To have a 40-year working career (age 25 to age 65), you need to save and invest 15% of your standard of living each of those 40 years regardless of how much you earn in order to stay on track for retirement. If you are starting late on your savings though, then you have to save and invest more in order to retire at the same age.

Many of my friends talk about being “old and broke” because they have not really started their retirement savings. The temptation is simply to joke about working forever and not do anything differently. However, with a few small changes, you could get back on track.

If you have little to no savings, then you have two options to plan for retirement: you can either decrease your lifestyle to increase your savings or push back your retirement. Here is how that works out for various ages:

Age 30

If you start saving at age 30, you are only 5 years late compared to the financial planning assumed working career.

The easiest option for a 30-year-old is to simply start saving 15%. If you start saving 15% of your take home pay at age 30, then you are on track to retire at age 69. This might only be 4 years later than your ideal retirement age of 65.

Plus, if you still want to retire at age 65, the math is easy. You’ll just have to increase your savings to 18.5% of your take home pay starting at age 30.

If both of those savings targets are too high, shoot for a lower goal. An age 75 retirement, for example, is still a few years before the average life expectancy. To retire at age 75, strive to save 9.3% of your take home pay starting at age 30.

Age 40

They say that in the family financial life cycle, you have two chances to save: before children or after children. During the child rearing years, many families are just trying to tread water and stay out of debt.

Those who are just getting started saving for retirement in their 40s are often those who are just starting to see dry land after a decade lost to the unexpected financial needs that infants, toddlers, and elementary school children bring.

For those who are both trying to save for retirement and for college, as much as you love your children and would do anything for them, you should prioritize your own retirement. Your child can always get student loans and then you can help them with payments, but no one will loan you money to retire.

If you start saving 15% of your take home pay at age 40, then you are on track to retire at age 76. This might be 11 years later than your ideal retirement age, but is still several years before the average life expectancy. If you want to retire a little earlier, starting at age 40 and saving 15.5% pulls the retirement age down another year to age 75.

If you still want to retire at age 65 but are starting at age 40, then you’ll have to increase your savings to 30.2% of your take home pay. Though this may be a struggle for some families, it is a level of savings achieved by many who follow the FIRE movement, short for Financial Independence Retire Early.

Age 50

This is the crowd that typically jokes about working forever. For those of you who love your jobs, that may be a dream. For others, thinking too much about your working future is a nightmare. Luckily, as with the other ages, your retirement is in your control.

If you start saving 15% of your take home pay at age 50, then you are on track to retire at age 82. This might be 17 years later than your ideal retirement age, but it does mean that there is an upper limit on your working career and an approaching date for your financial freedom. Having the possibility of financial freedom is certainly better than truly having to work forever.

If you still want to retire at age 65 but are starting at age 50, then you’ll have to increase your savings to 48.6% of your take home pay. Though this likely sounds impossible at first blush, there always exists a family who is living off of half, a third, or even a fourth of what you are making. Saving over half of your take home pay is almost always doable. I recommend trying Core Values Budgeting to see if you can make substantial cuts in the areas of your spending that are unimportant to you personally.

For a more modest goal, you could strive to save 25.9% of your take home pay starting at age 50 to retire at age 75.

Age 60

It is sobering to see your friends retiring and wishing you had savings like them. The road of spending is filled with justifications of needs, wants, emergencies, and shocks. It is best not to dwell on the past and set aside every excuse that you have to spend. This is the time to get serious about saving.

If you start saving 15% of your take home pay at age 60, then you are on track to retire at age 88. This might be 23 years later than your ideal retirement age, but if you are lucky, it means that there may be a day in your life when you can have financial freedom or at least pay your medical bills.

If you still want to retire at age 65 but are starting at age 60, you might be surprised that I believe you could still do it. When I was a kid, my family used to frequently say that the trailer park represents financial freedom. The idea was that by living with minimal living expenses, you could more quickly achieve a level of savings that supports those modest needs for the rest of your life. If you start saving at age 60, you have to increase your savings to 77.1% of your take home pay in order to retire at age 65. Although that means significantly downsizing your lifestyle, it could mean the freedom to pursue your life calling and vocation for the first time.

To retire at an easier-to-achieve age of 75, strive to save 43.5% of your take home pay starting at age 60.

Invest

If you have savings but they are not invested, invest them. This small step brings you significantly closer to retirement. Even if you are saving 15% of your take-home pay, if you are not investing it you are not on track for retirement. Investing your savings now will make the power of compounding work for you.

If you need help getting started with investing, we recommend checking out our free Gone-Fishing portfolios or our low-cost no-minimum “Do-It-Yourself” service level.

No matter how small your savings or when you start accumulating them, those small changes have large effects over time. Start now to get your money working for you.

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