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Whether you're just starting your career or getting ready to leave the workforce for good, retirement can present a challenge.
Across workers of all age ranges, 58 percent say they plan to work past age 65—if they retire at all, according to a new survey of 4,550 workers for the Transamerica Center for Retirement Studies. Workers who are in their 60s or older are the least optimistic about ever retiring, but even among 20-something workers, 43 percent don't anticipate clocking out before 65.
"It's never too soon or too late to start saving, investing, preparing and planning for retirement," said Catherine Collinson, president of the Transamerica Institute and Transamerica Center for Retirement Studies. "Each age range has unique opportunities."
Here's how—and how much—workers in their 20s, 30s, 40s, 50s and 60s should be saving for retirement, and how much they are actually setting aside. See how you stack up.
—By CNBC's Kelli B. Grant
Posted May 5, 2015
Where you should be: The benchmark for 25-year-old workers is to have investment assets equivalent to 20 percent of their annual salary, according to the personal financial planning textbook "Cases in Financial Planning." So a worker making $50,000, for example, should have at least $10,000 saved for retirement.
Where your peers are: "Many are off to an awesome savings start," said Collinson. About two-thirds of 20-somethings are already saving for retirement in a work-sponsored plan, reports the study, with a median $16,000 saved. (Of course, that also means one-third are not.) Of those who save, 28 percent contribute more than 10 percent of their salary. Compared with older workers, consumers in their 20s are more apt to contribute to a Roth 401(k) given the option. And more than half say they use "professionally managed" accounts, including strategic allocation funds and target date funds.
Improvement opportunities: "The big opportunity is to really get savvy about investing," said Collinson. The study found that workers in their 20s were most likely to say they are "not sure" how their retirement savings are invested (27 percent said so). With 40-plus years of saving ahead, she said, this age group stands to benefit most from the magic of compounding. "Even if you don't have visions of becoming an investment expert, learn enough so you can ask really informed questions," she said. Get a sense of different kinds of investments, as well as appropriate asset allocation and risk.
Where you should be: By age 30, a worker should have 0.3 to 2.5 times their salary saved, depending on how much you earn, according to JPMorgan Chase's 2015 "Guide to Retirement." By age 35, Fidelity estimates you should have savings equivalent to your salary.
Where your peers are: More than three-quarters of 30-somethings are saving for retirement in a work-sponsored plan, with a median $45,000 saved. Of those, the study found, 30 percent are "super savers" contributing more than 10 percent of their salary. Compared with older workers, consumers in their 30s are more apt to contribute to a Roth 401(k) given the option (38 percent say they do), and they're most likely to use "professionally managed" accounts including strategic allocation funds and target date funds (57 percent do).
Improvement opportunities: "Thirty-somethings are strong savers, weak planners," said Collinson. Her recommendation? Continue your financial education, and nail down your goal number for retirement. "It will be a shockingly big number," she said, but one that's vital to keep in mind as you age to make sure you're on track.
Sync your retirement savings with other financial goals, said Kevin Meehan, a certified financial planner based in Itasca, Illinois. "Education planning for your children, poorly planned, becomes a retirement problem," he said. Scaling down retirement contributions now can require you to play catch-up later.
Where you should be: By age 40, a worker should have 1.1 to 4.6 times their salary saved, depending on how much you earn, according to JPMorgan Chase's 2015 "Guide to Retirement." Fidelity estimates you should have savings equivalent to three times your salary by age 45, or $150,000 for someone earning $50,000 per year.
Where your peers are: A whopping 82 percent of 40-somethings are saving for retirement in a work-sponsored plan, according to the study, with a median $63,000 saved. Of those, 23 percent are "super savers" contributing more than 10 percent of their salary.
Improvement opportunities: This age group's median savings rate is just 7 percent of their salary, which is less than workers in their 30s, 50s and 60s are contributing. A quarter of 40-something workers has taken a loan or early withdrawal from their retirement plan. "If your financial house is broken, fix it now," said Meehan. "Errors you make now may be ones you'll have to live with the rest of your life."
Certified financial planner Lynn Ballou, a managing partner at Ballou Plum Wealth Advisors in Lafayette, California, also recommends "proactively carving out money for retirement wherever you can." Look for opportunities to max out employer-sponsored plans, and explore other options including IRAs and even brokerage accounts. You may also need to make bigger lifestyle changes to realign spending and saving goals.
Where you should be: By age 50, a worker should have 2.3 to 7.8 times their salary saved, depending on how much you earn, according to JPMorgan Chase. Fidelity estimates you should have savings equivalent to five times your salary by age 55, or $250,000 for someone earning $50,000 per year.
Where your peers are: "This is the group facing future retirement realities," said Collinson. Eighty-three percent of 50-somethings are saving for retirement in a work-sponsored plan, according to the study, with a median $117,000 saved. Of those, 31 percent are "super savers" contributing more than 10 percent of their salary. Almost two-thirds—61 percent—are also saving for retirement outside of work. Yet most don't feel well-prepared: 59 percent plan to work past age 65 or do not plan to retire.
Improvement opportunities: Take advantage of catch-up contributions, which allow individuals age 50 and older sock away up to an extra $6,000 in a 401(k) and $1,000 in an IRA. Now's also a good time to consider your work horizon. Expectations in your 30s and 40s of retiring at say, age 55, may seem more or less feasible now, Meehan said. Consider, if you're planning to continue working, that outlook and its impact on your finances: Will you stay with your current employer, or explore opportunities with other companies or in other fields?
Where you should be: By age 60, a worker should have 4.3 to 13 times their salary saved, depending on how much you earn, according to JP Morgan Chase. Fidelity estimates you should have savings equivalent to eight times your salary by retirement or age 67, or $400,000 for someone earning $50,000 per year.
Where your peers are: The good news first—80 percent of workers age 60 or older are saving for retirement in a work-sponsored plan, with a median $172,000 saved. Roughly 40 percent have amassed $250,000 or more, and 33 percent are "super savers" contributing more than 10 percent of their salary. Workers in their 60s are the most likely to also be saving for retirement outside of work, with 69 percent doing so.
But many don't expect to fully retire anytime soon: 82 percent plan to or are already working past age 65, or do not plan to retire at all. Half plan to continue working at least part time.
Improvement opportunity: Nearly half of workers in this age group expect to rely on Social Security as their primary form of income in retirement, but only 29 percent claim to know a great deal about their benefits. So start researching benefits and claiming strategies now, said Collinson. "Learn as much as you can," she said. Start thinking about how to preserve those savings, too, said Ballou, with smart draw-down strategies and appropriate asset allocation. "How can I use the resources that I have in the wisest way?" she said. Don't assume you need to be too conservative—you might still have a life expectancy of 20 to 30 years in retirement.
If you still feel like you're not on track, now's the time to think bigger life changes like relocating or eliminating discretionary expenses, said Ballou. "Think about what you can really afford," she said.