Are you ahead or behind others when it comes to saving for retirement?
Most experts recommend taking back 70% to 90% of your pre-retirement income when you leave your job. This money should come from Social Security and savings, and from your employer pension if you have one.
You’ll probably want to maintain a similar lifestyle in retirement, so your income will affect how much you need to save. After all, if you were making a six-figure income and suddenly had to live on $20,000, it would be a drastic change.
Your income can also affect how much you can save. If you’re making a lot of money, you’ll probably have more disposable income to invest in your future.
Your income plays a huge role in your retirement planning, so it helps to see where you stand. your Your retirement nest egg is on par with other people making the same salary as you. The data required for this is:
How do your retirement savings compare to others with similar incomes?
According to Vanguard’s 2025 How America Saves report, the average and median account balances by income are:
Data source: Vanguard.
It is clear that both the average balance and the median increase as income increases. Of course, the average balance will be higher than the median because some people who invest very heavily in their retirement plans will push up the average balance.
Still, the highest earners save more than 50 times more for retirement than the lowest earners.
It’s clear that these highly paid people will need more money in their 401(k) accounts to maintain their lifestyles. However, balances for people at the bottom of the income scale are so low that they cannot replace the recommended income percentage.
For example, if you only had $10,928 in savings and followed the 4% rule, your investments would only generate about $437.12 in annual retirement income. That’s well below the $30,000 to $49,999 people with this level of median savings currently earn.
Now, this data covers all ages, so the numbers may be skewed downwards for people who take longer to retire. But the truth is, if you have many years until retirement, you need to save a larger nest egg because you need to account for the effects of inflation, which reduces the purchasing power of your future savings.
Are you on track for a secure retirement?
It’s interesting to see how you compare to your peers and can give you insight into how people with similar incomes are managing (or not managing) their retirement investments.
But most importantly, make sure you personally have enough money in your 401(k) or IRA to live the life you want after you quit your job. You can do it in the following way.
- Determine the total amount you need to save. A good rule of thumb is to estimate that you will need 10 times your pre-retirement income.
- Using an online calculator Investor.gov does the same thing as seeing how much you should save each month to get the nest egg you decide you need.
- A budget based on how much money you have to saveReduce your amount to ensure you can invest the amount you want (or, if you can’t invest the amount you need at the moment, at least take steps to work up to it).
- Automate 401(k) contributions or other retirement plans to ensure you save the amount you need.
It’s important to remember that Social Security alone won’t support you. So whether you’re above or below those in your income bracket, this kind of planning for a secure future is worth the effort.
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