Retirement Readiness by Age: Key Milestones at 35, 45, 55, and 65

Planning for retirement isn't a one-time event - it's a journey that evolves with each stage of life. Whether you're establishing your career, navigating your peak earning years, or preparing for the transition to retirement, knowing where you stand is essential for building confidence in your financial future. In this article, explore the key milestones that can help you measure your progress and take meaningful action at four critical ages.

Age 35: Laying the Foundation

By age 35, many individuals are balancing career growth with personal milestones such as homeownership and raising families. While retirement may feel distant, this is a critical decade for establishing momentum. The financial decisions you make now may significantly impact your long-term financial success.

Key Benchmarks to Strive For:

• Savings Target: A good rule of thumb is to aim for retirement savings equal to 1 to 1.5 times your current annual salary by age 35.
• Emergency Savings Fund (Rainy Day Fund): Many experts typically recommend setting aside enough savings to cover three to six months’ worth of living expenses. For households with two incomes, aim for at least three months' worth; for single-income households, a six-month cushion is advised.
• 401k Contributions: Maximize employer matches and aim to contribute at least 10-15% of your income (including employer contributions). In 2025, the maximum annual contribution limit for those under age 50 is $23,500.
• Debt Management: Begin prioritizing paying down high-interest debt to free up cash flow for long-term goals.
• Insurance Coverage: Review your existing insurance policies and consider securing coverage for health, life, disability, identity theft, and any high-value assets you own or rent. For life insurance, it's generally recommended that each income earner has enough coverage to replace their lifetime earning potential, ensuring financial protection for dependents in the event of an untimely loss.
• Financial Plan: Establish a written plan with projections for retirement needs and a strategy for saving and investing. Compounding interest works best when time is on your side. The earlier you begin saving consistently, the more flexibility you'll have later in life.

Age 45: Mid-Career Checkpoint

At age 45, the retirement horizon starts to feel more tangible – roughly 20 years away. You’re likely in your peak earning years and may have accumulated some significant retirement savings. This is also the decade where mid-career risks (job changes, family obligations, health issues) could impact your trajectory. Now is the time to assess whether you're on track for retirement or need to make some adjustments.

Key Benchmarks to Strive For:

• Savings Target: By 45, your retirement savings should ideally equal 2.5 to 4 times your current salary.
• 401k Contributions: Continue maximizing employer matches and aim to contribute 15-20% or more of your income.
• Diversified Investment Strategy: Ensure your portfolio reflects a thoughtful balance of growth and risk management.
• Catch-Up Planning: Evaluate whether you need to increase retirement contributions to meet future needs. Consider bumping up to the IRS contribution limits.
• Long-Term Care and Insurance Planning: Continue thinking about how to protect your income and assets through appropriate insurance coverage.
• Keep Spending in Check: You may start noticing you have extra spending money at this point in your life. That doesn’t mean you should spend money on things you don’t need. Treat yourself from time to time then save the rest for your future.
• Financial Plan: Review your financial plan and periodically adjust it as needed.

Age 55: The Final Decade of Accumulation

With retirement potentially just 10 years away, age 55 is a pivotal time to solidify your financial readiness. The decisions you make now can significantly influence the quality and timing of your retirement.

Key Benchmarks to Strive For:

• Savings Target: Ideally, you should have saved 5 to 8.5 times your annual salary by this age to stay on track.
• 401k Contributions: Continue maximizing employer matches and aim to contribute 20-25% of your income. If needed, take advantage of 401k catch-up contributions to help meet your savings target. In 2025, individuals age 50 and older can contribute up to an additional $7,500 and those age 60-63 can contribute an additional $11,250.
• Retirement Income Planning: Start by estimating your income needs in retirement and comparing them to your projected income sources, such as Social Security, pensions, and investment earnings.
• Debt Management: Develop a strategy to pay off your mortgage before retirement to significantly reduce your monthly financial obligations.
• Healthcare Planning: Research and understand the coverage provided by Medicare and long-term care insurance and estimate your potential medical expenses in retirement.
• Tax Strategy: Explore tax-efficient ways to withdraw funds and strategically allocate assets across accounts, such as Roth and Traditional IRAs.

Age 65: Finalize Retirement Plans

At 65, retirement is just around the corner. This is the time to solidify your plans, make any final adjustments, and prepare to embrace your retirement years with confidence.

Key Benchmarks to Strive For:

• Savings Target: By this age, many experts agree you should have 8 to 14 times your salary saved for retirement.
• Retirement Date: Evaluate whether you are ready to retire now or if you should continue working. Factors to consider include financial readiness, healthcare coverage, and job satisfaction.
• Retirement Income Plan: Assess income from social security, retirement savings, pensions, annuities, other investments, and any planned part-time work. Create a retirement budget to ensure income streams will cover fixed and discretionary expenses.
• Required Minimum Distributions (RMDs): Understand how much you will be required to withdraw and when to help you avoid unnecessary taxes and penalties. Under the SECURE Act 2.0, the age at which individuals must begin taking Required Minimum Distributions (RMDs) from retirement accounts has increased. As of 2023, the RMD age rose from 72 to 73, and it will increase again to 75 starting in 2033. These changes apply to traditional IRAs, 401(k)s, and other tax-deferred retirement accounts.
• Healthcare and Long-term Care Coverage: Enroll in Medicare Part A and B and consider Part D and Supplemental plans. Understand when enrollment windows are and the penalties for late sign up. Reevaluate long-term care insurance and plan for potential costs.
• Estate and Legacy Planning: Review and update your will, trusts, and beneficiary designations. Have open conversations with your family and financial advisor about your legacy intentions and estate wishes.
• Lifestyle and Purpose: Plan for how you will spend your free time once you are done working, including hobbies, volunteering, travel, and spending time with family. Understand there may be an emotional adjustment as you transition into this next phase of life.

Every retirement journey is unique. Income, lifestyle expectations, family dynamics, and health all influence your retirement readiness. Having a personalized financial plan can help ensure you're on the right path at any stage. If you’re ready to assess your retirement readiness, contact a professional who can help you today.