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Are You On Track For Retirement? Here’s How To Check
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Are You On Track For Retirement? Here’s How To Check
A NerdWallet survey finds that few Americans have checked in on their retirement savings progress.
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11 years of experience Expertise Data analysis personal financeErin El Issa writes data-driven studies across personal finance topics. She loves numbers and aims to demystify data sets to help consumers improve their financial lives. Before becoming a Nerd in 2014, she worked as a tax accountant and freelance personal finance writer. Erin's work has been cited by The New York Times, CNBC, The Guardian, the "Today" show, Forbes and elsewhere. In her spare time, Erin reads and crochets voraciously and tries in vain to keep up with her two kids. She is based in Ann Arbor, Michigan.
Erin El Issa writes data-driven studies across personal finance topics. She loves numbers and aims to demystify data sets to help consumers improve their financial lives. Before becoming a Nerd in 2014, she worked as a tax accountant and freelance personal finance writer. Erin's work has been cited by The New York Times, CNBC, The Guardian, the "Today" show, Forbes and elsewhere. In her spare time, Erin reads and crochets voraciously and tries in vain to keep up with her two kids. She is based in Ann Arbor, Michigan. Published in Senior Writer & Content Strategist + more + more
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Expertise Wealth small business personal finance Kate Ashford is a writer, spokesperson, wealth management specialist (WMS™) and certified senior advisor (CSA®) who joined NerdWallet in 2021. Her work on personal finance, retirement and Medicare has been featured by The Associated Press, The Washington Post, MarketWatch, MSN, Fidelity and Apple News, among others. Previously, she was a freelance writer in personal finance for both consumer and business publications. She has a degree from the University of Virginia and a master’s in journalism from Northwestern. At NerdWallet, our content goes through a rigorous editorial review process. We have such confidence in our accurate and useful content that we let outside experts inspect our work. Lead Writer & Spokesperson + more + more
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19 years of experience Expertise Economics Data analysis Personal financeAs NerdWallet’s Senior Economist, Elizabeth Renter spends her time analyzing economic trends and data to help people make more informed decisions about their personal finances. Her work has been cited by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Prior to joining NerdWallet in 2014, she was a freelance journalist. She received a Masters of Science in Finance and Economics from West Texas A&M University, and focused her elective coursework on macroeconomics and analytics. When she’s not at work, Elizabeth enjoys college football, old houses, traveling to old cities and powerlifting. She is based in Durham, North Carolina.
As NerdWallet’s Senior Economist, Elizabeth Renter spends her time analyzing economic trends and data to help people make more informed decisions about their personal finances. Her work has been cited by The New York Times, The Washington Post, the "Today" show, CNBC and elsewhere. Prior to joining NerdWallet in 2014, she was a freelance journalist. She received a Masters of Science in Finance and Economics from West Texas A&M University, and focused her elective coursework on macroeconomics and analytics. When she’s not at work, Elizabeth enjoys college football, old houses, traveling to old cities and powerlifting. She is based in Durham, North Carolina. Published in Economist & Spokesperson + more + moreWhether leaving the workforce is just around the corner or decades away, it’s always a good time to consider: Are you financially on track to retire?
Whether leaving the workforce is just around the corner or decades away, it’s always a good time to consider: Are you financially on track to retire?A NerdWallet survey, conducted online by The Harris Poll in October 2024, found that just 23% of Americans had evaluated their progress toward retirement savings goals in the prior 12 months. To check in on how you’re doing, the first step is likely figuring out what number you’re aiming for.
A NerdWallet survey, conducted online by The Harris Poll in October 2024, found that just 23% of Americans had evaluated their progress toward retirement savings goals in the prior 12 months. To check in on how you’re doing, the first step is likely figuring out what number you’re aiming for.Set your retirement goal
Set your retirement goalIt may be tempting to measure your retirement savings against other people your age, but like many financial goals, this one is personal. How much money you need in retirement depends on factors like the cost of living in the place you hope to retire, whether there are loved ones to support and how you plan to spend your golden years. A good question to ask yourself is “how much money do I need to retire the way I want to?”
It may be tempting to measure your retirement savings against other people your age, but like many financial goals, this one is personal. How much money you need in retirement depends on factors like the cost of living in the place you hope to retire, whether there are loved ones to support and how you plan to spend your golden years. A good question to ask yourself is “how much money do I need to retire the way I want to the way I want to ?”There are many unknowns between now and 20, 30 or 40 years in the future. But a good starting point is calculating how much you’ll need in retirement income. This involves looking at your current expenses, deciding which ones will increase or decrease by the time you retire, and then adding in any additional spending you plan to do once you leave the workforce.
There are many unknowns between now and 20, 30 or 40 years in the future. But a good starting point is calculating how much you’ll need in retirement income . This involves looking at your current expenses, deciding which ones will increase or decrease by the time you retire, and then adding in any additional spending you plan to do once you leave the workforce.If you’d rather use a general rule of thumb to calculate, you might assume you’ll need between 70% and 90% of your current income in retirement. Most people don’t need as much money in retirement to continue their current lifestyle because they’re no longer saving for retirement, nor are they paying payroll taxes or other work-related expenses.
If you’d rather use a general rule of thumb to calculate, you might assume you’ll need between 70% and 90% of your current income in retirement. Most people don’t need as much money in retirement to continue their current lifestyle because they’re no longer saving for retirement, nor are they paying payroll taxes or other work-related expenses.Calculate how much you need to save
Calculate how much you need to saveWith an idea of how much you’ll need in retirement, use a retirement calculator to determine if you’re saving enough to hit that goal. In the calculator, input your age, current savings, monthly contributions and monthly retirement budget. You can also adjust factors like retirement age, rate of return, life expectancy and expectations around raises and inflation.
With an idea of how much you’ll need in retirement, use a retirement calculator to determine if you’re saving enough to hit that goal. In the calculator, input your age, current savings, monthly contributions and monthly retirement budget. You can also adjust factors like retirement age, rate of return, life expectancy and expectations around raises and inflation.If your existing retirement savings and monthly contributions won’t get you to your savings goal, adjust your contributions in the calculator to see how much more you need to save. Keep in mind, this is a ballpark estimate and planning for future unknowns is difficult. But having a target retirement income and knowing what it takes to get there makes your progress measurable. Plus, this goal can be adjusted as you get closer to retirement age.
If your existing retirement savings and monthly contributions won’t get you to your savings goal, adjust your contributions in the calculator to see how much more you need to save. Keep in mind, this is a ballpark estimate and planning for future unknowns is difficult. But having a target retirement income and knowing what it takes to get there makes your progress measurable. Plus, this goal can be adjusted as you get closer to retirement age.Start increasing your savings, if needed, to hit your goals
Start increasing your savings, if needed, to hit your goalsJust a quarter of Americans (25%) had taken steps to increase their retirement savings in the prior 12 months, according to the survey. If the calculator exercise showed that your existing savings and contributions are on track, great! Carry on. But if you need to start saving more, consider:
Just a quarter of Americans (25%) had taken steps to increase their retirement savings in the prior 12 months, according to the survey. If the calculator exercise showed that your existing savings and contributions are on track, great! Carry on. But if you need to start saving more, consider:Setting up automatic contribution increases. Some retirement accounts allow you to set up annual increases. So for example, you could set up your 401(k) contributions to automatically go up by 1% each year. (Depending on your plan and the size of the company you work for, this may be done for you automatically, if you don’t opt out.) Over time, this could make a big difference, even if the change seems small.
Setting up automatic contribution increases. Setting up automatic contribution increases. Some retirement accounts allow you to set up annual increases. So for example, you could set up your 401(k) contributions to automatically go up by 1% each year. (Depending on your plan and the size of the company you work for, this may be done for you automatically , if you don’t opt out.) Over time, this could make a big difference, even if the change seems small.Let’s say your salary is $50,000 and you’re currently contributing 10%, or $5,000 a year. It may not seem like a big win to increase that to 11%, or $5,500 a year, but that extra $500 in annual contributions could be worth more than $49,000 in 30 years at a 7% return. And that’s assuming you don’t continue increasing your contributions each year.
Let’s say your salary is $50,000 and you’re currently contributing 10%, or $5,000 a year. It may not seem like a big win to increase that to 11%, or $5,500 a year, but that extra $500 in annual contributions could be worth more than $49,000 in 30 years at a 7% return. And that’s assuming you don’t continue increasing your contributions each year.Saving your raises. If you can do without it, invest your next raise for retirement. This could mean increasing your 401(k) or 403(b) contribution, or putting the extra funds into a Roth IRA. Don’t want to save all of it? Put a portion of it away instead. Every little bit helps.
Saving your raises. Saving your raises. If you can do without it, invest your next raise for retirement. This could mean increasing your 401(k) or 403(b) contribution, or putting the extra funds into a Roth IRA . Don’t want to save all of it? Put a portion of it away instead. Every little bit helps.Evaluating your spending and debt payoff. Track your spending for a few months and then examine if there’s anything you could reasonably reduce or cut out to free up more money to invest.
Evaluating your spending and debt payoff. Evaluating your spending and debt payoff. Track your spending for a few months and then examine if there’s anything you could reasonably reduce or cut out to free up more money to invest.As for debt payoff, if you’re aggressively paying off low interest debt — such as that with interest rates below 5% — it might be worth considering whether some of that extra money is better off saved for retirement while you slow down debt payoff progress. Ideally, you should aim to work on several important financial goals, like investing for retirement, saving up an emergency fund and paying off debt, simultaneously, to get all of your financial ducks in a row. At the very least, make sure you’re contributing enough to get the company match on your retirement funds, before allocating more money toward low-interest debt.
As for debt payoff, if you’re aggressively paying off low interest debt — such as that with interest rates below 5% — it might be worth considering whether some of that extra money is better off saved for retirement while you slow down debt payoff progress. Ideally, you should aim to work on several important financial goals, like investing for retirement, saving up an emergency fund and paying off debt, simultaneously, to get all of your financial ducks in a row. At the very least, make sure you’re contributing enough to get the company match on your retirement funds, before allocating more money toward low-interest debt.Methodology
MethodologyThis survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from Oct. 1-3, 2024, among 2,090 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact press@nerdwallet.com.
This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from Oct. 1-3, 2024, among 2,090 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact press@nerdwallet.com .Disclaimer
Disclaimer DisclaimerNerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.
NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results. About the author Erin El Issa Erin El Issa Erin El Issa is a credit cards expert and studies writer at NerdWallet. Her work has been featured by USA Today, U.S. News and MarketWatch. See full bio.Helpful resources
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