Are You Behind On Retirement Savings? Here's How To Tell Blog Post

Most people have a nagging feeling they are behind on retirement savings. Very few actually sit down and find out if that feeling is right.

That distinction matters more than people realize. A vague sense of being behind leads to anxiety and avoidance. A clear picture of where you actually stand leads to a plan.

This article is about getting you to that clear picture.

Below are the warning signs that you may be behind, the specific numbers you need to review, and an honest framework for deciding what to do about it.

First, Understand What "Behind" Actually Means

There is no universal definition of being behind on retirement savings because retirement is personal. Your target depends on when you want to retire, what you plan to spend, what other income sources you will have and how long you might live.

That said, benchmarks on how much you should have saved exist for a reason. They give you a starting point for comparison, and comparing yourself to them is a legitimate and useful exercise.

The most widely referenced benchmarks come from Fidelity, which suggests the following savings targets relative to your current annual income:

• Age 30: 1x your salary saved

• Age 40: 3x your salary saved

• Age 45: 4x your salary saved

• Age 50: 6x your salary saved

• Age 55: 7x your salary saved

• Age 60: 8x your salary saved

• Age 67: 10x your salary saved

If your current retirement savings are meaningfully below these benchmarks for your age, that is one signal you may be behind. But it is not the only one and it's not the whole story.

Retirement Checklist for Those Over 40.

The Warning Signs You Are Behind On Retirement Savings

These are the patterns that consistently show up in people who are behind. Work through them honestly.

Warning Sign 1: You Don't Know Your Balance

This sounds almost too simple to include, but it is one of the clearest warning signs there is. If you cannot state your approximate retirement account balance from memory, or at least pull it up within a few minutes, you are not engaged with your retirement plan in a meaningful way.

People who are on track tend to know their numbers. Not because they are obsessive about money, but because they check in regularly, they have a system, and retirement savings feels like a real and active goal rather than something happening passively in the background.

What to do: Log into every retirement account you have, including old 401(k)s from previous employers, and write down the current balance. This single act tends to create clarity and motivation faster than anything else.

Warning Sign 2: You Have Never Increased Your Contribution Rate

If you set your 401(k) contribution to 3% or 5% when you first started your job and have never touched it since, you are almost certainly behind.

A contribution rate that made sense at 25 on a starting salary does not make sense at 42 on a higher income. The math requires your savings rate to grow as your income grows, especially if you are trying to make up for lost time.

The IRS allows contributions of up to $23,000 per year into a 401(k) in 2024, plus an additional $7,500 catch-up contribution if you are 50 or older. Most people contribute a fraction of that.

What to do: Find out what percentage of your income you are currently saving across all retirement accounts. If it is below 15%, that is a flag worth taking seriously.

Warning Sign 3: You Have Cashed Out a Retirement Account

This is one of the most damaging and common retirement savings mistakes people make. When you leave a job and cash out your 401(k) instead of rolling it over, you pay ordinary income taxes on the entire amount plus a 10% early withdrawal penalty if you are under 59½.

Worse, you lose all the future compounding that money would have generated.

Research from the Employee Benefit Research Institute has consistently shown that cash-outs at job transitions are one of the leading causes of retirement savings shortfalls, particularly for people in their 30s and early 40s.

If you have done this even once, particularly on a balance that had grown to a meaningful size, you are likely behind where you would otherwise be.

What to do: You cannot undo a past cash-out, but you can stop the pattern now. Any time you leave a job going forward, roll your 401(k) into either your new employer's plan or an IRA. Do not treat it as accessible money.

Warning Sign 4: You Are Only Getting the Employer Match, Nothing More

Capturing your full employer match is the right first step. It is not a complete retirement savings strategy.

The employer match is often described as free money, and that framing, while accurate, can create a false sense of completion.

People who contribute just enough to get the match and stop there are often significantly behind, particularly if they started saving late or have a higher income lifestyle they want to maintain in retirement.

As a rough guide, financial planners commonly recommend saving 15% of gross income for retirement, including any employer contributions. If your total savings rate (your contribution plus the employer match) is well below that, the match alone is not doing the job.

What to do: Calculate your total savings rate as a percentage of your gross income. If it is below 15%, identify the gap and make a plan to close it over the next one to two years.

Warning Sign 5: You Have Significant High-Interest Debt

Credit card debt and other high-interest obligations do not just cost you money in interest. They prevent you from saving. Every dollar going toward a 22% APR credit card balance is a dollar not going into a retirement account and not compounding over time.

Beyond the direct savings impact, high-interest debt is a signal about cash flow and financial habits that often correlates with retirement savings shortfalls.

What to do: If you are carrying credit card balances, that needs to be addressed alongside your retirement savings strategy. The math on paying off 20%+ interest debt is almost always better than investing the same money.

Once the high-interest debt is gone, redirect that cash flow entirely to retirement savings.

Warning Sign 6: You Are Counting On an Inheritance or Windfall

Factoring an expected inheritance into your retirement plan is one of the riskiest things you can do.

Inheritances are delayed, reduced, depleted by long-term care costs, or eliminated entirely far more often than people expect. Building your plan around money you do not control is not a plan. It is a wish.

The same applies to expecting a large bonus, a business sale, or a stock option payout to solve your retirement savings problem down the road.

Those things may happen. They may not. A retirement plan that requires them to materialize is a plan with a major structural weakness.

What to do: Build your retirement projection using only money you currently have or are actively saving. If an inheritance or windfall arrives, treat it as an accelerant, not a foundation.

Warning Sign 7: You Have Not Saved Consistently for More Than Five Years

Consistency is what makes compound growth work. A person who saves aggressively for two years and then stops for three years is in a meaningfully worse position than someone who saves moderately but never stops.

If your retirement savings history has large gaps, whether from job transitions, financial hardship, lifestyle inflation, or avoidance, you are likely behind relative to where a consistent saver of your same income would be.

What to do: This is about establishing the habit more than fixing a specific number. Set contributions to automatic, increase them annually, and do not let a job change or a tight financial year become a multi-year savings gap.

The Numbers You Need to Review Right Now

Warning signs tell you something might be wrong. Numbers tell you exactly what is wrong and how much ground you need to make up. Here are the specific figures to pull together.

Number 1: Your Total Retirement Savings Balance

Add up every retirement account you have: current 401(k) or 403(b), old employer plans you have not rolled over, traditional IRAs, Roth IRAs, and any other retirement-specific accounts. This is your starting point.

Do not include home equity, regular savings accounts, or investment accounts that are not designated for retirement. Those may play a role in your plan eventually but mixing them into your retirement balance number creates false comfort.

Number 2: Your Current Savings Rate

Calculate the percentage of your gross income going into retirement accounts each month, including your employer's contribution.

If you earn $80,000 per year and you contribute $400 per month while your employer adds $200, your monthly retirement savings is $600, which is $7,200 per year, or 9% of gross income.

Write that percentage down. Compare it to the 15% benchmark. The gap between where you are and where you should be is one of the most actionable numbers in your financial life.

Number 3: Your Retirement Income Target

Estimate what you will need to spend each year in retirement. A common starting point is 70% to 80% of your current pre-retirement income, though this varies significantly based on your lifestyle, debt situation, and healthcare costs.

Once you have an annual spending target, use the 4% rule to estimate the portfolio size you need. Divide your annual spending target by 0.04.

For example, if you want $60,000 per year from your portfolio, you need $1,500,000 saved. If you expect $24,000 from Social Security, you only need to generate $36,000 from savings, which requires $900,000.

Number 4: Your Projected Balance at Retirement

Use a compound interest calculator like the one at Investor.gov to project what your current balance will grow to by your target retirement age, assuming you continue at your current savings rate.

Then compare that projected balance to the portfolio size you need from Number 3 above. The gap between those two numbers is your retirement savings shortfall, and knowing that number is the most important thing you can do for your retirement right now.

Number 5: Your Social Security Estimate

Log into ssa.gov/myaccount and pull up your estimated Social Security benefit at age 62, full retirement age, and age 70. This income reduces how much your portfolio needs to generate, which directly affects how much you need to save.

Many people are surprised by how significantly claiming at 70 versus 62 changes their monthly benefit.

The difference can be 70% to 76% more per month by waiting to 70, per Social Security Administration data. That difference has real implications for how much you need saved.

What Being Behind Actually Means for Your Options

If you have worked through the numbers and confirmed that you are behind, here is the honest picture of what that means.

You have more options than you think, and fewer than you would like.

The options available to someone who is behind on retirement savings come down to four levers, and most people will need to pull more than one:

Save more. Increase your contribution rate as aggressively as your cash flow allows. Every additional percentage point matters more in your 40s and 50s than it would have in your 30s, but it still matters a great deal.

Work longer. Delaying retirement by even two or three years has an outsized effect on your plan. It gives your portfolio more time to grow, reduces the number of years it needs to support you, and in many cases increases your Social Security benefit.

Spend less in retirement. Reducing your target retirement spending directly reduces how much you need saved. This is a legitimate lever, not a failure. Plenty of people find retirement deeply satisfying on a modest budget.

Take on more calculated risk. If your portfolio is very conservatively allocated and your retirement timeline is still 15 or 20 years out, a shift toward a more growth-oriented allocation may be appropriate.

This is not a reason to take reckless risks. It is a reason to make sure your allocation matches your actual timeline rather than your anxiety level.

Consider speaking with a fee-only planner through NAPFA.org before making major allocation changes.

The One Thing That Separates People Who Catch Up From Those Who Don't

It is not income. It is not luck. It is not finding a hot investment.

It is the decision to stop avoiding the numbers.

People who successfully catch up on retirement savings almost universally describe the same turning point: the moment they actually looked at their specific gap, calculated what it would take to close it, and committed to a plan.

The anxiety they had been carrying around turned out to be worse than the actual math.

You may be in a similar position. The number might be uncomfortable. But it is a real number that leads to a real plan, and a real plan is the only thing that actually changes the outcome.

Pull the numbers. Know where you stand. Then decide what you are going to do about it.