Guide to Retiring Comfortably: Decade by Decade

Retiring comfortably doesn’t just happen – it takes planning, discipline, research and time. Less than half of Americans have done the hard math and planned their retirement budget – a well-planned stash of savings should last the average American 20 years.7

Preparing for retirement can be a daunting task. So daunting in fact, that the majority of Generation Y (those born between 1980 and 2003) have avoided the task altogether. A Scottrade study discovered that 60% of Generation Y admitted to not thinking about retirement at all.1 No matter your age, it’s never too late to start saving! There may be many years between you and retirement, or it may be right around the corner. The important thing is that you start somewhere.

We’ve broken down goals decade by decade to help you plan out your retirement budget at any age. The goal is prepare yourself little by little so that you can enjoy every moment of work-free life. With some planning, you’ll be able to enjoy retirement stress-free!

Pay Off Your Debt

You’re financially running in place if you are saving aggressively while staying deep in debt. While 25- to 34-year-olds managed to cut their credit card debt in half compared to a 2008 survey, they still average over $5,000 in credit card debt.3

If you are just paying the minimums on your credit cards to help set more money aside for savings, you’ll most likely end up spending more over time with APR fees. Set up a credit card payment plan, starting with the credit card that has the highest APR, and work your way down.

If you have larger debt (e.g. student loans), consider refinancing your loans at a lower rate. The difference between 3% and 5% over the course of a decade-long loan can make a large difference in the amount you end up paying back in the end.


Goal #1

Experts suggest following the “30% Rule” for a stronger credit score: Avoid carrying a balance of more than 30% of your total credit limit.2 For example, imagine you have three credit cards with a combined credit limit of $10,000. You have a balance of $2,000 on card A, $1,000 on card B and $1,500 on card C. Even though you don’t have $3,000 (30%) on any one card, you still have a balance of $4,500 in total – well above your 30% goal.


Goal #2

Establish a “Rainy Day Fund”: the amount it would cost you to cover rent, utilities, groceries, car payments and other essentials for six months in case of unexpected unemployment. While this is separate from retirement savings, it will help you stay out of debt while unemployed and keep you on track for when you are able to contribute to your retirement savings again.


Goal #3

You’ve knocked out that debilitating debt and set aside some funds for a rainy day. The next step is starting your retirement savings. Financial experts suggest saving 10% of your annual income each year.2

HELP! What is a 401(k)?

A 401(k) is a savings plan that is sponsored by your employer. There are a few benefits to 401(k) contributions.

  • Your contribution is taken directly from your paycheck, so no action is needed on your part.
  • The money isn’t taxed until it’s withdrawn.
  • Many employers will match your contribution up to a certain percent. The actual percent matched varies greatly from employer to employer, but there is one important take away: It’s free money! Financial experts recommend employees match their company’s 401(k) contribution, increasing retirement savings automatically.2

Back to Basics

If you haven’t met all your retirement goals for your 20s, start there. The goals of your 20s are the foundation of any retirement plan and help you get to a stable financial baseline. If you’ve met all the targets above, your financial health is good.

At this point, you’re ready to expand your efforts. If you have been successfully saving 10% of your annual income as suggested in Goal #3, increase your target to 15% – 20%.

Your 20s are about getting things in order. Your 30s are about cementing those plans from now until retirement. By now, you are probably settled in your career, might have a spouse and potentially own property. It’s time to reflect on what your goals are, individually or with your spouse. Set up proper expectations for the level of comfort you’re looking for in your retirement and how much you can expect to save between now and then. Be honest with your lifestyle – it’s better to save more rather than less.

    • Meet with a financial planner to see if there are any opportunities for you. If so, discuss which ones are best for you based on the retirement plan you already have in place. The recommendations of the financial planner may alter the plan you have for yourself, so make sure you reflect on the long-term risks before diving into any investment.
    • That being said, don’t get hung up on the current state of the market or make drastic choices when the market makes major turns. There will be highs and lows. You have decades before retirement and have time to ride it out.4 One year out of the next 30 will most likely not make or break the bank.


    • If you are still feeling behind, consider a simple route to saving more: earning more. Many employees settle for salaries when they could ask for a small raise that could add up to a big difference. Vincent Wagner, a certified financial planner and president of Guide Tower Financial Planning New York gave this example: “Say you’re age 35 and earn $50,000 a year. If you settle for a 3% annual cost-of-living increase rather than negotiating a 5% annual raise, you’ll have lost nearly $950,000 in potential earnings by age 65.4 Use websites like Glassdoor to check salaries within your industry to support your negotiation.


HELP! What is an IRA?

An Individual Retirement Account (IRA) is a way to save for retirement independently (whether or not you have a 401(k) with your company). There are three types of IRAs: Traditional, Roth and 401(k) Rollover. In all cases, there is a penalty if you withdraw from the account early.8

  • If you have a Traditional IRA, your contributions are not taxed. The tax is deferred until you withdraw the funds in retirement.
  • Roth IRA contributions are after-tax, meaning that your money can grow tax-free (provided that certain conditions are met).
  • 401(k) Rollover accounts are intended for when an employee leaves their job and needs to put their 401(k) savings into an independent retirement account.
Why choose an IRA?

When you are decades away from retirement there is one big advantage you have over those who start saving later: time. Though the interest is small, the amount you earn over time adds up. The average Roth IRA balance doubles every seven years.9 For example: If you open a Roth IRA with $1,000, in seven years your balance will be $2,000 and in 14 years, it will be $4,000. Fluctuations in the market mean this doubling is not guaranteed. However, low risk investments are a great way to increase your savings slowly over time.

Better Late Than Never


You may be in good health now, but as we age, more medical issues tend to surface. Be prepared for unexpected medical costs.


Most companies provide only up to 60% of your income if you are disabled.5 This can derail some of your earlier saving goals you set in place, depending on how severe the issue is and how much your insurance covers. When in doubt, save more. Now is a great time to bump that annual savings percentage from Goal #3 to 30%.


Be proactive about your health to help stay on top of any illness that may be preventable. While this won’t help you directly add to your savings, it may help minimize costly health problems later down the road.

Acting Like You’re in Your 20s

You have a little over a decade to make up for lost time. Before anything else, follow the rules we laid out for your 20s: absolve debt and save.

Your annual savings are going to be crucial to catch up. Aim to save 30% if you aren’t already.

When in doubt, take a look at your lifestyle and see where you can cut out extra costs. It’s challenging to make lifestyle changes, but it’s a necessity if you want to enjoy a work-free life later down the road. Consider making small changes like downgrading your cable package and finding alternatives to dining out.

Help! Why Does My Age Matter?
  • Once you turn 50, you can contribute an extra $5,500 on top of the normal contribution limit ($16,500) for company-sponsored retirement plans (e.g. 403(b) and 401(k) plans). That’s a total of $22,000!
  • For a traditional IRA or Roth IRA, it’s an extra $1,000 per year on top of the $5,000 contribution limit for everyone.6



Retirement may seem like a while away, but planning for tomorrow starts today. Each small step you take now will help alleviate stress down the road and provide more financial opportunities. From saving small to working up to IRAs, there are a lot of ways you can save – choose what works well for you and your budget. You may get overwhelmed or frustrated, but your retirement saving strategy is more like a marathon than a sprint. When you cross that finish line into your relaxing work-free zone, it will all be worth it.


1 New research on retirement saving: Gen Y is generation procrastination. (March 15, 2011). Retrieved February 16, 2016, from

2 Brown, A. (January 29, 2013). A guide to jumpstarting a retirement plan in your 20s. Retrieved February 16, 2016, from

3 What’s your total credit card debt? (n.d.). Retrieved February 16, 2016, from

4 10 quick steps to plan for retirement in your 30s. (August 29, 2015). Retrieved February 16, 2016, from

5 6 tips for financial planning in your 40s. (n.d.). Retrieved February 16, 2016, from

6 Buttell, A. (n.d.). Saving for retirement in your 40s, 50s and 60s. Retrieved February 17, 2016, from

7 Top 10 ways to prepare for retirement. (n.d.). Retrieved February 17, 2016, from

8 What is an IRA? (n.d.). Retrieved February 18, 2016, from

9 Whitmer, A. (March 27, 2012). Why I love my Roth IRA. Retrieved February 18, 2016, from



Babs is Lead Content Strategist and financial guru. She loves exploring fresh ways to save more and enjoy life on a budget! When she’s not writing, you’ll find her binge-watching musicals, reading in the (sporadic) Chicago sunshine and discovering great new places to eat. Accio, tacos! 

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