Unlike tracking your daily steps, your calorie intake or your latest jogging route, there doesn’t appear to be an app for tracking your retirement savings.
So, how much should you be putting away for your twilight years to live comfortably?
Survey data published by Wonga recently revealed that out of nearly 8,000 respondents, most people aspire to retire between the ages of 50 and 70, but only 50% of people between 25 and 44 have actually started saving for their retirement. If this sounds familiar, you might want to catch up with your retirement saving goals and try to hit these benchmarks.
Retirement Savings in Your 20s
In your early 20s, it is unlikely that you have started putting away any money for your retirement. You are probably in education or have an entry-level position with a low income, just figuring out how to budget accurately. This is okay.
But once you start working with disposable income in your later 20s, it is time to start putting money away for retirement. Don’t create a goal at this stage, but do open a dedicated savings account you can add to whenever you have managed to save a little. Your 30-year-old self will thank you.
Retirement Savings in Your 30s and 40s
Your 30s and 40s are where you put in the hard yards towards your retirement saving goal. An effective – but not the only – way to make retirement saving targets is to base your targets off your annual income. Experts believe that you should save around 15% of your pay during your 30s, which should equate to x1.5 your annual income over the decade.
In your 40s, you might want to ramp this up a little and save more, aiming for around x2 your annual income over the decade. This should provide you with a solid foundation as you enter your 50s.
Retirement Savings in Your 50s
In your 50s, when you are likely to have paid off your mortgage, there should be more room to save. Workers are typically more dedicated to contributing as retirement comes into view. Experts suggest that you aim to have x5 to x9 your annual income by the time you reach 60.
Your Benchmarks Should Be Personalised
Although experts can make rough perditions on how much you should save or aim to save each decade, these rules are flexible.
How much you need to save will depend on how much money you earn, if you are single or married – and if your partner works as well. And of course, they depend on what plans you have for your retirement. Some people make money last longer in retirement than others.
Moreover, these benchmarks are not stipulated to make you feel bad for not hitting them. They should serve as motivation and help you inch your way closer to financial security in later life.