How Much Should I Have Saved for Retirement by Age 40?
Learn the common benchmark of 3x your salary by 40, why it may not apply to you, and a simpler way to know if you are genuinely on track.
The Common Benchmark (3x Your Salary)
Fidelity Investments, one of the largest retirement account managers in the United States, publishes age-based savings benchmarks that have become widely referenced in personal finance. According to their guidelines, you should have approximately 3 times your current annual salary saved for retirement by age 40. By 50, the target is 6 times. By 60, it is 8 times. By 67, the full retirement target is 10 times your final salary.
These benchmarks assume you will need roughly 80% of your pre-retirement income in retirement, will retire around age 67, and will invest in a balanced portfolio with returns that average around 5.5% annually after fees. They also assume Social Security will provide some income in retirement.
On a $70,000 salary at age 40, the 3x benchmark translates to $210,000 in retirement savings. Many people look at this number and feel significant anxiety. Understanding where it comes from and what it actually means is more useful than feeling stressed about whether you hit it.
Why That Number Is Not Right for Everyone
The 3x benchmark assumes a specific set of circumstances that do not apply to everyone. It assumes steady employment and savings from an early age. It assumes a particular lifestyle cost in retirement. It assumes a specific retirement age. Someone who plans to work until 70, has a defined-benefit pension, or expects significantly lower expenses in retirement needs far less than the benchmark suggests.
Conversely, someone planning to retire at 55, with high expected healthcare costs, no pension, and a lifestyle requiring significant income may need more than 10 times their salary saved by traditional retirement age. The benchmark is a starting point for a conversation, not a universal truth.
Location also matters enormously. Retiring in a low-cost area with paid-off housing requires far less savings than retiring in a high-cost city or continuing to rent. Someone retiring to rural Portugal with $800,000 saved may have a more financially secure retirement than someone staying in San Francisco with $1.5 million.
What Matters More Than the Benchmark
The most important factor is your savings rate, not your current balance. Research consistently shows that the percentage of income you save each year is the primary driver of retirement outcomes, particularly in the early and middle stages of your career when the balance is small and compounding has not yet had decades to work.
A person who starts saving 15% of income at 25 will almost certainly reach retirement security regardless of whether they hit the 3x benchmark at 40. A person who has $300,000 saved at 40 but stops contributing and cashes out their account in a crisis may arrive at retirement age with far less than someone who had less at 40 but saved consistently.
Direction matters too. Are you currently contributing to a retirement account? Is your balance growing each year? Do you have a plan for healthcare costs before Medicare eligibility at 65? Are you on a path toward a paid-off home or a sustainable housing cost in retirement? These questions reveal more about your retirement trajectory than a single snapshot balance.
A Simpler Way to Know If You Are on Track
A more personally relevant way to assess retirement readiness is to calculate your own retirement number using the 4% rule. Estimate your annual expenses in retirement. Multiply by 25. The result is roughly how much you need saved to sustain that spending rate indefinitely.
If you expect to spend $50,000 per year in retirement, your target is $1.25 million. If Social Security will cover $20,000 of that, you need your savings to generate $30,000 per year, which requires $750,000. Knowing your personal target makes the question more answerable than comparing yourself to a population-level benchmark.
At 40, use a compound interest calculator to project your current savings forward to your planned retirement age at a realistic return assumption (5% to 7% after inflation and fees). Add projected future contributions. Compare the result to your personal retirement target. This projection is far more informative than any generalized benchmark.