Retirement is the most expensive purchase most people ever make — often 25 to 30 years of living expenses with no paycheck. The good news: you don't need to solve it all today. You need to know roughly where you stand, pick the right accounts, and let time do the heavy lifting.
Am I on track? Common savings benchmarks
One widely used rule of thumb (popularized by Fidelity) frames retirement savings as multiples of your salary. It's not a law of nature — just a way to gut-check your progress:
| By age | Aim to have saved | Example at $60,000 salary |
|---|---|---|
| 30 | About 1× your annual salary | $60,000 |
| 40 | About 3× your salary | $180,000 |
| 50 | About 6× your salary | $360,000 |
| 60 | About 8× your salary | $480,000 |
| 67 | About 10× your salary | $600,000 |
Most people are — and it's fixable. These benchmarks assume a steady savings rate starting in your 20s, which isn't how most real lives work. What matters is your savings rate from here forward. Many planners suggest working toward saving around 15% of income for retirement (including any employer match), and workers age 50+ can make extra "catch-up" contributions the IRS allows specifically for this situation.
401(k) vs. IRA: what's the difference?
Both are tax-advantaged containers for retirement money — the difference is who offers them and how much control you have.
| 401(k) / 403(b) | IRA | |
|---|---|---|
| Offered by | Your employer | You open it yourself at any brokerage |
| Contribution limits | Higher (set annually by the IRS) | Lower (set annually by the IRS) |
| Employer match | Often yes — this is free money | No |
| Investment choices | Limited to the plan's menu | Nearly unlimited |
| Roth option | Many plans offer a Roth 401(k) | Roth IRA (income limits apply) |
A common, sensible order of operations: contribute enough to your 401(k) to get the full employer match first (a 50–100% instant return you can't get anywhere else), then consider an IRA for its flexibility and investment choice, then return to the 401(k) if you can save more. Contribution limits change most years, so check irs.gov for the current numbers rather than relying on any article's figures.
Traditional vs. Roth, in one sentence each
- Traditional: tax break now, pay income tax when you withdraw in retirement — often favorable if you expect a lower tax bracket later.
- Roth: no tax break now, but qualified withdrawals in retirement are tax-free — often favorable if you're early in your career or expect higher taxes later.
Why Social Security claiming age matters so much
You can claim Social Security retirement benefits as early as 62 or as late as 70 — and the difference is permanent.
- Claiming before your full retirement age (66–67 for most people today) permanently reduces your monthly benefit — claiming at 62 can mean roughly 25–30% less per month than waiting until full retirement age.
- Waiting past full retirement age earns delayed retirement credits of about 8% per year until age 70.
- Add it up, and the monthly check at 70 can be roughly 75% larger than the check at 62 — for the rest of your life, with cost-of-living adjustments applied to the bigger number.
That doesn't automatically mean waiting is right for you. Health, family longevity, whether you're still working, spousal benefits, and what you'd draw from savings in the meantime all factor in. The point is that this is a decision, not a default — and it deserves real analysis before you file. You can see your own projected benefits at ssa.gov.
Know your benchmark, capture every dollar of employer match, choose traditional vs. Roth based on your tax picture, and treat the Social Security claiming decision as one of the biggest financial choices of your 60s — because it is.