Fidelity Investments has come up with a rule of thumb workers can use to see if their retirement savings are on track.

It shows what percent of their current salary workers should have saved up at various ages if they want to be able to retire at age 67 and live on 85 percent of final pay.

To get there, the average worker should have saved (in all retirement accounts combined) about a year's worth of salary at age 35, three times at age 45, five times at age 55 and eight times by age 67.

For example, a worker earning $100,000 at age 67 should have saved $800,000.

The rule makes various assumptions - such as that the worker starts saving at age 25, saves continuously until age 67, lives until age 92 and earns an average investment return of 5.5 percent. It also assumes the person starts contributing 6 percent of pay to a workplace plan and increases that by one percentage point a year until reaching 12 percent and gets a matching contribution equal to 3 percent of pay from the employer.

Change any of those assumptions and the amount needed at various ages also changes.

Fidelity, like most retirement-plan administrators, has more sophisticated tools workers can use to get personalized answers to their questions.

It devised the rule of thumb because so many of its more than 17 million retirement-plan participants wanted to know if they were on track to retire and "didn't want a half-hour explanation," says Jeanne Thompson, a vice president of market insights with Fidelity.

Most retirement rules of thumb focus on how much to save each year (10 to 15 percent is a common benchmark), how much you should have saved by the end of your career or what percent of your final pay you need to live on in retirement (70 to 85 percent is a good target).

But none provided a benchmark workers could use to see if they are on track.

Original post:
Retirement rule of thumb from Fidelity