Saving for Retirement

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Set your retirement goals

A successful retirement savings plan starts with a few key points

Investing for retirement doesn't have to be complicated. The key is to determine how much you'll need and then develop a plan to achieve your goal.

When setting your retirement goal, you should:

  • Focus on what you can control—how much to save and where to invest it.
  • Create a plan so you can track your progress.
  • Monitor your plan and adjust as necessary.

Begin by considering the lifestyle you envision in retirement. Most experts say you'll need roughly 70% to 80% of your current annual income to live comfortably. This could include sources such as Social Security, but it's probably wise to conclude that your personal savings will provide your primary source of income.

Determine how much to save

If you’re not sure how much is enough, try using the interactive tool below. Enter your age, current retirement assets, and how much you're saving each month. Click Calculate to estimate your total retirement savings at age 65 and how much you'll be able to withdraw monthly. Then try increasing your savings amount to see how much more you could have. Remember that saving for retirement contains two important components—how much you save, and how regularly you do so.

Current balance
$ (less than $1 billion)
Monthly savings
$ (less than $1 billion)
Estimated balance
$ 192,517
Monthly withdrawal
$ 642

The results are hypothetical and do not represent any particular investment. They are offered for informational purposes only and will vary based on the information you provide. Based upon the current retirement savings balance you provided, the calculations are in today's dollars and assume your investments will grow over time at a real rate of return of 4% each year. The current retirement savings balance is assumed to be at the beginning of the month.

The example also assumes that upon retirement at age 65, you will withdraw an amount equal to 4% of your balance and that in successive years, you'll adjust the dollar amount of your withdrawal for inflation.

If you adopt an automatic investment plan, you'll invest the same amount of money at regular intervals over a specific time frame, regardless of share prices. Known as dollar-cost averaging, this strategy helps you avoid trying to time the market and enables you to benefit from the effects of compounding returns.

Consider your retirement costs

Your retirement costs can be influenced by many factors, from everyday living expenses to health care to how often you plan to travel. And don't overlook the effects of inflation on your savings. You may need more than you think to achieve a comfortable retirement.

Since 1960, the Consumer Price Index has increased by an annual average of 4%. So if you had invested $2,000 annually for 40 years and seen an 8% annual return on your investments, your total savings of $513,113 might only buy $112,234 in goods and services today.

Choose your investments wisely

Once you know how much to invest, you'll need to decide how to allocate your money among stocks, bonds, and short-term reserves. Stock funds historically have produced the highest long-term returns, but their prices also fluctuate more.

The funds you choose should be suited to your risk tolerance and years to retirement. If you're unsure about making that decision, you may want to consider a target-date fund. You can choose the fund with the target date that most closely matches your expected year of retirement, and the fund's managers will gradually adjust its emphasis toward a more conservative mix over time.

Revisit your plan

It's important to annually review your plan to help keep your savings amount and investment choices on track to meet your retirement goals. If they're not, you may need to increase your savings, rebalance your investments, or rethink your expectations for living in retirement.

Remember that investments in target-date funds are subject to the risks of their underlying funds. The year in the fund name refers to the approximate year (the target date) when an investor would retire and leave the work force. The fund will gradually shift its emphasis from more aggressive to more conservative investments based on its target date. An investment in a target-date fund is not guaranteed at any time, including on or after the target date.


  • All investments are subject to risk.
  • Investments in bonds are subject to interest rate, credit, and inflation risk.
  • Diversification does not ensure a profit or protect against losses in a declining market.
  • Dollar-cost averaging does not guarantee that your investments will make a profit, nor does it protect you against losses when stock or bond prices are falling. You should consider whether you would be willing to continue investing during a long downturn in the market, because dollar-cost averaging involves making continuous investments regardless of fluctuating price levels.
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