Angela Mae
4 min read
Being able to retire when you want and with enough money is key to a comfortable, happy retirement. The average retirement age in the U.S. is 62 years old, according to a MassMutual survey. But no matter when you want to retire or where you’re at right now in your career, there are certain things you can do to ensure success.
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Powered by Money.com - Yahoo may earn commission from the links above.Not sure where to start? Fidelity Investments advises people to keep these three “A” words in mind: amount, account and asset mix. Here’s why these things matter in crafting a winning retirement savings plan.
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The most important “A” word is “amount.” Why? Because it’s hard to retire comfortably if you don’t have enough savings in the first place.
As a general rule, Fidelity advises people to start saving as soon as they can for as long as they can. Every year, you should ideally set aside 15% of your gross (or pre-tax) income for retirement. This 15% doesn’t have to only come from your base salary. It can also come from employer-matching or profit-sharing contributions, which you might get from a 401(k), 403(b), 457(b) or similar plan.
Say you can contribute 6% of your gross salary to your retirement account each year, but your employer matches those contributions. This means you’ve already got 12% covered. All you’ll need then is to save an additional 3% to get the full 15% savings rate.
As an example:
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You earn $70,000 a year and contribute 6% ($4,200) to your 401(k) plan.
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Your employer offers 100% matching contributions for an additional $4,200.
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You need to save another $2,100 throughout the year to hit the 15% savings benchmark.
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Where you keep your money is important, too. Someone who puts their entire retirement savings in a basic savings account with a 0.42% APY — the average rate right now — isn’t going to earn nearly as much on that money as someone who puts their funds in a tax-advantaged retirement plan.
The retirement account you choose can also impact how that money is taxed.
For example, your contributions to a traditional IRA or 401(k) are pre-tax. This means you’ll pay less in income tax for the year, but your withdrawals are taxable. Roth 401(k) or Roth IRA contributions are made using after-tax dollars. This means no upfront tax break, but your withdrawals are generally tax-free.
Retirement accounts do come with limitations. In 2025, the maximum contribution limits are:
