*It may be possible to achieve your retirement goals with a lower savings rate than 15% if you get an early start saving or if you have relatively low income. Note also that people in some circ*mstances may not be able to meet their savings goals solely through tax-advantaged plans. With these and other factors considered, we believe 15% or more is an appropriate target for most people considering the wide range of potential financial changes over your lifetime.
Assumptions: Savings needed considers benchmarks that are based on a target multiple at retirement age and a savings trajectory over time to achieve that target. Household income grows at 5% until age 45 and 3% (the assumed inflation rate) thereafter. Investment returns before retirement are 7% before taxes, and savings grow tax-deferred. The person retires at age 65 and begins withdrawing 4% of assets (a rate intended to support steady inflation-adjusted spending over a 30-year retirement). Retirement targets reflect estimated spending needs in retirement (including a 5% reduction from preretirement levels); Social Security benefits (using the ssa.gov Quick Calculator, assuming claiming at full retirement ages, and the Social Security Administration’s assumed earnings history pattern); state taxes (4% of income, excluding Social Security benefits); and federal taxes as of January 1, 2024.
Important Information
All investments are subject to market risk, including the possible loss of principal.
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.
This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types; advice of any kind; or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circ*mstances before making an investment decision. Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.
The views contained herein are those of the author as of February 2024 and are subject to change without notice; these views may differ from those of other T.RowePrice associates.
All charts and tables are shown for illustrative purposes only.
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