How Much to Have in Retirement Savings by 40

Starting early gives you plenty of time to plan for retirement.
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Your golden years represent the time to spend pursuing your ideal leisure activities and enjoying life. Maybe you plan to travel the world with your spouse for several years before spending years doting on your grandchildren. Saving adequate money to cover your dreams takes years of dedicated savings habits. It’s never too early to begin planning for retirement. According to Kiplinger, you typically will need to have accumulated two times your annual salary saved by the age of 40 to help build up a nest egg that can maintain your standard of living in retirement.

Yearly Salary

You need a good idea of the amount of money you need in retirement to calculate your anticipated annual salary. Add up the amount you need for your fixed expenses and disposable income per month and multiple that number by 12. Don’t forget to add in entertainment expenses and health care insurance costs. Once you have your yearly salary, you can start calculating your total figure for retirement.

The Grand Total

It can be helpful to look at your retirement goal as a whole number. According to Time Business & Money, you need to have accumulated between eight and 12 times your final annual salary to retire comfortably. Kiplinger recommends 10 times your annual salary. Multiple your annual salary by 10 to estimate the total number you need to retire.


Time Business & Money offers guideposts on where your retirement savings should be by age. By age 35, you should have one year’s salary saved. By age 45, you should have three years saved. By age 55, you should have five years. Kiplinger offers a more in-depth profile using your age and a savings factor. By age 40, you should have saved approximately twice the amount of your annual salary.

Additional Income

Don’t forget about Social Security and your pension. According to CBS News, the average employee making $50,000 can expect approximately $1,233 in Social Security income, as of publication. Add a spouse making $610 per month and your total household SSI would be $1,843, for example. You can estimate your Social Security income at retirement using tools on the Social Security Administration's website. Also, contact your pension plan administrator for information regarding disbursement payments. Add these amounts into your income when calculating your yearly income.

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