If you are a younger servicemen/women your military retirement plan just underwent a huge change. With the change to a blended retirement system more and more military members are going to have big retirement decisions to make. What should I have saved for retirement by now? Is it a percentage? A dollar amount? How are guidelines for retirement savings created? It’s important to understand reasonable retirement savings expectations as a way to increase knowledge of your financial health.

It Depends On Your Salary

It’s obvious that someone saving 5% of their $100,000 salary is going to have a very different amount saved than someone saving 5% of their $35,000 salary. This is simple math. However it’s helpful to adjust retirement expectations based on salary because salary also dictates lifestyle habits. If you’re living on 95% of your income at $100k ($95,000) a year, you’ll need more in retirement than the individual who has lived on  95% of their $35k income ($33,250).

The following chart from this Business Insider article provides 401k (which is similar to the military TSP) guidelines dependent upon both age and salary. This is perhaps our favorite of the available resources as it allows for the flexibility of cost of living and is based on a conservative market return of 7% before retirement and 5% after retirement.

A Few Different Ideas

There are a variety of retirement benchmarks that suggest different guidelines for measuring your retirement savings progress.

Here are a few examples:

  • David Weliver from Money Under 30 suggests having one year’s salary saved in retirement by age 30.
  • The New York Times Bucks Blog suggests the following chart by age:
    • 30 – 1/2 Salary
    • 35 – Salary
    • 40 – 2x Salary
    • 45 – 3x Salary
    • 50 – 4x Salary
    • 67 – 8x Salary
  • Financial Samurai suggests the following ranges depending on age and years worked:

401k by age savings potential guide

How Much Are People Actually Saving?

The guidelines provide an ideal, but what’s the reality? There are so many opinions on the subject we think it’s also helpful to see what others are ACTUALLY doing.

The Daily Finance presented findings from a study conducted LearnVest and Chase Blueprint about what people in different age groups are saving for retirement. I’ll list a few of the highlights:

  • Age 25-32: 72% had saved less than $50k and 30% had less than $25k.
  • Age 33-44: 62% had saved between $10k and $250k; 17% between $50-100k; and 15% between $10-25k
  • Age 45-54: 20% had between $100k-250k and 15% had LESS than $25k!

To read all of the results head over to this article from the Daily Finance.

Why Does it Matter?

In many ways it doesn’t matter what the expected retirement savings amount is. There are so many factors in retirement savings that may ruin your plans, a crash could make saving pointless, a huge inheritance could eliminate your need for constant savings or you could choose to move to another country with a minimal cost of living. You have more control over your retirement than you probably realize. 

Retirement savings is a big deal. While you don’t need to fully subscribe to any one of these guidelines, the idea that so many people have tried to answer this question and come up with answers in a similar range should mean something. Take a look through, compare your own savings and goals for retirement income and then determine whether you’re on track. If this feels overwhelming, know that you have the power to change your financial state. It simply means making retirement savings a priority.

What guideline makes sense to you? How are you doing on your retirement goals?