How much should I save for retirement? Rules of thumb and a simple estimate

“Am I saving enough?” is one of the most common money worries, and one of the hardest to answer because retirement can feel abstract and far away. There’s no single right number, but there are reliable ways to estimate how much to save for retirement and check whether you’re on track.

Rule of thumb 1: save around 15% of your income

A widely used benchmark is to save about 15% of your pre-tax income for retirement, including any employer contributions, from your 20s or early 30s onward. If your employer adds 5%, you’d contribute about 10%.

It’s a guideline, not a law. If you start later, plan to retire early or expect high spending in retirement, you’ll need more. If you have a generous pension, you may need less.

Rule of thumb 2: salary milestones by age

Fidelity publishes a popular set of milestones for someone planning to retire around 67:

They’re a quick way to check progress, but they’re based on assumptions about returns, retirement age and lifestyle that may not match yours.

Estimate your own target with the 4% rule

For a more personal figure, work it out in three steps.

1. Estimate the yearly income you’ll want in retirement. Many people aim for 70–80% of their pre-retirement income, since work costs and saving disappear. Your own spending matters more than the rule; our guide to how to make a budget helps you see it clearly.

2. Subtract guaranteed income. Deduct expected state pension or Social Security, workplace pensions and other reliable income. What’s left is what your savings must provide.

3. Multiply by 25. This comes from the 4% rule: research by planner William Bengen in the 1990s found that withdrawing 4% of a diversified portfolio in the first year, then adjusting for inflation, historically lasted at least 30 years in US data. Dividing by 4% is the same as multiplying by 25.

Example: you want $50,000 a year, and expect $20,000 from a state pension. Your savings need to provide $30,000 a year. Target: $30,000 × 25 = $750,000 (in today’s money).

The 4% rule is a starting point, not a promise. Longer retirements, lower future returns or high fees may call for a lower withdrawal rate.

How much do you need to save each month?

Using the $750,000 example and assuming a 7% average annual return:

Starting 10 years earlier cuts the monthly amount by more than half. That’s compound interest doing the heavy lifting, and it’s why the best time to start is as early as possible. Returns aren’t guaranteed, so revisit the numbers every year or two.

Where should retirement savings go?

1. Get any employer match first. If your employer matches contributions, not taking it means leaving part of your pay on the table.
2. Use tax-advantaged retirement accounts available where you live. Tax relief or tax-free growth makes a big difference over decades.
3. Invest for the long term. Retirement money with decades to grow has historically benefited from a large share in diversified stock funds, shifting toward bonds as retirement approaches. See stocks vs bonds and what is an index fund.
4. Keep fees low. A 1% difference in yearly fees can shrink your final pot by a fifth or more over 30 years.

What if you’re behind?

Many people are. The practical levers:

• Increase your saving rate gradually, for example by 1% of pay each year or half of every raise.
• Clear high-interest debt to free up cash; see debt avalanche vs snowball.
• Use catch-up contributions if your country allows extra contributions after a certain age.
• Consider working a little longer — each extra year means more saving and fewer years to fund.
• Plan to spend less in retirement, for example by downsizing.
• Avoid risky shortcuts. Chasing high returns to “catch up” often backfires.

The bottom line

Aim to save around 15% of your income including employer contributions, use the salary milestones as a rough check and estimate your own target as yearly income needed from savings × 25. Start as early as you can, take any employer match, keep fees low and increase your saving rate over time. Before investing, make sure your emergency fund is in place.

This article is general information, not personal financial advice. Retirement rules, pensions and tax treatment vary by country; consider speaking with a qualified adviser.