Retirement 101

How much money should I put in my defined contribution plan?

How much money you think you’ll spend when you retire, how early you start saving, investment returns, and whether you’ll have other sources of retirement income are just some of the things that can make a big difference in how much you must save for retirement.

  • If you’re in your early 20s, a good rule of thumb is to save 10% to 15% of your income.
  • If you’ve delayed saving for retirement, you’ll probably have to save more. This chart estimates how much you’ll have to save each year to replace different percentages of your income after age 65. The numbers assume a generous 5% pay increase and a return on your savings of 7% each year. Recently, inflation has ranged from 2-4%. 

    ​Age When You
    Start Saving
    ​Percentage of Pay You Need to Save
    for a Percentage of Your Current Income in Retirement

    ​70%80%​90%​100%
    ​259.4%10.7%​12.1%​13.4%
    ​35​13.3%15.2%​17.1%​19.0%
    ​45​20.4%​23.3%​26.2%​29.1%
    ​55​39.6%​45.3%​50.9%​56.6%
  • If you think there will be years when you won’t be paid because you’re raising children or caring for a parent, you may want to save an extra 5% or 10% of your income each year you work.
  • If you’re a woman, you may want to save a little bit more. Women tend to live longer than men; this means your money may have to last longer in retirement.