But life passes by quickly, as it always does, and by the time they hit middle age, hundreds of thousands of Americans wind up regretting their lack of savings for retirement. So far behind in the savings game, they may be ready to throw in the towel and say it’s too late. Or, they may not even know how much money they need to comfortably retire. They may be patting themselves on the back for putting a couple hundred dollars away every month, only to realize it’s not nearly enough to live on.

If you’re wondering how much to save for retirement—or how to save for retirement, check out our guide below. We’ll give you simple, actionable tips so you can build up a sizeable nest egg, no matter what stage of life you’re currently living in.

How Much Money Do You Need to Save?

The amount of money you need to save for retirement depends on the lifestyle you want to live. Likely, you’ll want to be living as comfortably as you do now, so that should be your benchmark for how much you’ll need per year. Then you’ll take into account the things you’ll need to pay for. (Some people will not need to pay a mortgage or pay expenses related to their children by the time they’re retired.)

One rule of thumb is to save at certain levels at each decade of life. For example, in your 30s you should save at least as much as your annual salary. By the time you’re 40, you should save three times your annual salary. And when you turn 50, you should have six times your annual salary put away for retirement. At age 60, you should have eight times your salary saved, and then at 67, you should have 10 times your salary reserved for retirement. Ultimately, you should save 12 times your salary before you retire.

Savings Tips

If saving 12 times your annual salary sounds overwhelming to you, you’re not alone. But, if you take it one month at a time and dutifully save the right amount, you’ll eventually get there. Here are four excellent ideas when it comes to saving for retirement:

1. Take Advantage of Your 401(k)

Does your employer offer a 401(k) plan? If so, you’d be crazy not to take advantage of it. This type of savings plan earns interest over time, so you’ll save more the sooner you start. On top of that, many employers will match some percentage of the amount you put in, which is basically free money. If you’re not sure how much to put in, start with saving at least 10 percent of your pay.

2. Set Up a Roth IRA

Maybe your employer doesn’t offer a 401(k). Or maybe you want to really maximize your retirement savings. In that case, set up a Roth IRA to earn interest on even more money you set aside for retirement. This money can be put in the account tax-free, and it won’t be taxed when you take it out in retirement. There are limits on how much you can put in a Roth IRA, so this is a great tool to work alongside your 401(k).

3. Pay Off Debt

Paying off debt isn’t technically saving you any money—or is it? If you have school loans, a home mortgage, or any other debt, you’re paying interest every month that you have the loan. So, the sooner you pay down the debt, the better. You will indeed save thousands of dollars by paying off your debts earlier than the term of your loan. Just make sure there aren’t any penalties for paying in advance!

4. Use an HSA

A health savings account is another great way to take advantage of pre-tax dollars. This money can be withdrawn from your paycheck every month to go into an account reserved for medical expenses. The money earns interest, and it can sit in the account until you’re ready to use it. Since many retirees have growing medical expenses, this is an important aspect of any retirement budget.

Learn More

By following these tips, you’ll be well on your way to a sizable retirement savings fund. Want to learn more about saving money? Check out our post on the basics of budgeting.