Here’s how much you should have saved by 45

Emmie Martin, CNBC Published 1:00 p.m. ET Sept. 12, 2017

When it comes to saving for the future, Americans are lagging way behind.

The median amount of retirement savings (https://www.cnbc.com/2017/04/07/how-much-the-average-family-

(Photo: Getty Images)
has-saved-for-retirement-at-every-age.html) for working-age families in the U.S., those ages 32 to 61, is just
$5,000. About a third, or 35%, of all adults in the U.S. have only several hundred dollars in their savings
accounts (https://www.cnbc.com/2016/10/03/how-much-americans-at-every-age-have-in-their-savings-
accounts.html) and 34% have zero, according to a 2016 GOBankingRates survey
(https://www.gobankingrates.com/personal-finance/data-americans-savings/).

That's a lot less than you'll probably need. By age 45, experts recommend that you have the equivalent of four times your annual salary in the bank if you
plan to retire at 67 and keep up a similar lifestyle, according to a recent report by financial services company Fidelity.
(https://www.fidelity.com/viewpoints/retirement/how-much-money-do-i-need-to-retire)

That's a step up from the amount you should have by 40 (https://www.cnbc.com/2017/08/16/how-much-you-should-have-saved-by-40.html) (three times
your salary) and twice as much as you should have by 35 (https://www.cnbc.com/2017/08/08/how-much-you-should-have-saved-by-35.html) (twice your
annual salary).

And it's a lot. So how do you get there?

Save as much as you can as early as you can. Fidelity recommends putting away 15% of your income per year starting at age 25 and investing more
than 50% of your savings over your lifetime.

"The good news is that that 15% also includes any employer match," Ken Hevert, senior vice president of retirement at Fidelity, tells CNBC Make It. That
means if you're eligible for a 5% match on your 401(k) plan and you contribute 5% of your salary to the account, you're already putting away 10%.

Three big factors determine if you're on track for retirement: amount, account and asset allocation. In addition to saving 15% of your income, you should
be investing. The easiest way to get started is to sign up for your employer's 401(k) plan (https://www.cnbc.com/2016/07/20/five-401k-tips-for-recent-
grads.html) and take full advantage of any company match, which essentially gives you free money.

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Regardless of whether your employer offers a 401(k), (https://www.cnbc.com/2017/08/31/congress-considers-changing-the-401k-rules.html) you can

contribute to a Roth IRA (https://www.cnbc.com/2016/11/14/heres-how-young-people-should-invest-their-first-10000.html) or traditional IRA, which are
both individual retirement accounts that offer tax benefits.

In addition to saving and investing, you also want to create a diversified portfolio. "The purpose of diversification, ultimately, is that through different
economic cycles and different policy cycles, some asset classes will perform better than others," Hevert says.

As the market swells and declines over the years, a mix of various types of investments will keep you from being at the mercy of how one specific stock,
or kind of stock, is performing.

Accruing four times your annual income by 45 represents an ideal scenario, especially if you choose to divert savings to other goals, such as buying a
home (https://www.cnbc.com/2017/06/09/biggest-millennials-make-when-buying-a-house.html) or having kids. But, as a general rule, if you're aiming to
save around 15% of your income — or as close as you can get — and invest it, "you're going to be in the right ballpark," Hevert says.

At the end of the day, how much you'll want to save for retirement will depend on the lifestyle that you want to maintain during your golden years. Do you
want to travel? Pursue a hobby? Go back to school? "This is all about giving people the confidence that they're going to be able to maintain a desired
lifestyle, while also putting themselves in the best position to not run out of money," Hevert says.

If you're interested in jump-starting your savings, here's a few sources of inspiration to get you started:
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5 tips to save more money, from ordinary people who have paid off thousands (https://www.cnbc.com/2017/06/26/money-saving-tips-from-
ordinary-people-who-have-paid-off-thousands.html)
The easy trick that helped one 26-year-old save $18,432 in 6 months (https://www.cnbc.com/2017/07/07/no-spend-days-helped-a-26-year-
old-save-18432-in-6-months.html)
6 ways to save more money without trying too hard (https://www.cnbc.com/2017/07/13/6-ways-to-save-more-money-without-trying-too-
hard.html)

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