How much to save for retirement is a common question from workers, but there is no universal rule of thumb that applies to everyone.
“It’s really where are you now, how long is it going to be until you make that transition (to retirement) and what are the risks up until that time,” says Brian Kearns, president of financial firm Haddam Road Advisors in Evanston, Illinois.
Older workers and those who are risk-averse — meaning they will invest more conservatively — will likely need to save more than their younger and more aggressively invested counterparts.
“Where you save has an impact on how much you save,” says Michael Policar, a fiduciary financial planner with NGP Financial Planning in the greater Seattle area.
Using a tax-advantaged account such as a 401(k) or IRA can protect against taxes eating away at the value of retirement savings, meaning you may be able to save less. To avoid taxes in retirement, consider Roth accounts, which are funded with after-tax dollars but grow tax-free and can be accessed tax-free in retirement.
If you are still deciding how much to save for retirement in 2025, consider these strategies based on your financial situation.
[READ: 9 Social Security Calculators That Can Help You Decide When to Claim]
Max Out Your Retirement Accounts
If you are using a tax-advantaged plan such as a 401(k) or IRA, the best thing you can do is save the maximum amount allowed by law. The following are the 2025 contribution limits:
401(k) and similar workplace plans
— $23,500 for workers younger than 50
— $31,000 for workers 50 and older
— $34,750 for workers 60-63
IRAs
— $7,000 for workers younger than 50
— $8,000 for workers 50 and older
If that seems like a lot of money, keep in mind that failing to have your own savings could mean you are more reliant on government programs.
“People don’t want to depend on Social Security, but then they are unwilling to take action,” says Joe Conroy, owner of Harford Retirement Planners in Bel Air, Maryland.
Workers who are ready to make retirement savings a priority can contribute to both a 401(k) and an IRA in the same year, although there may be some income limitations on tax deductions.
Save 15% to 20% of Your Income
For some workers, maxing out their retirement accounts isn’t financially feasible. In that case, trying to save 15% to 20% of your income is a good goal for 2025.
“If you aim for 20%, that’s a better place to start,” according to Policar. He notes that it is easier to reduce the amount you are saving than it is to increase it.
Younger workers in particular may be better able to hit that 20% mark since they often have fewer expenses. Starting at 20% savings will give them a good foundation from which investments can compound and grow over time. As they hit life milestones, such as getting married, buying a house or having children, they can reduce their savings percentage if needed.
[READ: What Net Worth Do You Need to Retire?]
Put Away What You Can
Does 15% of your income still feel like an unattainable amount? Then save whatever you can, experts advise.
“Figure out what works for you,” Kearns says. Getting into the habit of saving something is better than saving nothing. Then you may be able to catch up as you run across extra sources of income such as gifts, bonuses or inheritances. “If you get a windfall, that right there is something that will make your life so much easier if you put it to work right now,” he says.
Perhaps ironically, saving might be most difficult for mid-to-late career professionals given their higher incomes.
“Gen X is in that sandwich generation,” Conroy says. Long-term care for their aging parents and weddings for their children are just two of the large expenses these workers may be juggling along with their other bills and retirement savings.
If you are contributing to an employer-sponsored plan such as a 401(k) account, try to at least contribute enough to claim the employer match, if offered. Many workplaces will match worker contributions up to a certain percentage, which may immediately double how much you are saving for retirement each pay period.
[Related:10 Essential Sources of Retirement Income]
No Magic Number for Retirement Savings
In addition to knowing how much to save in 2025, some workers may also want to know how much they should be saving for retirement overall.
There is no simple answer to that.
“What do you typically spend in a year?” Kearns asks. That can be a good place to start, but you’ll need to consider whether your retirement savings are in a traditional account and subject to income tax in retirement or in a tax-free Roth account.
If someone spends $10,000 a month but has money in a taxable account, they will need to withdraw more than that to maintain their current standard of living. “If you have a 20% tax rate, that means you’ll need $150,000 a year,” Kearns says.
A common rule of thumb is that retirees need 80% to 85% of their pre-retirement income to live comfortably after leaving the workforce. “It sounds great, but I haven’t found it to be true,” according to Policar. He finds it is better for clients to plan on spending 100% of their pre-retirement income and recommends multiplying that amount by 25 to roughly determine how much to save for retirement.
Living expenses don’t always go down in retirement, and as someone ages, there is a greater likelihood of them having increased health care expenses. Long-term care, if needed, can also quickly deplete savings. These are all good reasons to save as much as possible in 2025 for future retirement expenses.
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How Much Should You Save for Retirement in 2025 originally appeared on usnews.com
Update 06/23/25: This story was published at an earlier date and has been updated with new information.
