How much should I save each year for retirement

The question of how much you should save each year is key to ensuring you’re on track to meet your retirement goals. To be confident you’ll be able to maintain your lifestyle in retirement, it’s best to save consistently throughout your career.

Experts recommend putting aside at least 10% of your pre-tax annual income (including your employer’s contributions) if you can, to maintain your current lifestyle in retirement.^* This is known as the ‘yearly savings rate’. But to make your own yearly savings rate more precise, there are a few factors to take into consideration. The most important are:

The diagram below will give you an idea of the percentage of your annual income you might need to save each year, based on the country you live in and the age you started saving:

This figure might seem a lot, but it includes all your retirement savings across all accounts – even the contributions from your current and previous employers. Of course, you might not be able to save this much every year, but there are always ways to catch up. And even small increases in your yearly savings rate can make an impact.

Let’s say that between you and your employer, you’re currently saving 8% of your annual income for your retirement. You might want to consider increasing this rate to 9% of your annual income. What impact would it have on your wallet each year? And most importantly, how much difference would it make to the size of the retirement pot you end up with?

As you can see in the diagram above, the sooner you start saving, the more time you’ll have for your savings to grow.

If retirement is decades away, it may be hard to think or care much about it. But when you’re young is precisely the time to start saving for retirement. Even though it can be a challenge to save for the future, giving your savings those extra years to grow could make the sacrifice worthwhile.