Episode 370 – It’s an age-old question that seems like everybody asks: am I saving enough for retirement? It’s never going to yield an easy answer. There are so many variables: age, future savings rates, rate of return, lifestyle, etc. Where do you even begin? Fortunately, there are benchmarks available at every age that can give you a sense of whether you’re on track.

Hello, this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode: are my retirement savings on track?

It’s an age-old question. Am I saving enough for retirement? There’s never going to be an easy answer, especially if you’re young. There are so many variables: age, future savings rates, rate of return, lifestyle, taxes, etc. Where do you even begin?

There are plenty of opinions to be found. Global asset management giant T. Rowe Price has done some notable research on this topic. They’ve published a series of benchmarks at every age that can give you a sense of where you stand as of today.

The benchmarks are based on current income. For example, if you’re 30 years old, they suggest that your total savings should be one half of your annual income or more. They suggest 100 percent of your income if you’re age 35, twice your income at age 40, three times at age 45, and five times at age 50. The multiplier goes to seven times at age 55, nine times at age 60, and eleven times at age 65.[1] Note that these figures include contributions, both by you and your employer, to a workplace retirement plan such as a 401(k).

As you can probably tell, these are just ballpark estimates. To come up with these estimates, they assume that your household income goes up by five percent per year until age 45, and three percent thereafter. They assume an inflation rate of three percent. They also assume a seven percent return before taxes, and that everyone retires at age 65. Upon retirement, the assumed withdrawal rate is four percent.

As with anything else, the individual situation you’re in will vary over time, so it’s safe to say that these benchmarks have their limitations. Also, they assume you’re relying only on personal savings and Social Security for retirement income. If you have other sources, such as a pension, your personal benchmark might be lower.

Also, remember that Social Security benefits—assuming they’ll still be there for younger Americans—are progressive in nature. That is, for Americans with higher earnings, Social Security benefits will represent a smaller percentage of their retirement income. So, in most cases, people with higher earnings will have to rely more heavily on personal savings to meet their retirement needs.

How can you meet these suggested goals? T. Rowe Price says that, as a general rule, most people should probably save at least 15 percent of their income if they wish to keep up with the benchmarks, more than that if you’ve already fallen behind.[2]

So, what do you do if you’re below the benchmark? With discipline, some people can start increasing their savings rate right away, and that would be the ideal solution. But it’s very difficult for most people. You might be able to make your increased savings rate automatic, simply by having your employer increase the contribution rate that is withheld from your paycheck. In other words, pay yourself first! Either way, if your employer has a 401(k) with an employer match, make sure you at least take full advantage of it if you’re not already doing so.

If you’re getting on in years and you don’t have enough in savings, one alternative might be to slowly transition into retirement with part-time employment. It’s not ideal. After all, you’ll be fully retiring later than you would prefer, but it could make a significant difference, including the possibility of health insurance benefits which can be costly in retirement.

One final question. Is it possible to save too much for retirement? We talked about this back in episode 296. The answer is yes. As important as it is to save as much money as you can as early as possible, you have to balance that against your current lifestyle. If you’re younger, you could easily overextend yourself if you fully fund your 401(k). This could result in maxing out your credit cards to meet your monthly expenses.[3] That could end up costing you more than the savings are worth.

It’s also important to understand the role of taxes. Just remember that withdrawals from a traditional IRA or 401(k) are 100 percent taxable. Once you get into your seventies, you may be subject to Required Minimum Distributions or RMDs. This means that you have to withdraw money from your IRA or 401(k) and pay tax on it, whether you need the money for your expenses or not.

Also, many experts believe that future tax brackets will eventually be higher than they are today. If that does in fact happen, it could minimize the advantages of a 401(k) or IRA, because you were in a lower bracket when you took the deduction than you were when you had to pay the tax. This would minimize whatever advantage you might have had.

[1]T. Rowe Price Insights on Retirement. “Are My Retirement Savings on Track?” Troweprice.com. https://www.troweprice.com/content/dam/workplace/SVRI_Retirement%20Perspective%20Savings%20Benchmark.pdf (accessed January 23, 2026).

[2] Id.

[3] Schrager, Allison. “Yes, Clients Can Save Too Much For Retirement.” fa-mag.com. https://www.fa-mag.com/news/yes–you-can-save-too-much-for-retirement-78828.html?section=68 (accessed August 6, 2024).

This podcast is brought to you by Security Mutual Life Insurance Company of New York, The Company That Cares®. The content provided is intended for educational and informational purposes only. Information is provided in good faith. However, the Company makes no representation or warranty of any kind regarding the accuracy, reliability, or completeness of the information.

The information presented is designed to provide general information regarding the subject matter covered. It is not to serve as legal, tax or other financial advice related to individual situations, because each individual’s legal, tax and financial situation is different. Specific advice needs to be tailored to your situation. Therefore, please consult with your own attorney, tax professional and/or other advisors regarding your specific situation.

To help reach your goals, you need a skilled professional by your side. Contact your local Security Mutual life insurance advisor today. As part of the planning process, he or she will coordinate with your other advisors as needed to help you achieve your financial goals and objectives. For more information, visit us at SMLNY.com/SMLPodcast. If you’ve enjoyed this podcast, tell your friends about it. And be sure to give us a five-star review. And check us out on LinkedIn, YouTube and Twitter. Thanks for listening, and we’ll talk to you next time.

Tax laws are complex and subject to change. The information presented is based on current interpretation of the laws. Neither Security Mutual nor its agents are permitted to provide tax or legal advice.

The applicability of any strategy discussed is dependent upon the particular facts and circumstances. Results may vary, and products and services discussed may not be appropriate for all situations. Each person’s needs, objectives and financial circumstances are different, and must be reviewed and analyzed independently. We encourage individuals to seek personalized advice from a qualified Security Mutual life insurance advisor regarding their personal needs, objectives, and financial circumstances. Insurance products are issued by Security Mutual Life Insurance Company of New York, Binghamton, New York. Product availability and features may vary by state.​