By age 30, you should be able to save nearly a year’s worth of your retirement salary. Fidelity Investments recommends. But even if you’re not there, you’re not alone.
As of the first quarter of 2023, the median 401(k) balance for Americans ages 30 to 39 is $17,400, according to Fidelity Investments data provided to CNBC Make It. The average is a little higher at $46,000, but the median is generally a better measure, as a few accounts with large balances can be skewed upwards.
If your retirement savings fall below either of these amounts, the first thing to remember is that you’re not a failure, says certified financial planner and CEO of Blue Ocean Global Wealth. One Margherita Chen told CNBC Make It.
“It may not be healthy to stick to one number,” she says. “There is no context and no consideration for progress along the way.”
Instead, keep this important number in mind. retirement savings rate. This is the percentage of your income that you contribute to your 401(k).
Fidelity is about 15% of income By retirement date with available employer matching. If you think you need a lot of money to stash at the moment, you can start small and increase your donation over time.
In practice, Mr. Chen said, you might increase your contribution by 1% each year until you reach your maximum contribution. If you’re not interested in percentages, you can target a certain amount of money from each paycheck.
As a young worker, Chen says time is your friend when it comes to retirement savings. By starting to donate as early as possible, you can give your money more time to grow thanks to the power of compound interest.
“The key here is progress, not perfection,” she says. By continuously investing a certain percentage of your income, you can build sustainable wealth over the long term, she added.
If you’re in your 30s, your income is likely to increase as you age, and you’re likely to contribute more to your retirement savings over the long term. But it’s also okay to take care of yourself, Chen says.
Ultimately balance is key when it comes to retirement savings.
“Enjoy today, but save enough money for future fun,” she says.
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