How Much Should You Really Have Saved for Retirement by Age 60?

Key Points

• The ideal retirement savings at age 60 depends on who you ask.

• Fidelity says that you should aim to have eight times your salary saved by 60.

• Factors such as your planned retirement age and spending habits also play a role.

• The $23,760 Social Security bonus most retirees completely overlook ›

There's no one-size-fits-all way to determine how much you need to save for retirement. In addition to your current age, there are several variables that can change things, including your income level, saving and spending habits, and your planned age of retirement.

For example, someone who plans to retire at 62 can assess their situation at age 60 in a completely different way than someone who aims to work until 70 and still has a decade left to save and invest.

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Having said that, there are some good general guidelines, and they can vary slightly depending on who you ask. For example, Fidelity says that you should have eight times your salary saved for retirement by the time you turn 60. Mutual fund leader T. Rowe Price gives a range of six to 11 times your salary. And if you hire a financial planner, he or she may have their own preferred rule of thumb.

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How much should you have saved by 60?

For simplicity, let's use Fidelity's guideline of eight times your salary, which assumes a planned retirement age of 67, which is the full retirement age for Social Security, and that you plan to maintain approximately the same lifestyle after you retire.

So, to get an idea of your retirement savings target by age 60, simply multiply how much money you make by eight. For example, if you make $100,000 per year, you're likely on track for a comfortable retirement if you have $800,000 in retirement savings.

Two things to think about

Again, this is just a rule of thumb, and you can adjust your retirement savings milestones up or down, depending on several factors. I mentioned these briefly in the introduction, but here's a little more color on two big factors to help you plan:

When do you plan to retire?

In a nutshell, the sooner you plan to retire, the more you should have saved by 60. Fidelity suggests that the average 67-year-old retiree should aim to have 10 times their income saved by the time they retire. But the financial services company says that the average 65-year-old retiree should plan on 12 times their salary at retirement.

Do you expect lifestyle changes?

Fidelity's guideline assumes that you plan to maintain roughly the same cost of living as before you retire, but if that's not the case, it definitely plays a part in your retirement savings needs. If you plan to pursue an expensive hobby or travel the world, aim to have more saved than the rule of thumb suggests. On the other hand, if you plan to live a more frugal life as a retiree, you'd probably be on track with significantly less savings.

What works for you?

Of course, there are other factors to consider. And keep in mind that just because you plan to work until a certain age doesn't mean that you'll be physically able to. In fact, depending on the study, between one-third and one-half of Americans who retire early do so for health reasons.

Having said that, the general guideline of eight times your salary in retirement savings by 60 is a solid benchmark to aim for. If you can achieve this, you'll be far better prepared for retirement than the average American, and for most people, this combined with Social Security is sufficient to maintain the same lifestyle after you retire.

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Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends T. Rowe Price Group. The Motley Fool has a disclosure policy.