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How much you should have saved for retirement right now

How much should you have saved for retirement? There's actually a simple answer to that. You'll need to start with a bunch of basic assumptions, but all you really need to know is your income and your age.

In your 20s

Let's take a look at hypothetical Joe, who is hired straight out of college. By the time he's 25 years old, he's making $40,000 a year. He should have $4,000 socked away in his retirement fund, if he wants to retire at age 65.

How you can get there: Make sure you're contributing enough to your 401(k) to get the full match from your employer.

In your 30s

Joe finds a new job and at age 35 is now making $55,000 a year. At this point he should have $82,500 saved for retirement.

How to get there: Check in on your portfolio to make sure you're taking on enough risk to grow your investments. If retirement is 30 years away, you should have about 80% of your assets in the stock market.

When you switch jobs, you must decide what to do with your 401(k) from your old company. To avoid a 10% penalty for cashing out early, think about moving the funds into your new company's 401(k) or a rollover IRA, or leaving the money where it is.

In your 40s

Joe is promoted to a manager level position by age 45. He's now bringing home $65,000 a year and should have $240,500 in his nest egg.

How to get there: You can only contribute $18,000 to your 401(k) each year. For extra savings, think about opening an IRA as another place to sock away pre-tax money for retirement. If you have a Roth IRA, you're taxed now but every penny will go straight to your pocket when you take it out in retirement.

In your 50s

Joe gets a raise and at 55 he's earning $75,000 a year. By now, he should have $532,500 saved.

How to get there: Start playing catch up. After age 50, you can start contributing more each year to your retirement savings accounts (the cap is lifted). Now you can put an additional $6,000 into your 401(k) -- for a total of $24,000 -- and an additional $1,000 in your IRA accounts -- for a total \"catch-up\" contribution of $6,500.

This is also a good time to start shifting some of your retirement savings from stocks into less risky assets. At 10 years away from retirement, you should only keep about 70% of your assets in stocks.

In your 60s

The golden years are close. When Joe retires at age 65, he is making $80,000 a year. That means he should be able to quit his 9-to-5 gig with a $960,000 nest egg that should be able to give him $56,000-$64,000 in yearly income for the next 30 years.

How to withdraw your savings: Until age 59 1/2, you'd be hit with a penalty for withdrawing from your retirement accounts. But now you're in the clear. You can withdraw whatever you like from your 401(k) or your IRA accounts penalty free.

While you can leave money in a 401(k) for as long as you want, you have to start to make withdrawals from an IRA by a certain point. At age 70 1/2 you must start taking out \"required minimum distributions\" from your IRA accounts. The amount depends on how much you have saved and your life expectancy, according to tables published by the IRS.

Source: Calculations come from Charlie Farrell, CEO at Northstar Investment Advisors. Figures target a 70% to 80% pre-retirement income replacement at age 65 for an assumed 30-year retirement. It assumes Social Security will account for 20% of retirement income, a 3.5% return on investments, and a withdrawal rate between 4% and 5% annually in retirement.

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