Retirement Savings Milestones by Age: Are You on Track?

Fidelity's Age-Based Benchmarks

Fidelity Investments, the largest retirement plan recordkeeper in the United States, publishes a widely cited set of retirement savings benchmarks indexed to current salary. The benchmarks assume a target replacement rate of 45% of pre-retirement income from saved assets (with Social Security covering the rest), retirement at age 67, and a savings rate of 15% of gross income beginning at age 25.

The benchmarks, as most recently updated by Fidelity, are:

• Age 30: 1× current salary saved
• Age 40: 3× current salary saved
• Age 50: 6× current salary saved
• Age 60: 8× current salary saved
• Age 67: 10× current salary saved (retirement target)

These are rules of thumb, not laws of physics. They assume steady income growth, a 5.5% real return, no extended unemployment, and a savings rate that scales with income. They also assume the saver starts at age 25. A late starter faces a much steeper curve.

What "1× Salary" Actually Means

The benchmark is multiple of current salary, not a dollar figure. At age 30, a worker earning \$60,000/year should have roughly \$60,000 in combined 401(k), IRA, and taxable retirement balances. A worker earning \$100,000/year should have roughly \$100,000. The multiple scales the target to lifestyle: someone earning \$200,000 and accustomed to spending at that level needs a larger absolute balance to replace 45% of income than someone earning \$60,000.

The benchmark also assumes salary growth over time. A 30-year-old at \$60,000 who reaches \$90,000 by age 40 needs 3× the age-40 salary — \$270,000 — not 3× the age-30 salary (\$180,000). This is the source of the painful math: the target moves upward as income grows, so the saver must accelerate contributions to keep pace.

How the Benchmarks Are Derived

The 1-3-6-8-10 progression is the result of two compounding forces working in opposite directions. Savings contributions add to the balance linearly; investment returns compound exponentially. Early in the savings career, contributions dominate the balance; later, returns dominate.

From age 25 to 30 (5 years), contributing 15% of a \$60,000 salary (\$9,000/year) at a 5.5% real return accumulates to roughly \$53,000 — close to the 1× salary target. The same saver from age 30 to 40 (10 years), with salary growing 3% per year and the same 15% contribution, accumulates to roughly \$260,000 — close to the 3× target of \$270,000 at age 40.

From age 40 to 50, the contributions continue but the compounding curve steepens. The saver adds perhaps \$180,000 in new contributions but investment returns contribute another \$250,000 — by age 50 the balance hits roughly \$470,000-\$520,000, depending on the year-by-year return path. The 6× salary target is roughly \$480,000.

From age 50 onward, the catch-up contribution provision of the Internal Revenue Code (§414(v)) allows workers aged 50+ to contribute an additional amount above the standard elective deferral limit. For 2024, the standard 401(k) elective deferral limit is \$23,000 per IRC §402(g), and the catch-up adds \$7,500 for workers aged 50+, bringing the total to \$30,500. IRA catch-ups add \$1,000 above the standard \$7,000 limit.

Are You on Track? A Worked Example

Consider a 35-year-old earning \$85,000/year with \$60,000 currently saved. Where should they be?

The 1× benchmark applies at 30 (\$85,000 equivalent), and the 3× benchmark at 40 (\$255,000). Linear interpolation suggests a 35-year-old should have roughly 2× salary — about \$170,000 saved. With only \$60,000, this saver is roughly \$110,000 behind the benchmark.

To close the gap by age 40, the saver needs to contribute enough to add roughly \$190,000 over 5 years (the \$110,000 deficit plus the \$80,000 of expected benchmark growth). At a 5.5% real return, that requires roughly \$33,000/year of contributions — about 39% of gross income, which exceeds the 402(g) limit and is not plausible as a single-worker 401(k) contribution.

A more realistic plan: contribute the maximum to the 401(k) (\$23,000 in 2024) plus \$7,000 to a Roth IRA, totaling \$30,000/year. At 5.5% real returns over 5 years, that accumulates to roughly \$172,000 — still short of the \$190,000 needed. The shortfall must be closed either by higher returns (taking more portfolio risk), higher income (career advancement), or an extended working career (retiring at 70 instead of 67).

The 4% Rule and Your Retirement Number

The benchmarks target a 10× salary replacement, but many retirees prefer to think in absolute dollars. The "4% rule," derived from the so-called Trinity Study by Cooley, Hubbard, and Walz (1998), found that a portfolio of 50% stocks and 50% bonds survived a 30-year withdrawal period in 95%+ of historical scenarios when the initial withdrawal rate was 4% of the portfolio balance, with withdrawals adjusted for inflation in subsequent years.

Applying the 4% rule: a portfolio of \$1,000,000 supports a \$40,000/year inflation-adjusted withdrawal stream. To replace \$60,000/year of income (assuming Social Security covers roughly \$25,000 and the portfolio covers \$35,000), the target portfolio is roughly \$875,000 — close to the 10× benchmark for a \$60,000 earner.

Recent research, notably from Michael Finke and colleagues (2013) and from Bill Bengen (the original 4% rule formulator), suggests that 4% may be optimistic in a low-yield environment. Many planners now recommend 3.5% as a safer starting withdrawal rate. At 3.5%, the same \$60,000 replacement requires a portfolio of roughly \$1,000,000.

Variables That Move the Target

• Expected retirement age. Retiring at 62 versus 67 adds 5 years of withdrawals and shortens the accumulation window by 5 years — a double hit that requires roughly 50% more savings.
• Social Security claiming age. Claiming at 62 reduces benefits by roughly 25-30% versus claiming at full retirement age; claiming at 70 increases benefits by roughly 24-32% over the full retirement age benefit. Delaying Social Security is mathematically equivalent to buying an inflation-indexed annuity at a favorable price.
• Pension income. Workers covered by defined-benefit pensions need less portfolio income. The benchmarks assume no pension.
• Healthcare costs. A married couple retiring at 65 in 2024 can expect roughly \$315,000 in healthcare costs through retirement per the Milliman Medical Index. Medicare does not cover everything.
• Tax diversification. Roth balances withdraw tax-free; traditional balances withdraw at ordinary income rates. A saver with all traditional balances needs a larger pretax target than one with substantial Roth savings.

Catch-Up Strategies for Late Starters

A late starter has three levers, none pleasant:

1. Save more. Workers 50+ can contribute \$30,500/year to a 401(k) plus \$8,000 to an IRA — a combined \$38,500 in tax-advantaged savings. Maxing both for 15 years at 5.5% real returns accumulates to roughly \$925,000.
2. Work longer. Each additional working year both adds a contribution year and subtracts a retirement year — a roughly 1.5× multiplier effect on required savings.
3. Take more risk. Shifting from a 60/40 portfolio (historically ~7% nominal) to an 80/20 portfolio (historically ~8.5% nominal) adds ~1.5 percentage points of expected return, but at the cost of substantially larger drawdowns.

Conclusion

The 1-3-6-8-10 benchmarks are useful diagnostic checkpoints, not inflexible mandates. A saver at 4× salary at age 45 is ahead; a saver at 1× salary at age 45 is behind. The benchmark tells you the gap; the action plan closes it. Run your own numbers with our Retirement Calculator and review annually.

This article is for educational purposes only and does not constitute financial or investment advice. Investment returns vary and may lose principal. See our disclaimer for full terms. Written by the HT99 Tools Editorial Team.