Many Americans are anxious and confused when it comes to saving for retirement.
One of those pain points: How much should households be setting aside to give themselves a good chance at financial security in older age?
More than half of Americans lack confidence in their ability to retire when they want and to sustain a comfortable life, according to a 2024 poll by the Bipartisan Policy Center.
It's easy to see why people are unsure of themselves: Retirement savings is an inexact science.
"It's really a hard question to answer," said Philip Chao, a certified financial planner and founder of Experiential Wealth, based in Cabin John, Maryland.
"Everyone's answer is different," Chao said. "There is no magic number."
Why?
Savings rates change from person to person based on factors like income and when they started saving. It's also inherently impossible for anyone to know when they'll stop working, how long they'll live, or how financial conditions may evolve -- all of which impact the value of one's nest egg and how long it must last.
That said, there are guideposts and truisms that will give many savers a good shot at getting it right, experts said.
"I think a total savings rate of 15% is probably the right place to start," said CFP David Blanchett, head of retirement research at PGIM, the asset management arm of Prudential Financial.
The percentage is a share of savers' annual income before taxes. It includes any money workers might get from a company 401(k) match.
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Those with lower earnings -- say, less than $50,000 a year -- can probably save less, perhaps around 10%, Blanchett said, as a rough approximation.
Conversely, higher earners -- perhaps those who make more than $200,000 a year -- may need to save closer to 20%, he said.
These disparities are due to the progressive nature of Social Security. Benefits generally account for a bigger chunk of lower earners' retirement income relative to higher earners. Those with higher salaries must save more to compensate.
"If I make $5 million, I don't really care about Social Security, because it won't really make a dent," Chao said.
Households should have a basic idea of why they're saving, Chao said.
Savings will help cover -- at a minimum -- essential expenses like food and housing throughout retirement, which may last decades, Chao said. Hopefully there will be additional funds for spending on non-essential items like travel.
This income generally comes from a combination of personal savings and Social Security. Between those sources, households generally need enough money each year to replace about 70% to 75% of the salaries they earned just before retirement, Chao said.
Fidelity, the largest administrator of 401(k) plans, pegs that replacement rate at 55% to 80% for workers to be able to maintain their lifestyle in retirement.
Of that, about 45 percentage points would come from savings, Fidelity wrote in an October analysis.
To get there, the firm estimates people should save 15% a year from age 25 to 67. The rate may be lower for those with a pension, it said.
The savings rate also rises for those who start later: Someone who starts saving at 35 years old would need to save 23% a year, for example, Fidelity estimates.
Here's a basic example from Fidelity of how the financial calculus might work: Let's say a 25-year-old woman earns $54,000 a year. Assuming a 1.5% raise each year, after inflation, her salary would be $100,000 by age 67.
Her savings would likely need to generate about $45,000 a year, adjusted for inflation, to maintain her lifestyle after age 67. (This figure is 45% of her $100,000 income before retirement, which is Fidelity's estimate for an adequate personal savings rate.)
Since the worker currently gets a 5% dollar-for-dollar match on her 401(k) plan contributions, she'd need to save 10% of her income each year, starting with $5,400 this year -- for a total of 15% toward retirement.
However, 15% won't necessarily be an accurate guide for everyone, experts said.
"The more you make, the more you have to save," Blanchett said. "I think that's a really important piece, given the way Social Security benefits adjust based upon your historical earnings history."
There are some keys to general success for retirement, experts said.