Money

The Savings Rate You Actually Need, By Age

2026-11-101 min read

The 15% rule is repeated everywhere and is wrong for most people under 35 and optimistic for most people over 50. What matters is the gap between your savings balance and the balance you'll need — which is entirely a function of years remaining and expected return.

Start with a balance target

A common planning assumption is withdrawing 4% of your portfolio in year one of retirement. To generate $40,000 per year you need roughly $1,000,000. To generate $60,000 you need $1,500,000. Get that number before you think about percentages.

Then work backwards

With a 6% real return, money roughly doubles every 12 years. So $250,000 at age 35 becomes about $1,000,000 at 59. The same person starting at 45 needs roughly $500,000 already saved to hit the same target.

Why income growth matters more than the percentage

A 20% savings rate on $50,000 saves $10,000. A 12% rate on $90,000 saves $10,800. Career growth moves the number faster than austerity. That's not permission to spend everything — it's a reason not to optimise the wrong variable.

Employer match is the floor

Any employer match not claimed is a guaranteed 50–100% return left on the table. Contribute at least enough to get the full match before anything else, including before extra debt payments above the minimum.

The mistakes that cost people money

• Using the same percentage in your twenties and your fifties.
• Ignoring the employer match while trying to optimise fund selection.
• Assuming a 10% nominal return with 3% inflation and treating it as 10% real.
• Measuring savings rate only as retirement contributions and excluding other investments.

Common questions

Is 15% enough?

It's a reasonable target if you start in your late twenties and have stable income. Start later and the number rises.

Should I count my employer contribution in the 15%?

Most planners count it. If you want a conservative estimate, count only your own contributions.