What’s the magic number for your retirement savings?

How much money do you need to retire well? It's a million-dollar question that, for some Americans, may require more than $1 million to answer.

To be financially ready to retire by age 67, says Fidelity Investments — the nation's largest retirement-plan provider — you should aim to have 10 times your final salary in savings.

Man and numbers
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That's the "magic number," and it applies to investors with a broad range of income, from about $50,000 to $300,000 a year.

Planning for a seven-figure nest egg may seem to be an intangible retirement savings goal. Trying to set benchmarks along the way — based on your age and earnings — might be more realistic.

"It's easy to get your mind around," said Manisha Thakor, director of wealth strategies for women at The BAM Alliance. "The Fidelity metric is clear, memorable and, for most people, still a stretch, so it will get them thinking, 'Wow, I need to save more.'"

Here is the time line in which Fidelity suggests you increase your savings so that you can reach that magic number:

  • In your 20s, put enough away so that by the time you turn 30, you'll have the equivalent of your salary saved.
  • By 40, aim to have three times your salary saved up.
  • By age 50, you should have enough saved to equal six times your salary.
  • By age 60, your savings should be eight times your salary.
  • And 10 times your salary by the full retirement age of 67.

Of course, life doesn't always fit neatly into a formula. You may need to adjust along the way, be open to saving more or less in any given year, and work toward making up any investment losses. Seeking the advice of a financial planner may be another important step to take to help you reach your retirement goal.

"Most people are so far off from having 10 times their last year of salary saved for retirement that by following this guideline, they will save more and pay more attention to how they are investing now." -Manisha Thakor, director of wealth strategies for women at The BAM Alliance

"Here's the tough thing about rules of thumb: If you apply them without professional advice and some form of precision over longer periods of time, you may be getting farther and farther away from spending goals you want to have in retirement," said Dr. Ajamu Loving, assistant professor of financial planning at The American College of Financial Services.

"But if you actually sit down with a professional, they can run simulations to show you the percentage of time your portfolio is likely to fail, and you can do concrete things to make sure to withstand your retirement."

Thakor agrees that the Fidelity metric is not perfect but says the good news is that it should serve as a wake-up call.

"Most people are so far off from having 10 times their last year of salary saved for retirement that by following this guideline, they will save more and pay more attention to how they are investing now," Thakor said, adding, "And that is the only thing you can control at this stage of the retirement-planning process, so that is precisely what you should be focused on."

— By Sharon Epperson, senior personal finance correspondent