Q4 2023 Retirement Trends - Fidelity (2024)

FAQs

How accurate is Fidelity retirement analysis? ›

The Fidelity Retirement Score is a hypothetical illustration and does not represent your individual situation or the investment results of any particular investment or investment strategy, and is not a guarantee of future results. Your score does not consider the composition of current savings and other factors.

Fidelity's 45% rule states that you should plan to save and invest enough to replace at least 45% of your preretirement income. This rule assumes that you retire at age 67 and have no pension income, other than Social Security.

To make your retirement savings last, try to limit withdrawals to 4% to 5% of your initial retirement savings, and increase that amount based on inflation.

The financial services firm handles more than 45 million retirement accounts total. The average 401(k) balance ended 2023 up 14% from a year earlier to $118,600, Fidelity found. The average individual retirement account balance also gained 12% year over year to $116,600 in the fourth quarter of 2023.

The rule of 6%

For many people, it generally makes sense to first pay down any debt with an interest rate of 6% or greater.

Fees. Fidelity has average trading and low non-trading fees, including commission-free US stock trading. On the negative side, margin rates and fees for some mutual funds can be high. We compared Fidelity's fees with two similar brokers we selected, E*TRADE and TD Ameritrade.

Average Monthly Retirement Income

According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.

So, if you're aiming for $100,000 a year in retirement and also receiving Social Security checks, you'd need to have this amount in your portfolio: age 62: $2.1 million. age 67: $1.9 million. age 70: $1.8 million.

Contributions can always be taken tax- and penalty-free. But Roth IRAs must meet the 5-year aging rule before withdrawals from earnings can be taken tax- and penalty-free. Failing to meet the 5-year rule can result in taxes and penalties.

What is 10 times salary to retire? ›

Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement. If you're behind, don't fret. There are ways to catch up.

Age 40—three times annual salary. Age 45—four times annual salary. Age 50—five times annual salary. Age 55—six times annual salary.

The average retirement savings for all families is $333,940 according to the 2022 Survey of Consumer Finances.

The overall median Retirement Preparedness Measure (RPM) for the typical American household is 78, which falls into the "Fair" zone, meaning the typical retirement saver is on target to have 78% of the income Fidelity estimates they will need to cover retirement costs.

$300,000 can last for roughly 26 years if your average monthly spend is around $1,600. Social Security benefits help bolster your retirement income and make retiring on $300k even more accessible. It's often recommended to have 10-12 times your current income in savings by the time you retire.

The output is only as accurate as the assumptions used for input. One mistaken assumption, and your retirement needs could easily be twice the amount estimated (or worse), leaving you financially exposed when you can least afford it.

Fidelity remains our top overall choice for best online broker as well as our choice as the best broker for low costs and for ETFs this year. In addition, Fidelity earned top ranks as the best broker for cash management, which are new additions to our best online broker and trading platforms awards this year.

They Are Not Perfect

No matter how impressive they appear, they cannot predict the future and they will not give results that are perfectly accurate 20 years from now. Rather, the good calculators and projections can help to determine if you are in the ballpark. They are approximately helpful.

Here's how the Rule of 72 works. You take the number 72 and divide it by the investment's projected annual return. The result is the number of years, approximately, it'll take for your money to double.