How much should you save for retirement?

The best time to save for the future is now. Learn how increasing the amount you contribute to your retirement plan over time can help you grow your retirement savings even more.

Article highlights

  • A 10-15% savings goal
  • Benefit or pretax dollars

Aim for at least 10 percent

A good rule of thumb is to save 10 to 15 percent of your pay in your retirement plan. Remember, inflation is going to make your lifestyle more expensive in the future than it is now. And people are living longer, so your retirement may last 20 to 30 years—or more. You’ll want to make sure you have enough savings.


Two percent more can make an impact

Saving 10 to 15 percent may seem like a lot, but you don’t have to get there all at once. Try saving 2 percent more every year. Steady increases can make a significant difference to your account balance over time.

Let’s say you’re saving 6 percent of your pay now, and you bump up your contributions 2 percent every year until you reach 15 percent.

Retirement contribution chart

As you can see, annual boosts add up to almost $500,000 more over 40 years!

* This illustration assumes a $40,000 annual salary and a 6% rate of return compounded monthly in a tax-deferred account. This is a hypothetical example. It is not indicative of any product or performance and does not reflect any expense associated with investing. Taxes will be due upon distribution of the tax-deferred amount and, if shown, results would be lower. Actual investment results will fluctuate with market conditions, so that the amount withdrawn may be worth more or less than the original amount invested. It is possible to lose money investing in securities.

It may cost less than you think

When you save pretax dollars in your retirement plan, you lower your taxable income. That means the amount deducted from your paycheck is less than the amount you contribute to the plan.

For example, if you have a $40,000 salary and are in the 20 percent tax bracket, saving an extra 2 percent means you’d contribute $780 more per year. Your take-home pay would decrease by $624 a year—just $12 a week.

Save more

Now that you know a target percentage, make your move and increase your contributions today. Examine your personal situation and create a plan that’s right for you. If your plan allows automatic increases, boosting your savings rate can be even easier.

Need help? A financial professional can work with you to develop a specific course of action that can help you achieve your goals.

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This material is provided by The Lincoln National Life Insurance Company, Fort Wayne, IN, and, in New York, Lincoln Life & Annuity Company of New York, Syracuse, NY and their applicable affiliates (collectively referred to as “Lincoln”). This material is intended for general use with the public. Lincoln does not provide investment advice, and this material is not intended to provide investment advice. Lincoln has financial interests that are served by the sale of Lincoln programs, products and services.