By the time you're in your 40s, you're entering your peak earning years and could be more than halfway to retirement. How prepared are Americans that age for their golden years?
CNBC Make It turned to Fidelity, the nation's largest retirement-plan provider, for the numbers.
As of the second quarter of 2018, Americans between 40 and 49 years old had an average 401(k) balance of $103,500 and were contributing 8.4 percent of their paychecks. Fidelity also found that employers were matching, on average, 4.6 percent, which put the total savings rate for forty-somethings at 13 percent.
Note that these numbers apply only to those who have, and are using, these retirement accounts: As GOBankingRates found in a 2017 report, a staggering 38 percent of young Gen Xers (ages 35 to 44) have $0 saved.
Overall, Americans aged 40 to 49 are saving more in their 401(k)s than they were five years ago: In 2013, they had an average balance of $79,000 and were contributing 7.8 percent of their paychecks.
Still, Fidelity warns that they, and Americans in general, may need to up their savings rate and their totals in order to retire comfortably in their late 60s.
Read on to see how much you should be setting aside for retirement and how to get to that savings rate.
The answer to this is highly personal and depends on your lifestyle and spending habits, but there are a few basic guidelines to follow if you want to retire comfortably.
For starters, Fidelity suggests that everyone set aside 15 percent of their income in a retirement account. "We believe if you save 15 percent throughout your career you will have enough to maintain your lifestyle in retirement," Katie Taylor, VP of thought leadership at Fidelity Investments, tells CNBC Make It.
That 15 percent can include any matching contributions from your employer, she says.
Other experts, including co-founder of AE Wealth Management David Bach, say that if you set aside at least 10 percent of your income, you'll set yourself up to be fine. Of course, more is better: Bach adds that if you want to retire "rich," save 15 to 20 percent.
Another rule of thumb, according to Fidelity, is to have 10 times your final salary in savings if you want to retire by age 67. It suggests a timeline in order to get to that magic number:
- By age 30: Have the equivalent of your starting salary saved
- By age 35: Have two times your salary saved
- By age 40: Have three times your salary saved
- By age 45: Have four times your salary saved
- By age 50: Have six times your salary saved
- By age 55: Have seven times your salary saved
- By age 60: Have eight times your salary saved
- By age 67: Have 10 times your salary saved
If you're not setting aside 10 to 15 percent of your income or you don't have the equivalent of three times your salary saved by age 40, don't panic. There are strategies you can use that will help you get to, or nearer to, where you need to be.
First things first: "When you are hired with an employer, make sure that you are inquiring about 401(k) benefits," says Taylor. "Find out what kind of 401(k) they have and make sure you get enrolled as soon as you're eligible. A lot of employers will automatically enroll you, but you can always proactively enroll."
Next, find out if your company offers a 401(k) match. If they do, take full advantage of it, says Taylor: "If there is a match that's 3 percent, make sure that you're saving at least 3 percent. Otherwise, you're leaving free money on the table."
Another useful tool you may have access to is "auto-increase," which allows you to choose the percentage you want to raise your contributions by and how often. This way, you won't forget to up your contributions or talk yourself out of setting aside a larger chunk when the time comes.
Most importantly, start setting aside money now. "It's harder to catch up if don't save," says Taylor. "If you spend the first half of your career not saving, you've got to do a lot of catch up later in your career and you don't have the time in the market to ride out any fluctuations. It's always a good idea to get started as early as possible."
If you're one of the many Americans without access to a 401(k), don't stress, and don't use that as an excuse to put off saving for retirement. You have plenty of other options, including a traditional, Roth or SEP IRA, a health savings account (HSA) or a normal investment account.
Read up on all of your options, choose an account to fund and start setting aside money for your future today.
Don't miss: Here's how much money Americans have in their 401(k)s at every age
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