Are Your Retirement Savings on Track?

In this episode of Motley Fool Hidden Gems Investing, Motley Fool retirement expert Robert Brokamp covers:

• Benchmarks provided by financial-services firms.
• Factors that will determine whether you need to save more or less than the benchmarks.
• Latest thinking on safe withdrawal rates in retirement.
• Retirement calculators to consider.

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A full transcript is below.

This podcast was recorded on Oct. 10, 2026.

Robert Brokamp: Do the amounts in your IRAs and 401(k)s have you on the path to financial independence? I discussed where to get the answer to that question this week on the Saturday Personal Finance edition of The Motley Fool Hidden Gems Investing podcast. I'm Robert Brokamp, and figuring out whether you're on track to retire is a pretty complicated calculation involving all kinds of variables and quite a few predictions. Fortunately, help is available. The Internet is full of calculators that can crunch the numbers, and I'll mention a few later on in this episode. Also, a fee-only financial planner can mix professional-grade software with experience, expertise, and determine whether you're on track to retire when and how you want.

But what if you're just looking for a quick litmus test to see if you're generally on track? Well, you're in luck. Several financial services firms publish and update age-based savings guidelines, and I'm going to provide an average of the benchmarks provided by some of these companies. But first, let's understand the limitations of these benchmarks. Because any analysis of retirement preparedness depends on several factors, such as your income replacement rate, which is, how much income you need in retirement as a percentage of your pre-retirement income and how your spending will change throughout your retirement. Your retirement age, and life expectancy, future investment returns, inflation, salary growth, tax rates, the account types that you have, are they taxable tax-deferred or tax-free?

Of course what you'll get from Social Security. When these firms created their benchmarks, they had to base their analyses on their own set of assumptions. There is some variation from one firm to the other, but perhaps actually not as much as you might expect. These guidelines are usually expressed as a multiple of your gross, that is pre-tax household income. You start with your salary as well as your spouses if you're married, and then sum up all your savings that will be used for retirement. Don't include assets dedicated to other goals like college savings, and don't include your home equity.

Then divide your savings by your income to get your figure. With all that preamble, let's look at some of the benchmarks. I took the averages for certain ages from six firms, Ally Bank, American Century, Bank of America, Fidelity, Schwab, and T. Rowe Price. Some firms provided a range of savings benchmarks at each age, so I use the middle of that range for these calculations. Here we go. For people who are age 30, the average of these benchmarks say that you should have 0.9 times your salary saved. If you're 40, you should have 2.8 times your income saved at age 50, 5.2, 60, 7.9. Now, these firms they often assume different retirement ages. For the folks who assumed a retirement age of 65, that benchmark was 10.1. You should have 10.1 times your income, say before you retire. For the firms that assumed a retirement age of 67, the number is 9.8 because you don't need as much the later you retire. Now those are very general guidelines, intended for a very broad audience.

Here are four factors that could determine whether these guidelines are too low or too high for you. First up, these benchmarks don't factor in other sources of income or wealth beyond Social Security and a portfolio. You might have a pension, or perhaps you plan to downsize and move to a smaller home or a cheaper part of the country when you retire, or you may expect a big inheritance down the road. Though you should always be pretty conservative of that. You don't always know what's in someone's estate plan or how much the value of their estate is, and it might be consumed by end of life or long-term care expenses. But if you're very confident you're getting an inheritance, then you could factor that in.

The bottom line here is that if you will have other resources in retirement, besides a portfolio and Social Security, you may not have to save as much. A second consideration is your marital status. The evidence is clear that single people generally need to save more than married people. There are a few reasons for this, including the way Social Security is designed. Married people basically have the benefits of economies of scale. It's cheaper on a per person basis for two people who live together. If you're married, you have someone to take care of you if you're sick or you need long term care, whereas a single person may have to pay for those services. Single people generally need to save more.

Actually, the report from T. Rowe Price that has their benchmarks shows the differences in savings rates for married people and single people. The third factor to consider is income, and this again comes down to Social Security. Those who earn more will have to save more because Social Security replace a smaller portion of their pre-retirement income. Let's put some figures on this, according to a report published by the Social Security Administration earlier this year, here are the percentages of pre-retirement income that will be replaced by Social Security for a person born in 1960 who claims benefits at their full retirement age of 67 based on their career average annual earnings. Someone who over their career earns $72,000 a year, Social Security is going to replace 41% of that. Someone whose average annual income over their career was $115,000, Social Security is going to replace 34%, and someone who had an average annual income of $178,000, Social Security is going to replace 27%. Again, the bottom line is, the more you earn, the more you have to save because you're going to get less help from Social Security.

The fourth factor is Social Security itself. All these benchmarks assume that we'll all get the benefits were promised. But the Social Security Trust Fund is due to be depleted around 2032. At which point, the program will only be able to pay about 75%-80% of promised benefits. I hope that Uncle Sam finds a solution before then, and I do think that those close to or in retirement will get their promised benefits, but those who are in their 40s or younger should perhaps assume that there's going to be some benefit cut, which would mean that you need to save more for retirement.

As a final note on these benchmarks provided by financial services firms, I also recommend that you take a look at the checkpoints provided by JP Morgan Asset Management and their annual guide to retirement. The reason I didn't include these in the averages I mentioned previously is because JPMorgan presents their guidelines as dollar amounts, not multiples of household income. But really, I definitely recommend that you check out their free guide to retirement, not only for the checkpoints, but it's full of all kinds of excellent charts and graphics about retirement in general. I promise you're going to learn a thing or two if you look at it. Now, I wrote an article about these benchmarks for premium Fool members a couple of months ago, and I got some comments from readers along the lines of, I've been retired for a while, so these benchmarks are of no use to me.

For retirees, I think the best quick test of whether you have enough money is the latest thinking on withdrawal rates. In the beginning, there was yield, 4% rule created by financial planner Bill Bengen in 1994. Through subsequent research, he has moved that up to 4.7% as the bare minimum, as he explained in a book that he published last year. In the book, he explains his system for identifying conditions that can warrant a higher rate. When he was on this show a year ago, he said he'd recommend 5.5% at that time. I reached out to him last week to find out what he's thinking nowadays. We briefly chatted over the phone, and I asked him if he'd still recommend 5.5% today. He said that his system actually suggests a withdrawal rate of 5.8%, but he'd stick with 5.5% due to various financial concerns he has. Including high stock valuations, sticky inflation, ongoing wars, and unsustainable government deficits. We've had other guests on the show that suggest that maybe 5% is a good starting point, and I'm probably more comfortable with that figure. If you're retired, divide the amount you need each year from your portfolio by the size of your portfolio. If the result is below 5%, maybe 5.5%, you're probably in good shape. I should add that this is for a 30-year retirement. If you're older and your retirement is likely to be around 20 years, you could move the withdrawal rate up to around 6%, maybe a little less if you want to play it safer. Remember, the best thing you can do for your portfolio's longevity in retirement is to cut back on your withdrawals in a year after your portfolio has lost value or at least not take an inflacement adjustment that year.

Let's move on to tools, because while I do think these benchmarks and withdrawal rates can provide quick and dirty assessments of whether your retirement savings are on track, they by necessity, have to make many assumptions which may or may not line up with your personal circumstances. On top of that, they don't provide recommendations if you're behind. One way to come up with more customized results and solutions is to use online calculators. Besides assessing your odds of retirement success, using calculators have four other benefits. First of all, those who plan are more likely to succeed. There have been a few studies that have found that fewer than half of workers take any steps to figure out how much they need to save for retirement. But those who do end up with more wealth at retirement than those who don't. Now, there are obviously some questions of causation and correlation here, but I do believe that people who regularly monitor their retirement progress are going to be better prepared.

The second benefit is you'll discover your most powerful levers. What are the steps you can take today that will have the biggest impact on your retirement security? Third benefit is you can explore what scenarios. What if you saved a little bit more while you're working? What if you spent a little bit more in retirement? You downsized or upsized to another home, maybe retired a few years earlier or later. You delayed Social Security, or if your Social Security benefit gets cut by 20%, or retirement calculator can estimate the outcome of various potential choices and headwinds. The fourth benefit is you'll be much more aware of your situation. Just the process of digging up all this information and inputting the various variables into a financial calculator will force you to put numbers on things that might be fuzzy to you.

Especially if you're not the person who's naturally inclined to know your net worth at any given point. If you're married, the process of going through the calculator together can lead to valuable discussions. Those are four benefits of using online calculators. However, just as the guidelines from Fidelity, Schwab T. Rowe Price, etc provide at least slightly different assessments. Each retirement calculator is going to provide somewhat different results. It is best to use a few tools and see if there's a general consensus on your current path. As I've mentioned on the show before, my favorite free retirement calculator is the CalcXML Retirement Planning module. Just do an online search for it, and it should turn up.

There are some tools that cost money, but I think they're worth it. The most popular are Boldin, MaxiFi, Pralana, and Projection Lab. I should add that Motley Fool Ventures, a sister company of the Motley Fool, has an investment in Boldin. Check out the benchmarks from financial services firms and read the reports for a bit of retirement planning education. But then use online tools to crunch your specific numbers and determine whether you're on track.

That, my Foolish friends, is the show. Thanks so much for spending part of your weekend with me and thanks to Bart Shannon, the engineer for this episode. As always, people on the program may have interest in the investments they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell investments based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. I'm Robert Brokamp. Fool on, everybody.

Ally is an advertising partner of Motley Fool Money. Charles Schwab is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Robert Brokamp, CFP, EA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and T. Rowe Price Group. The Motley Fool recommends Charles Schwab and recommends the following options: short September 2026 $95 calls on Charles Schwab. The Motley Fool has a disclosure policy.