Saving for retirement

When it comes to retirement, it’s normal to wonder where you stand and what to do next. We’ll help you get on the right track.

What you'll learn: 


Why it's important to save now

Saving for retirement is about creating the future you want. It means setting aside enough money to do what matters most to you, whether that’s retiring early, living comfortably or leaving a legacy. 

It also means starting to save—and invest Tooltip —as early as possible so you don’t miss out on the potential snowball effect of compound growth Tooltip

Here's an example:

Say you start saving $100 a month today. Assuming a 6% average annualized return Tooltip on your investment, you’d have about $46,000 in 20 years and about $192,000 in 40 years. But if you wait 10 years to start saving and investing, you’d only have about $17,000 in 20 years and about $99,000 in 40 years.1

Source: Schwab Center for Financial Research

Learn more about how waiting to save could cost you.

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How to prioritize retirement and other goals

We get it—retirement isn’t your only goal. You might also be trying to pay off debt, buy a car or home, or save for your kids’ education.

Still, saving and investing for retirement should be a high priority.

Learn more about how to prioritize multiple savings goals.

How much to save based on your age

To get an accurate estimate of how much you’ll need to retire, you’ll need a personal retirement plan. But you can get a general idea by multiplying the amount you expect to spend in your first year of retirement by 25.  

Here's an example:

Say you want to spend about $40,000 every year of a 30-year retirement. $40,000 times 25 equals $1 million. So your retirement portfolio value will need to be at least $1 million to provide the money you need. In most cases, you’ll have other sources of income, like Social Security. But your savings will need to cover a large part of your spending needs. 

Here are some guidelines to help you set aside enough, based on when you start saving:2

If you start saving in your... Save this amount from your paychecks and bonuses...
20s 10% - 15%
30s 15% - 25%
40s 25% - 35%
Mid-40s or later At least 35%

If your employer offers a company match, include it in the percentages above. Keep in mind that most retirement accounts have annual contribution limits.

Learn how to get the full company match, if your employer offers one.

Which retirement accounts to use

You understand the power of compound growth—and you know how much to save. But where should you put your retirement savings? And what if you’ve already maxed out your 401(k) or IRA, or have a 401(k) from your old job?

Here’s what we recommend:

  • Save at least enough in your employer-sponsored account—401(k), 403(b), 457(b) or Thrift Savings Plan—to get the full company match, if your employer offers one. If you have more than one 401(k), find out if a rollover is right for you.3
  • Use a Health Savings Account (HSA) Tooltip to put money away for future health care costs, if you’re eligible.
  • If you’ve maxed out your employer-sponsored account or don’t have one, consider a traditional or Roth IRA Tooltip to boost your savings.
  • If you’ve maxed out your IRA, consider a brokerage account Tooltip to save even more.

    Compare account types, including eligibility, contribution limits and tax rules.

How to create your retirement plan

Saving a percentage of your income in your employer-sponsored retirement account—at least enough to get the full company match—is a good start.

But without a more specific, long-term plan, you won’t know if your money will last as long as you need it to—or if you’ll be able to do all the things that matter to you, and still have the retirement you want. That’s where a personal retirement plan comes in.
A good plan gives you a roadmap to the retirement you want, based on:

  • When you want to retire
  • How long you expect to be retire
  • Your future expenses for needs, wants and wishes
  • Your savings and income

It also takes into account your investment portfolio and risk tolerance Tooltip and other needs and goals, like gift-giving, legacy planning and major life events.

Learn how you can create a personal retirement plan. 

What you can do next