Retirement goals

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  • #19759

    A friend of mine came back from a financial planner meeting and the financial planner said that she should have the following goals:

    • Retirement account should be equal to annual salary at age 35
    • 3 x annual salary at 45 years old
    • 6 x annual salary at 55 years old
    • 8 x annual salary at 65 years old

    This has me a little bit freaked out. I am about to turn 36 and only have 2/3 of my annual salary in my TSP. Do these goals seem reasonable?


    You are ahead of majority of Americans that don’t have any retirement savings. It is only a rule of thumb that should be used as a goal to guide you. How much you can save depends on your salary, location/cost of living, assets/liabilities, the market, etc. Financial managers often think you need more than you really need IMO. Your money will grow over time and at age 50, you can make “catch up” contributions if needed.

    How much are you currently contributing to your TSP? Suggest you contribute at least 5-10% to get the matching. Do you a lot of debt? If so, suggest you listen to Dave Ramsey.

    Below is some info on retirement savings, some that show you how others are doing (probably more than you need):
    Where are you on the TSP totem pole?
    The Average American’s Retirement Savings By Age — And Where So Many Go Wrong
    How Much to Save for Retirement – Are You on Track? (Infographic)
    Fidelity Rule of Thumb
    30 1 X Salary Saved
    35 2 X Salary Saved
    40 3 X Salary Saved
    45 4 X Salary Saved • 3x at 45 years old
    50 6 X Salary Saved
    55 7 X Salary Saved • 6x at 55 years old
    60 8 X Salary Saved
    67 10 X Salary Saved •8x at 65 years old
    There are resources/online calculators that can help you better calculate what you should have based on specific assumptions & needs
    Retirement Throughout the Ages: Expectations and Preparations of American Workers May 2015

    Hope something helps:)


    Being 36 years old would lead me to assume you have at least 20 years until you retire. With that in mind, I would be invested mostly in stocks. Sure you have a higher risk of incurring loses, but your retirement horizon is not for 2 decades. Contribute as much as you can to your TSP. Especially if you have to pay state taxes. In my current job, I have to pay state taxes, but I’m maxing out my regular contributions, $18,000 and my catch up contributions $6,000. I will be living in a state without a state income tax after retirement so the state incomes taxes I avoid now will never come back to get me.


    Bear in mind the Fidelity benchmarks assume no pension income.


    Ralph, I did not realize that. How would you adjust it considering a pension?


    I’m no expert, but if I’m reading the fine print correctly, the Fidelity savings targets assume a retirement age of 67, no pension income, and a desired income replacement of 45 percent, not including Social Security. According to their calculations, these figures yield a savings target of 10 times preretirement income. However, if you’re expecting some portion of your retirement income to come from a FERS annuity, the amount needed from savings alone *might* be less than 45 percent of preretirement income, which would in turn affect the savings target. Whether Fidelity’s other assumptions are correct, I can’t say.


    After thinking about this, another way to think about this is to take your (high 3 salary – FERS Pension) X Factor. I took my current TSP balance and ran the TSP Income Calculator with start of age 53, 62 & 67. Adding my pension to start or average (distribution varies based on life expectancy calculation; used 5% growth rate) results in between 50-70% of total salary. Current balance is approximately 7X ending salary or 10X (Ending Salary – Pension). I retired early so I’m trying to figure out when to start withdrawals from TSP…I should be OK. When evaluating retirement, there are a lot of payroll deductions including TSP that you are already managing without but I still want to let my TSP grow a little before taking withdrawals.

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