Are you on track with your retirement savings? The average 401(k) savings rate has reached record levels, signaling that more people are taking their financial futures into their own hands. According to a recent Vanguard report, the average combined savings rate was 11.7% in 2023, matching the record high from the year before. Similarly, a Fidelity report found a combined savings rate of 14.2% for the first quarter of 2024.
At Extreme Investor Network, we recommend saving 12% to 15% of your earnings, including employer contributions, for retirement every year. It’s essential to keep increasing your savings rate by at least 1% annually to reach that benchmark. Nearly a quarter of participants deferred more than 10% of their earnings in 2023, emphasizing the importance of consistent saving habits.
401(k) plan features such as automatic enrollment and higher default savings rates have played a significant role in boosting employee deferrals over time. With more plans offering automatic increases or step functions, it’s becoming easier for individuals to save for their future without even noticing.
But how much should you be saving for retirement? While industry benchmarks suggest a savings rate of 15%, the right percentage varies based on individual circumstances. Factors like age, income level, debt, and lifestyle expectations all play a role in determining the right savings target for you. At Extreme Investor Network, we recognize that each person’s situation is unique, and their savings strategy should reflect their individual needs, goals, and circumstances.
Whether you’re just starting your career or nearing retirement, it’s never too early or too late to start saving for the future. By understanding your financial goals and making a plan to achieve them, you can ensure a secure and comfortable retirement. Stay tuned to our blog for more valuable insights and tips on personal finance and investing.