you ‘should’ have stashed away in your retirement savings accounts between the ages of 30 to 67. Even better, it can show you how much you should have by a given age with variables such as when you want to retire and your desired lifestyle during retirement.

Assuming that you are 45 and plan to stop working at 65, that’s 20 years. Let’s assume that you would prefer to maintain your current lifestyle in retirement. Based on these and other assumptions — comprising a 15%-of-salary savings ratio, an investment portfolio of which is at least half stocks, and you will have revenue from Social Security and not a pension. The tool approximates that you should have:

  • 6x your yearly salary in retirement savings at age 45
  • 9x your salary by 55
  • 12x your salary by the time you’re done at 65.

According to these numbers, you would be on track at age 45 supposing your salary is within the range of $115,000 and $120,000, as savings equal to 6x a salary in that range would put you near the $700,000 figure. If your salary decreases, it means you are doing even better in terms of ratios. You will have to stay focused and diligently save through the rest of your career and contribute to your investments & savings regularly to stay on track.

However, the savings-to-salary ratio you should have can fluctuate significantly depending on when you want to stop working and what kind of lifestyle you want to maintain during those years.

If you assume you will work and save for 2 more years and stop working at 67 as an alternative to 65, the tool approximates that you would require just 4x your salary at age 45 instead of 6x. If you think that you’ll retire at age 67 and spend about 15% less during that time, the calculator estimates that you will need only 3x your salary saved by age 45.

Conversely, if you’re going to retire at age 62 and increase your spending by 15% after you retire, the tool approximates that you’ll need 9x your salary saved for retirement at age 45. It predicts that you would require 16x your salary saved for retirement if you stopped working at age 62.

Whether the amount you have saved at a given age is acceptable or not is dependent in mostly on the way you think you’ll live during retirement and when that will be.

While this savings calculator can give you a quick and easy approximation of whether you are financially prepped for retirement, you might want to do a deeper-dive to see how you’re doing with your retirement savings plan.

One of the ways to get this done is to go to a retirement preparation tool that lets you do a more customized evaluation, like T. Rowe Price’s retirement revenue calculator. You enter your retirement savings balance, the percentage of income you are saving annually, how you invest, your projected age of retirement and your planned Social Security, and the tool uses Monte Carlo simulations to estimate your odds at a comfortable retirement given you current savings and investment strategy.

If the probability is not as positive as you’d like, you can re-run the simulation to see how making changes to your plan, like saving more aggressively, pro-longing your career, working during retirement can skew the odds in your favor.


As you run these theoretical calculations, realize that what you’re seeing as a result is not a definitive outcome on your retirement financial health, but an estimation of where you are at this point in your life. If it seems you are on your way to a fruitful and stable retirement, that’s fantastic. Don’t let it get to your head though. You should always do a yearly check on your retirement financial trajectory. This is definitely a marathon, not a sprint.

If you’re behind where you should be, no need to freak out. It’s not too late to make the changes necessary to secure you financial future. At least now you know. You can plan and take action and set forth healthy financial habits from this point forward.

We believe that consulting a professional retirement financial advisor is an excellent way to make sense of it all. However, in the spirit of this website, educating yourself first is the most important step towards a secure retirement. Hearing someone tell you what you should do with your money is not as empowering as someone reinforcing what you already know you should do (or are doing already). Good luck!

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