How much should I be saving?

Read time: 2 to 3 minutes

Vanguard suggests that you save 12% to 15% of your pay each year for retirement, including any employer contributions. Here’s how to get there without breaking the bank.

Bump up your savings

The average investor is saving 10.7% in their retirement plan, which includes their employer’s contributions.* That's just two percentage points away from the suggested range.

Here’s an easy way to reach the goal

Bump up your savings rate by a small amount now, even if it’s just by one percentage point.
Boost your savings rate another one or two percentage points each year until you reach the suggested range.

If your plan offers an annual savings increase feature, you should sign up for it. If you do, Vanguard will automatically increase your savings rate for you each year. So you won’t even have to think about it.

*Source: How America Saves, 2023, Vanguard, 2023.

1% more is painless, really

If you think you can’t afford to save more, look at it this way. One percentage point more of your salary might cost less than a pizza per week.

A one-percentage-point savings increase for someone earning $50,000 a year translates to a reduction in take-home pay of only $9.61 a week.

If you can’t afford to make a small change to your savings rate right now, do it the next time you get a raise. For example, if you get a 2% raise and put half in your retirement plan, you’ll still see your take-home pay increase.

Now that's painless.

Saving more could bring a huge reward

Janet saves 9% today, including her employer’s match. If she increases her savings rate to 12%, she’ll have almost $150,000 more when she retires. That will translate into almost $500 more per month in retirement income. And who couldn’t use that extra money?

Example assumes a starting salary of $50,000 a year, an annual pay increase of 2%, and a 6% annual rate of return over a 30-year period. This hypothetical illustration does not represent the return on any particular investment, and the rate is not guaranteed. The final account balances do not reflect any taxes or penalties that may be due upon distribution. Withdrawals from a tax-deferred investment before age 59½ are subject to a 10% federal penalty tax unless an exception applies. Figures are rounded to the nearest $100.

Monthly retirement income assumes Janet can afford to spend approximately 4% of her initial balance each year in retirement and be reasonably confident she won’t outlive her savings. Her withdrawals are increased for inflation (at an annual rate of 3%).

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