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Here are some simple metrics so you know how much to save and if you are saving enough for retirement.


1. Save 15-19% of your income every year of your career.

In order to replace your pre-retirement income in retirement, it is estimated that you need to save between 15% and 19% of your earnings every year.  This includes employer match and employer discretionary contributions.  If you don’t have an employer 401(k) plan, you will need to open an IRA account to facilitate the pre-tax or Roth savings options.


2. Amount needed in your retirement account at retirement – The 80% Rule.

Basically, this states that you need 80% of your final pre-retirement salary to replace your pre-retirement income.  Let’s use some round numbers – if you earn $100,000 per year, you will need replacement (retirement) income of $80,000 per year.  This can be adjusted based on other sources of income such as social security, pensions, and part-time employment.

Now you ask – how much do I need to have in my retirement account to meet the 80% rule?  We have the 4% rule.  Basically, to generate the $80,000 mentioned, you would need a nest egg at retirement of about $2million, assuming a 5% return on investments.  You take the annual retirement income and divide it by 4%.  In this example, $80,000/4% = $2,000,000.


3. How to gauge where you are in your savings journey based on your age – Multiples of Salary based on age method.

This helps to determine if you are on track in your savings:

  • Age 35 – you should have saved 2 times your annual salary
  • Age 40 – you should have saved 3 times your annual salary
  • Age 45 – you should have saved 4 times your annual salary
  • Age 50 – you should have saved 5 times your annual salary
  • Age 55 – you should have saved 6 times your annual salary
  • Age 60 – you should have saved 7 times your annual salary
  • Age 65 – you should have saved 8 times your annual salary


About Kline, Keppel & Koryak

Located in Northeast Ohio, Kline, Keppel & Koryak is an independent Third Party Administrator supporting a wide variety of employers throughout the country, many in Western Pennsylvania and Northeast Ohio. We specialize in the Plan Design, Administration, Compliance Testing, and Reconciliation for all types of Defined Contribution Plans including: 401(k) Plans, Safe Harbor Plans, Cross-Tested or New Comparability Plans, Profit Sharing Plans, ESOP Plans, and Money Purchase Plans.  We work with any investment platform that offers recordkeeping services in conjunction with an independent TPA.  In addition, we provide recordkeeping services for plans not wanting to utilize a Daily Recordkeeping Platform.  Our personalized service keeps you, the client, in mind in  supporting you with all of your Retirement Plan needs. Contact us today!