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You’re 35, 50, or 60 years old: How much money should you have put aside for retirement by now?

Retirement is full of dreams. It’s when you can finally embrace that life-long bucket list and explore the world without worrying about finances. For many, retirement is like a second chance to participate in activities one did not have the opportunity or time for during their professional life. Whether it’s trips to historic sites, leisure activities such as fishing, golfing, painting, or simply spending more time pursuing lifelong interests, retirement offers a wealth of possibilities to explore.

However, smart retirement planning is the key to experiencing a financially secure and comfortable retirement. As you move through important life milestones such as your 30s, 50s, or 60s, it might be a good idea to assess how much money you should have saved for retirement by now to have a sense of security that your nest egg is being built strategically for your golden years.

Having said that, read on to find out how much you should have saved up or put aside for retirement accordingly at different milestones.

By age 35 – 40 

It is time to start planning and saving for retirement dedicatedly. A good rule of thumb is to save two to three years’ annual income by the time you reach 40. This means that if your annual salary is Rs 10 lakh per year, then by the time you turn 40, you should have Rs 20-30 lakh saved in retirement plans like Public Provident Fund (PPF) and National Pension System (NPS), or mutual funds investment (MFs).

You can start by saving 20% of your total income and increase savings to 40-50% gradually, according to your financial situation. Additionally, try to set aside an emergency fund so that if any unexpected expenses arise, such as medical bills or car repairs, you have funds available.

By age 50

By now, retirement may only be 10-15 years away, so it’s important to plan how you will use the money saved up during these years and how much more you need to save and invest for retirement appropriately. At this age, it’s recommended that you save at least two-thirds of your income, including employer contributions towards a retirement fund and increase your retirement savings rate substantially.

Also, you should have saved up to six times your current annual salary by the age of 50. For example, if your current salary is Rs 20 lakh annually, then you should have saved up to Rs 1.2 crore allocated for retirement purposes.

By age 60

According to financial experts, someone of this age should aim to have saved up to seven to eight times their current salary. This means if you are currently earning Rs 20 lakhs per year, then your retirement savings should be around Rs 1.4 to 1.6 crore at the age of 60.

At this stage, it’s also important to focus on creating an income stream from the money saved over the years and investing in fixed-income instruments that can provide regular cash flow.

Using a retirement planning calculator

Retirement saving requires incredibly thoughtful planning. The right amount to save varies from person to person, based on different factors, including your current income and expenditure habits, expected retirement age, and lifestyle during retirement. To figure out the right savings goal for yourself, consider using a retirement calculator online.

Simply enter details such as your present age and desired retirement age, information about current income, savings and investments for retirement (fixed deposits, mutual funds, stocks, pension plans, etc.), return rate expectations, and estimated expenses.

Considering these factors, the retirement planning calculator will provide you with valuable insights into how much you should set aside each month to build a sufficient retirement corpus. With this data in hand, you can take proactive steps to build your retirement corpus more smartly.

Closing thoughts

You can’t predict the future, but you can control how prepared you are for it. So, no matter what your age is, it’s never too late to start saving and investing for retirement. Also, depending on when you start saving, your allocation percentage and other related factors, your portfolio may look different from what you expected. As such, it’s important to consult a financial advisor to come up with a customised retirement investment plan that works best for you.

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