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Is Your Retirement Plan on Track?

The answer depends in part on your life stage.

The following is an excerpt from Christine Benz's recent webcast, Tune Up Your Portfolio in Uncertain Times. Watch the full webcast.

Christine Benz: The first step in the process is to ask and answer the question: How am I doing? And as I mentioned, this really depends on your life stage, the way that you would go about making this evaluation. If you're someone who is still accumulating assets for retirement, still working, the key things you want to look at would be your savings rate over the past year. Many people have in their minds that 10% is adequate. Actually, I think for many households, that's probably too low, that if possible, setting the bar at 15%, or even higher if you're part of a higher-income household, is a really worthy goal. So, look back on how much you've managed to save over the past couple of years and see whether you are in line with where you're hoping to be. Also look at how much you've managed to save so far. We've had very strong market performance, but investors might be hard-pressed to know whether they have saved enough so far. I would refer you to these benchmarks that Fidelity Investments periodically puts out that helps investors gauge the adequacy of their nest eggs based on their life stage. Fidelity's benchmark for someone who's aged 35 is that having saved 2 times your salary at that life stage is a worthy target. By the time someone is age 45, the target is 4 times salary; at age 55, the target is 7 times salary; and then at age 65, the target is 10 to 11 times salary. These aren't perfect benchmarks. In fact, my colleague, Amy Arnott did a deep dive on how investors might think about these benchmarks in the context of their own situations. But nonetheless, I think they're decent starting points for deciding whether you have saved enough or whether you potentially need to kick up your savings rate even more. I would also say for folks who are getting close to retirement, you can start thinking about withdrawal rates and the sustainability of whatever your withdrawal rate might be as a lens to decide whether you've managed to amass enough in savings.