How to save for retirement (and how much you should be saving)

Saving for retirement is a journey to financial stability that can be intimidating. Many people wonder when to start, how much to set aside, where to invest and how to know if you're saving enough.

In this deep-dive article, we'll cover everything about how to save for retirement: how to find the money to start saving, what retirement accounts and investment options you may have, how much to have saved by certain milestones, and moves to make if you're behind on your savings goals.

A common rule of thumb is to aim to save at least eight times your annual salary saved by the time you retire. However, everyone’s ideal savings amount will vary based on lifestyle, goals, and other personal factors. While saving that much can feel daunting, breaking it down into age-based milestones can make it more manageable and help you stay on track as life evolves.

So what does saving eight times your salary look like in practice? These decade-by-decade milestones offer a helpful way to measure your progress and adjust as needed:

• In your 30s: By the time you're 30, you should have one year's salary invested in a retirement account.
• In your 40s: Aim to have three times your annual salary invested by the time you reach age 40.
• In your 50s: You should have six times your annual salary set aside in a retirement account by the time you hit 50.
• In your 60s: Shoot for at least eight times your annual income invested in a retirement account puts you in a strong position to retire by 65.

Get more guidance for saving for retirement in each decade

If you're saving for retirement together, a good target is to have at least eight times your combined annual income set aside by the time you retire. Of course, that number is just a starting point—what really matters is aligning your retirement savings with the life you both imagine living. Think about your lifestyle goals, spending habits and what you want retirement to look like together. The more you talk through these decisions as a couple, the more confident you’ll feel in the path you’re building.

It's crucial for couples planning on retiring together to have a financial foundation built on communication. Take the time to understand each other's perspectives on money, how your assets and debts are intertwined and how your investment risk appetites work together. Couples creating a retirement plan should connect on how your retirement goals and timelines align, including when each of you wants to stop working and how you envision spending your early, mid and late retirement years.

The best time to start saving for retirement is today. Even if retirement seems like the distant future, saving even small amounts helps you maximize what you have by compounding your investments over time. The longer your money has to grow and gain returns that are then reinvested to grow and gain again, the more potential you have to reach or exceed your retirement savings goal.

If getting started with retirement saving doesn't feel feasible at the moment, starting small can help. Review your budget for anything you can spare, and consider building your retirement fund with money from side work or a windfall if you can.

Read more about when to start saving for retirement

If you're feeling behind on your retirement savings, it’s never too late to make progress. Focus on what you can do now: increase your savings rate, take advantage of tax-advantaged accounts, and commit to a plan that aligns with your goals. Every dollar you save today has the power to grow and help close the gap.

Consider these tactics to get your savings closer to where you want it to be:

• Check your contribution amounts. It's possible to slip behind on retirement savings if you set up your employer plan up at a low contribution rate and never look back. As your lifestyle and life stages change, reassess what fraction of your income you can do without today so you can have it (potentially with interest and returns) down the road.

• Maximize the employer match. With some workplace plans, employers will match the contribution you put into your retirement account up to a certain limit. For example, if you've set your contributions at 2% of your paycheck, but your employer would match up to 5%, consider finding a way to get your contributions up to 5%. When what you put in has the potential to be doubled at no cost to you, it's worth it to make it happen if you can.

• Periodically review your investment choices. If you're making steady contributions but your retirement account balance still isn't where you expect it to be, it may be a matter of underperformance. Make sure your money—whether within a retirement account or invested elsewhere—is being put to work with a strategic asset allocation that's best suited for you. Your goals, time horizon, risk tolerance and more factor into setting up a retirement investment mix you're satisfied with.

• Revisit your monthly budget. Take a pay-yourself-first approach and determine if any discretionary spending could shift to become a regular retirement contribution. (Bonus tip: Automate your savings by having it come directly out of your paycheck or setting up a scheduled transfer.)

• Pick up a side gig or monetize a hobby. Putting even a small bit of extra income that you don't need for essentials into a retirement savings account can help you reach your goal faster than you might expect.

• Deposit your windfalls. Unexpected money like cash gifts, workplace bonuses, inheritances, winnings or prizes can be a delight for present-day you. But if you don't have an immediate need for it, maybe add some or all of it to your retirement savings for future you.

• Kick in extra as you get closer to retirement. Once you turn 50, you're eligible to make catch-up contributions to tax-advantaged accounts. These increase your annual contribution limit by several thousand dollars. And thanks to the SECURE Act 2.0, retirement savers aged 60 to 63 have even higher catch-up limits.

See where you're at with our free retirement calculator

Dig into more of your financial details to get to a retirement savings goal that's right for you. Our retirement calculator can help you foresee your future needs based on your unique factors.


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Once you know how much money you want to have in retirement and have a plan to save regularly, consider your retirement account options and how to invest strategically.

It's often better to start by putting money into a special retirement account instead of a savings or investment account. Using a tax-advantaged retirement account offers you certain financial incentives for putting away money that you don't plan to use until later in life. There are two general types:

• Pre-tax retirement accounts: These accounts, like traditional 401(k)s or IRAs, are funded with income before taxes. Your contributions reduce your taxable income now, and the money grows tax-deferred. You’ll pay taxes when you withdraw the funds in retirement, ideally when you’re in a lower tax bracket.

• After-tax retirement accounts: Also known as Roth accounts, these are funded with money you’ve already paid taxes on. You won’t get a tax break now, but your money grows tax-free, and qualified withdrawals, including earnings, aren’t taxed in retirement. These accounts are helpful if you expect to be in a higher tax bracket later.
  

Let's look at the main categories of retirement savings options you may be able to choose from.

Workplace retirement savings accounts are one of the easiest ways to save for retirement. Your employer sets up the plan and handles the provider, so all you have to do is decide how much to contribute and choose your investments from the available options. Contributions automatically are deducted from your paycheck, making it a convenient, hands-off way to save for the future.

One major perk? These plans come with high contribution limits—up to $23,500 in 2025 (plus catch-up contributions if you're 50 or older)—which gives you more room to grow your retirement savings each year.

Here are the most common employer-based retirement savings accounts:

These pre-tax savings options let you contribute to a tax-deferred retirement account for as long as you work for the employer. Many employers will offer a matching contribution, where they'll put in as much money as you do up to certain percentage or amount.

The options that may be available to you largely depend on what kind of employer you have:

• 401(k) accounts: Offered by private employers.
• 403(b) accounts: Offered by churches, schools, hospitals and other tax-exempt organizations.
• 457(b) accounts: Offered by state or local governments and certain nonprofits.

If you leave the company, your contributions are yours to take with you. Employer contributions are yours too as long as you're vested, which means you've met your employer's ownership requirements, such as having a number of years of service. You usually can preserve the tax advantages by rolling over the account balance to another type of retirement account.

Roth versions of employer-sponsored retirement accounts work much like their traditional counterparts in terms of contribution limits and employer matching. However, Roth 401(k)s, Roth 403(b)s, and Roth 457(b)s are funded with after-tax dollars, meaning you pay taxes on your contributions upfront so you can have tax-free withdrawals in retirement.

If you work for the federal government or served in the armed forces, you can save for retirement with a Thrift Savings Plan. Similar to other workplace retirement accounts, they can be traditional (pre-tax) or Roth (after-tax), and you usually can contribute money with payroll deductions. TSPs have six individual fund options for participants to choose from, ranging from low-risk government securities to higher-risk investments that try to match the benchmarks of various stock indexes.

Working for yourself or freelancing can mean more freedom and control in your job, but it also means you're responsible for your own workplace retirement savings. Fortunately, you can set up certain self-employed retirement plans when you're a solo worker or if you run a small business.

Explore the five self-employed retirement plans

While less common today, some employers still offer pensions—retirement plans that provide income after you stop working.

Most pensions are defined benefit plans, where your employer promises a set amount in retirement, based on your salary and years of service. In these plans, your employer handles the contributions and investments, and you typically receive monthly payments for life once you retire.

Some employers may offer defined contribution pensions, which work more like a 401(k). You (and your employer) contribute to an individual account, and your retirement income depends on how much you save and how your investments perform.

If you’re offered a pension, it can be a valuable part of your retirement income mix, especially if it includes guaranteed monthly payout options in retirement.

It may be the case that you don't have an employer-sponsored plan, that you've maxed out other retirement savings accounts or that you just want to invest for retirement in different ways. Great news: The possibilities for retirement investing are practically endless.

An IRA is a helpful option for saving beyond your workplace retirement plan. These accounts often offer a broader range of investments than employer-sponsored plans, which can be appealing for more hands-on investors. The tradeoff is lower contribution limits—$7,000 in 2025, or $8,000 if you’re age 50 or older. There are two main types of IRAs to consider: traditional and Roth, each with different tax advantages.

Traditional IRAs are pre-tax retirement accounts. Like a traditional workplace plan, your contributions reduce your taxable income, and your earnings can grow tax-deferred until you make a qualified withdrawal. Anyone with earned income can open a traditional IRA at any financial institution that offers them.

Roth IRAs are retirement accounts funded with after-tax dollars. Just like Roth employer-sponsored retirement plans, your earnings have the potential to be tax-free if you follow the requirements for ownership and qualified withdrawals.^*

Unlike traditional IRAs, Roth IRAs have an income threshold you have to be under to contribute. The IRS rules are nuanced, but the main factors are that your contributions are limited based on your modified adjusted gross income (MAGI):

• If your MAGI as a single taxpayer is between $150,000 and $165,000 in 2025, you may be able to contribute a reduced amount to a Roth IRA. But if you make more than $165,000, you can't contribute at all.
• For joint filers, the MAGI range for reduced contributions is $236,000 to $246,000 in 2025. Couples who bring in more than $246,000 can't contribute at all.
• If you're married but filing separately, your MAGI can't be more than $10,000 or you can't contribute at all.

Make too much to open a Roth IRA? See your alternatives (including using a backdoor Roth IRA)

A health savings account is a tax-advantaged way to set aside money for qualified medical expenses both today and in the future. But HSAs can help you out in retirement beyond being used for health care costs. Once you turn 65, you can use your HSA to pay for anything without incurring a penalty. You'll still have to pay taxes if the spending isn't related to health care, but this rule means HSAs can essentially function like a tax-deferred retirement account after you turn 65.

An annuity is a financial contract you make with an insurance company that can be both a savings vehicle and a source of ongoing retirement income. Similar to pre-tax retirement accounts, your annuity contributions and earnings are tax-deferred until you start making withdrawals. During your retired years, an annuity can set you up with a predictable income stream with monthly distributions that may last for a specific period of time or for as long as you live.

Explore the different types of annuities

You can invest for retirement in several ways beyond retirement accounts. While you won't get any savings incentives with everyday investments, having taxable accounts brings other benefits. You will, for example, be able to access your long-term investment and cash it out at any time before retirement age without facing early withdrawal penalties. The passive income generated by certain investments can give you a stream of money that flows outside your everyday income and spending. Spreading your savings across different types of investments also brings tax diversification to your retirement strategy.

Here are some of the top investments to consider when investing for retirement:

• Mutual funds offer a simple way to diversify your retirement portfolio without selecting individual stocks or bonds. You can save specifically for retirement through a target date fund, which has an evolving investment mix with risk levels and allocations that coordinate with the time horizon of your selected retirement year. It's a hands-off way to make sure your investment gradually and automatically becomes more conservative as you get closer to retirement.

• Exchange-traded funds (ETFs) are somewhat similar to mutual funds in that they let investors buy an interest in a diversified securities portfolio. But ETFs trade like stocks on an exchange and can be bought and sold throughout the day. ETFs often have lower fees than mutual funds, which can help you keep more of your retirement savings for future growth.

• Stocks can be a great way to build long-term wealth for retirement if you're more hands-on with your investments and are prepared to research and watch them for performance. They can be more volatile than mutual funds or ETFs, but the stock market's annual average returns have a history of positive long-term performance.

• Bonds provide a way for investors to lend money to a government or corporation, which then pays the loan back with interest over time. For retirement savers, bonds are usually considered stable, conservative investments and can be a reliable source of income.

• Real estate investing can take many forms, such as buying a property and collecting rent or investing in a real estate investment trust that pays dividends. One key advantage of investing in real estate is that it's a physical asset that can appreciate in value over time in addition to being an ongoing source of income in retirement.

Throughout your working life, you can make some simple moves to build your retirement savings. These retirement savings best practices can help you make the most of what you have.

• Create and stick to a budget. When you know what money you have coming in and going out, you can spot where you can cut unnecessary expenses now to save more for the future. Get in the habit of putting away something for savings each month, and consider having it come directly out of your paycheck before you spend it. The earlier and longer you save, the more likely you are to reach your retirement goals.

• Start small and build over time. When you're starting from scratch and see questions like whether $2 million is enough to retire, it can feel like you'll never get there. But you can get going with even a fraction of a percent of your income. When you make a bit more money, bump up your contribution. Chip in what you can whenever you can. Just get the retirement savings snowball rolling so it can build by bits along the way.

• Automate your contributions. Once you've budgeted and set a starting amount that works for you, let technology help you keep your contributions flowing steadily. Most workplace retirement plans and HSAs work by deducting a dollar amount or percentage directly from your paycheck. For other retirement investments like an IRA or brokerage account, you usually can work with your bank or credit union to schedule ongoing automatic transfers. If you decide you want to change or increase the amount, it's often just a simple login and update.

• Diversify your portfolio. Diversification means spreading your money across different kinds of assets and investments. The idea is that if one area underperforms or even loses money, you'll have something somewhere else that's on a different track. For example, if you have a retirement savings mix that includes a target-date fund, growth stocks, bonds and ETFs, but your growth stocks suddenly tank, you'll have three other separate investments that can potentially provide a counterbalance while market volatility settles.

Social Security alone might not support your retirement plans. The average Social Security benefit is about $1,976 a month. That certainly helps build a foundation, but depending on your goals, you'll likely want to plan on supplementing it with your own savings.

Anyone who has earned income pays Social Security taxes and may become eligible to take Social Security retirement benefits. You're given Social Security credits based on your annual earnings. In 2025, it's one credit for every $1,810 of earned income up to a maximum of four credits once you've earned $7,240. To be eligible for retirement benefits, you need to accumulate 40 credits, meaning you must work a minimum of 10 years to have enough credits to claim benefits.

While every retirement saver has different circumstances, there are some common retirement risks that retirees face, such as higher taxes, increased inflation and market volatility.

Let's go through the most common threats to your retirement savings and how you can prepare for them.

It's not a given that you'll have decreased taxes in retirement. You may be bringing in less money, but you also may have fewer deductions, such as no mortgage interest or dependent children. Consider also that different retirement accounts have different tax implications, with some having deferred taxes that will be due and others potentially having no tax owed at all. One strategy to find a balance with tax efficiency is to diversify your savings among taxable, tax-deferred and tax-free income so you can save on taxes in your working years as well as manage your tax liability in retirement.

A weak economy can depress stock prices and lead to layoffs or wage freezes for employees. But you can help protect your retirement savings during downturns by being prepared. Investment diversification lets you spread your assets—and balance your market risk—across different types of accounts. When the market dips, it can be tempting to take your money out or change course based on trends. But it tends to be a better practice to keep emotions out of investing and not try to time the market. Stick with the long-term strategy you have in place, and keep up with steady contributions to your 401(k) or IRA.

Inflation is the gradual increase in the price of goods and services over time. It can reduce the value of your retirement savings when the money you've been diligently saving doesn't stretch as far as you planned. You can't predict or prevent inflation, but you can offset inflation's impact on your retirement savings. Regularly check in on your budget so you know how increased costs are affecting your finances. Add an extra percentage or two when you estimate how much you'll need in retirement. And seek out investments that are likely to outpace the inflation rate.

It's important to factor in the cost of medical care throughout your retirement years. Even though you're eligible for Medicare starting at age 65, it may not cover all your health care costs. You may need to be prepared for supplemental insurance premiums, deductibles and co-pays. Many people also underestimate how much more health care you may need as you age and the potential costs if an unexpected medical event happens. To safeguard your retirement savings, keep up an emergency fund and think about how you might leverage investment options in your HSA.

The chance of outliving your savings is a fundamental risk in retirement. In addition to saving for your long-awaited goals in retirement—like finally giving in to an expensive hobby or building your dream home—you also need to think practically about the potential number of years you'll need to support yourself. If you retire in your 60s and stay in good health, your money may need to last three or four decades. Be sure to account for longevity risk in case you live longer than you expect.