Retirement planning

Retirement Planning: By the Numbers

March 14, 2022
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Fulcrum Partners, a OneDigital Company, is sharing this chronological look at the basics of retirement planning for workers at every age. This article by Jania Stout, shares insights on important steps to take in each decade of your life.

The One Thing You Can Do to Prepare For Retirement During Each Decade

This year has seen a high level of market volatility, which has some worried. But whether you are recently graduated and starting your first job or getting ready to retire soon, now is not the time to make rash decisions about investments. Instead, know that hitting key milestones each decade can help get you in financial shape for retirement.

“Hitting key milestones each decade can help get you in financial shape for retirement.”

Jania Stout, Senior V.P., Retirement Services, OneDigital

Here is a look at one step you can take during each phase of life to be ready for retirement, no matter the market conditions.

In your 20s

While retirement is decades away, it is never too early to start contributing to your retirement savings. The more time you have to invest, the more time your money has to grow and earn compounding interest. In your 20s, your primary goal should be to save as much money as possible. At a minimum, you should contribute enough money to your 401(k) to get the maximum employer match if your company offers one.

You should also make sure you have a well-diversified portfolio, with an appropriate mix of stocks and bonds. Being diversified helps manage risk so that you can better weather the ups and downs of the stock market. If you’re not sure how to pick funds in your portfolio, look for an automatically diversified investment option like a target date fund, which many 401(k) plans offer.

In your 30s

Once you start saving, you should increase your contribution, aiming to contribute at least 10 -15 percent of your income to your retirement savings. Between your contributions and receiving the full employer match, you will be well on your way to maximizing your retirement savings.

In your 40s

With 20 years or so until retirement, you need to have a good sense of how much money you’ll need to cover expenses. There are dozens of online calculators to help you, but a rough estimate is that you’ll need about 80 percent of your salary assuming your spending habits don’t change much in retirement. Typically, this means you should be saving about 15 percent of your income.

That number may be surprising to some, and many people at this stage are behind on their retirement savings. But don’t panic. If you can’t afford to move up to 15 percent of your income yet, aim to gradually ramp up contributions. If your employer offers an automatic escalation feature, take advantage of it to help get to your goal.

It’s important to remember that your 401(k) is for retirement. Try to avoid tapping into the funds to pay for other routine expenses.

In your 50s

At this point, you can actually start to visualize retirement. Talk to your family about your goals: what are your expenses going to be? What is your projected income? Do they match?

This is the time to reassess whether you’re on target with your contributions. At 50, you can also start to take advantage of higher maximums with “catch up” contributions and contribute up to $27,000 annually to your 401(k).

In your 60s

This is when you need to be thinking about how you’re going to take the money you saved for retirement and convert it into an income stream for the rest of your life. You should check in on your allocation, to ensure that you have an appropriate mix of stocks and bonds and that you are not invested too aggressively. If you haven’t already done so, this is also an important time to talk to a trusted financial adviser to review and analyze all of your options.

Check out the Coffee Break with OneDigital video here.

Investment advice offered through OneDigital Investment Advisors, an SEC-registered investment adviser and wholly owned subsidiary of OneDigital.


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