retirement savings

How much are you targeting in retirement savings? There is no lack of suggested targets, as shown below. But what is the right amount of retirement savings for you, taking into account your unique circumstances?

Start by finding your retirement savings target from the recommendations below and then make any necessary adjustments based upon the suggestions that follow. Check out the Guidance section towards the end to make sure you are on track.

Retirement Savings Targets

  • 8 times final pay at age 70 – Fidelity

  • 10 times final pay at age 67 – Fidelity

  • 10 to 12 times current income – AARP

  • 11 times final pay – Money

  • 12 times final pay at age 65 – Fidelity

Suggested Adjustments

Expected lifestyle

If you are looking forward to an active retirement — traveling, completing your bucket list, or in general doing all of the things you have been putting off while you have been busy working — you will need to adjust your savings target higher. For example, that rule of thumb suggesting targeting 70% of pre-tax income should be closer to 90% for you. Or even higher.

Very few of the individuals I talk with who are close to retirement believe they will need less money than they are earning now when they retire. Most are much more comfortable targeting a replacement ratio of 100% of their final annual earnings. Their feeling is that if they fall short, they still will have enough money to do what they want.

Remember, what is the worst outcome you can experience by having too much retirement savings? Right, you will have more money to burn through during your retirement days. On the other hand, what is the worst outcome that can result from not having enough retirement savings? Living with a son or daughter is not appealing to most of us.


This is a big one. Most of us expect to be healthy when we retire, but many of us don’t end up that way. If you or your spouse has a chronic health condition that will need to be managed for the rest of your lives, adjust your retirement savings target higher.

If you are significantly overweight, don’t exercise, smoke or practice unhealthy lifestyle habits, you should adjust your retirement savings target higher. Unfortunately, you are on track to experience any of a number of bad (and costly) health outcomes as you age.


Does long life run in your family? Have your parents and grandparents lived well into their 80s or 90s? If so, it is likely that you can expect a similarly long life. You should adjust your retirement savings goal higher.

Lack of family

You may not have married or had children, or maybe you moved away from your family or lost touch. Your life expectancy also may be significantly longer than your spouse’s. If it is likely that you will spend a lot of time alone in your retirement days, targeting a higher retirement savings balance is probably wise. You will need to hire people to help you as you age.

Potential long-term care

If you can expect to enjoy a long life and especially if you don’t have family members close, your need for long-term care might be higher than average. Even if you don’t need nursing home care, you may incur assisted living or in-home care expenses. If this is a concern, adjust your savings target higher.

Unexpected retirement date

Most of us don’t retire when we expect to. In fact, the majority of us end up retiring sooner than we would prefer, mainly due to circumstances beyond our control.

For example, you may lose your job because your employer moves, runs into financial difficulties or gets bought. While searching for another job you may find that the employment opportunities available to you are a lot less appealing due to your age. And, of course, you or your spouse may experience significant health problems that may make it impossible to continue working.

Very few of the individuals I talk with retire at a time of their choosing. Yes, of course, they choose to retire, but circumstances beyond their control are driving their decisions. Given that it is likely that you will retire sooner than you think, you should probably raise your savings target.


Add 12% to 15% each year

To make sure you get on the right track during your working years, add at least 12% to 15% of your gross earnings to your 401(k) plan account each year. This holds true regardless of which target you choose.

Many experts, including Vanguard, believe this is the minimum you should contribute. It includes amounts received from your employer in the form of matching or profit sharing contributions.

Be sure to max out HSAs first

If you have access to a Health Savings Account (HSA) where you work, you should max out your contributions to that account every year. These are triple tax-free savings accounts that you can carry into retirement.

Prioritize HSA contributions ahead of what you plan to contribute to your 401(k) plan. If you need to contribute less to your 401(k) plan in order to max out your HSA contributions, do it!

Consider working with a fiduciary investment adviser

Studies have shown that working with an investment adviser makes it much more likely that you will achieve your savings and investment goals. If you don’t work with an adviser now, consider doing so. It has been estimated that working with an adviser can add another 4% to 6% in returns each year to your portfolio.

How Are We Doing?

Not so good. Recent studies show that more than half of us haven’t saved anything at all for retirement.

But it’s not too late.

Review your retirement savings plan today and make any necessary adjustments as soon as possible.


About the Author

Robert C. Lawton, AIF, CRPS is the founder and President of Lawton Retirement Plan Consultants, LLC. Mr. Lawton is an award-winning 401(k) investment adviser with over 30 years of experience. He has consulted with many Fortune 500 companies, including: Aon Hewitt, Apple, AT&T, First Interstate Bank, Florida Power & Light, General Dynamics, Houghton Mifflin Harcourt, IBM, John Deere, Mazda Motor Corporation, Northwestern Mutual, Northern Trust Company, Trek Bikes, Tribune Company, Underwriters Labs, and many others. Mr. Lawton may be contacted at (414) 828-4015 or

About Lawton Retirement Plan Consultants, LLC

Lawton Retirement Plan Consultants, LLC (LRPC) is a Milwaukee, Wisconsin-based independent, objective Registered Investment Adviser (RIA) providing investment advisory, fiduciary compliance, employee education, provider management and plan design services to employer retirement plan sponsors. The firm specializes in Socially Responsible Investment (SRI) strategies for retirement plans and is a pioneer in the field. LRPC currently has contracts in place to provide consulting services on nearly $475 million in plan assets. For more information, please contact Robert C. Lawton at (414) 828-4015 or or visit the firm’s website at Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser.

Important Disclosures

This information was developed as a general guide to educate plan sponsors and is not intended as authoritative guidance, tax, legal or investment advice. Each plan has unique requirements and you should consult your attorney or tax adviser for guidance on your specific situation. In no way does Lawton Retirement Plan Consultants, LLC assure that, by using the information provided, a plan sponsor will be in compliance with ERISA regulations. Investors should carefully consider investment objectives, risks, charges, and expenses. The statements in this publication are the opinions and beliefs of the commentator expressed when the commentary was made and are not intended to represent that person’s opinions and beliefs at any other time. The commentary does not necessarily reflect the opinion of Lawton Retirement Plan Consultants, LLC and should not be construed as recommendations or investment advice. Lawton Retirement Plan Consultants, LLC offers no tax, legal or accounting advice, and any advice contained herein is not specific to any individual, entity or retirement plan, but rather general in nature and, therefore, should not be relied upon for specific investment situations. Lawton Retirement Plan Consultants, LLC is a Wisconsin Registered Investment Adviser and accepts clients outside of Wisconsin based upon applicable state registration regulations and the “de minimus” exception.