American workers earning six-figure incomes have mixed feelings about whether they’re saving enough to retire.
Only about half of workers earning $100,000 or more feel that they’re contributing enough to their 401(k)s to retire comfortably in the future, according to CNBC’s August “Your Money” survey.
For those earning between $100,000 and $149,000, the median retirement account balance is $104,155, per Vanguard’s 2023 “How America Saves” report. That number jumps to $201,301 for those earning over $150,000.
The amount of money you’ll need to be able to take care of yourself during your post-work years will depend on a number of factors, including the age you plan to retire, if you plan to continue working part-time and how you plan to spend your money. You may also need more money saved up if you plan to retire in a state with higher costs of living.
However, many people have their sights set on retiring as millionaires. On average, Americans believe they’ll need around $1.8 million saved by the time they retire, according to Charles Schwab’s 2023 401(k) Participant Study.
With this in mind, CNBC calculated how much you need to set aside each month if you earn $150,000 and want to retire with $2 million at 67. These calculations are based on starting ages of 25, 30 and 35 and assume you begin with a $0 balance. They also don’t account for unpredictable life events such as layoffs, promotions or sudden changes in the stock market.
If you start at 25
- Earning a 3% annual rate of return: $1,979 per month
- Earning a 5% annual rate of return: $1,169 per month
- Earning a 7% annual rate of return: $657 per month
- Earning a 10% annual rate of return: $258 per month
If you start at 30
- Earning a 3% annual rate of return: $2,463 per month
- Earning a 5% annual rate of return: $1,562 per month
- Earning a 7% annual rate of return: $954 per month
- Earning a 10% annual rate of return: $429 per month
If you start at 35
- Earning a 3% annual rate of return: $3,108 per month
- Earning a 5% annual rate of return: $2,117 per month
- Earning a 7% annual rate of return: $1,400 per month
- Earning a 10% annual rate of return: $718 per month
Don’t panic if your retirement savings aren’t where you’d like them to be just yet. There’s still time to let compound interest help your contributions grow.
To that point, it’s important to be aware of the contribution and income limits for different types of retirement accounts.
For 2023, the contribution maximum for 401(k), 403(b) and most 457 plans is $22,500. Those 50 and over can contribute an additional $7,500 as well.
If you contribute to a Roth individual retirement account, or plan to open one, be mindful of the income limits. For 2023, single earners who make less than $138,000 are able to contribute up to $6,500, and those 50 and over can contribute an additional $1,000. If you earn more than or equal to $138,000 but less than $153,000, you can contribute a reduced amount, but if you make $153,000 or more, you’re not able to contribute.
But try not to solely focus on growing your account balance. Instead, many financial experts advise paying attention to your savings rate, which is the percentage of your income you set aside for retirement annually. Fidelity recommends an annual savings rate of 15%, including any employer match, if available.
And remember, when it comes to saving for retirement, “the key is to take action,” Fidelity said in its August “Viewpoints” report.
“Don’t be discouraged if you aren’t at your nearest milestone — there are ways to catch up to future milestones through planning and saving,” the report said.
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CHECK OUT: How much money you’d need to save each month to retire with $1.5 million if you earn $80,000 a year
