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How much money you should save for a comfortable retirement

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Many Americans are anxious and confused when it comes to saving for retirement.

One of those pain points: How much should households be setting aside to give themselves a good chance at financial security in older age?

More than half of Americans lack confidence in their ability to retire when they want and to sustain a comfortable life, according to a 2024 poll by the Bipartisan Policy Center.

It’s easy to see why people are unsure of themselves: Retirement savings is an inexact science.

“It’s really a hard question to answer,” said Philip Chao, a certified financial planner and founder of Experiential Wealth, based in Cabin John, Maryland.

“Everyone’s answer is different,” Chao said. “There is no magic number.”

Tax Tip: 401(K) limits for 2025

Why?

Savings rates change from person to person based on factors such as income and when they started saving. It’s also inherently impossible for anyone to know when they’ll stop working, how long they’ll live, or how financial conditions may evolve — all of which impact the value of one’s nest egg and how long it must last.

That said, there are guideposts and truisms that will give many savers a good shot at getting it right, experts said.

15% is ‘probably the right place to start’

“I think a total savings rate of 15% is probably the right place to start,” said CFP David Blanchett, head of retirement research at PGIM, the asset management arm of Prudential Financial.

The percentage is a share of savers’ annual income before taxes. It includes any money workers might get from a company 401(k) match.

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Those with lower earnings — say, less than $50,000 a year — can probably save less, perhaps around 10%, Blanchett said, as a rough approximation.

Conversely, higher earners — perhaps those who make more than $200,000 a year — may need to save closer to 20%, he said.

These disparities are due to the progressive nature of Social Security. Benefits generally account for a bigger chunk of lower earners’ retirement income relative to higher earners. Those with higher salaries must save more to compensate.

“If I make $5 million, I don’t really care about Social Security, because it won’t really make a dent,” Chao said.

How to think about retirement savings

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Households should have a basic idea of why they’re saving, Chao said.

Savings will help cover, at a minimum, essential expenses such as food and housing throughout retirement, which may last decades, Chao said. Hopefully there will be additional funds for spending on nonessential items such as travel.

This income generally comes from a combination of personal savings and Social Security. Between those sources, households generally need enough money each year to replace about 70% to 75% of the salaries they earned just before retirement, Chao said.

There is no magic number.

Philip Chao

CFP, founder of Experiential Wealth

Fidelity, the largest administrator of 401(k) plans, pegs that replacement rate at 55% to 80% for workers to be able to maintain their lifestyle in retirement.

Of that, about 45 percentage points would come from savings, Fidelity wrote in an October analysis.

To get there, people should save 15% a year from age 25 to 67, the firm estimates. The rate may be lower for those with a pension, it said.

The savings rate also rises for those who start later: Someone who starts saving at 35 years old would need to save 23% a year, for example, Fidelity estimates.

An example of how much to save

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Here’s a basic example from Fidelity of how the financial calculus might work: Let’s say a 25-year-old woman earns $54,000 a year. Assuming a 1.5% raise each year, after inflation, her salary would be $100,000 by age 67.

Her savings would likely need to generate about $45,000 a year, adjusted for inflation, to maintain her lifestyle after age 67. This figure is 45% of her $100,000 income before retirement, which is Fidelity’s estimate for an adequate personal savings rate.

Since the worker currently gets a 5% dollar-for-dollar match on her 401(k) plan contributions, she’d need to save 10% of her income each year, starting with $5,400 this year — for a total of 15% toward retirement.

However, 15% won’t necessarily be an accurate guide for everyone, experts said.

“The more you make, the more you have to save,” Blanchett said. “I think that’s a really important piece, given the way Social Security benefits adjust based upon your historical earnings history.”

Keys to success: ‘Start early and save often’

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There are some keys to general success for retirement, experts said.

  1. “Start early and save often,” Chao said. “That’s the main thing.” This helps build a savings habit and gives more time for investments to grow, experts said.
  2. “If you can’t save 15%, then save 5%, save whatever you can — even 1% — so you get in the habit of knowing you need to put money away,” Blanchett said. “Start when you can, where you can.”
  3. Every time you get a raise, save at least a portion instead of spending it all. Blanchett recommends setting aside at least a quarter of each raise. Otherwise, your savings rate will lag your more expensive lifestyle.
  4. Many people invest too conservatively, Chao said. Investors need an adequate mix of assets such as stocks and bonds to ensure investments grow adequately over decades. Target-date funds aren’t optimal for everyone, but provide a “pretty good” asset allocation for most savers, Blanchett said.
  5. Save for retirement in a tax-advantaged account like a 401(k) plan or an individual retirement account, rather than a taxable brokerage account, if possible. The latter will generally erode more savings due to taxes, Blanchett said.
  6. Delaying retirement is “the silver bullet” to make your retirement savings last longer, Blanchett said. One caution: Workers can’t always count on this option being available.
  7. Don’t forget about “vesting” rules for your 401(k) match. You may not be entitled to that money until after a few years of service.

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What student loan forgiveness opportunities still remain under Trump

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Under the Biden administration, the U.S. Department of Education made regular announcements that it was forgiving student debt for thousands of people under various relief programs and repayment plans.

That’s changed under President Donald Trump.

In his first few months in office, Trump — who has long been critical of education debt cancellation — signed an executive order aimed at limiting eligibility for the popular Public Service Loan Forgiveness program, and his Education Department revised some student loan repayment plans to no longer conclude in debt erasure.

“You have the administration trying to limit PSLF credits, and clear attacks on the income-based repayment with forgiveness options,” said Malissa Giles, a consumer bankruptcy attorney in Virginia.

The White House did not respond to CNBC’s request for comment.

Here’s what to know about the current status of federal student loan forgiveness opportunities.

Forgiveness chances narrow on repayment plans

The Biden administration’s new student loan repayment plan, Saving on a Valuable Education, or SAVE, isn’t expected to survive under Trump, experts say. A U.S. appeals court already blocked the plan in February after a GOP-led challenge to the program.

SAVE came with two key provisions that lawsuits targeted: It had lower monthly payments than any other federal student loan repayment plan, and it led to quicker debt erasure for those with small balances.

“I personally think you will see SAVE dismantled through the courts or the administration,” Giles said.

But the Education Department under Trump is now arguing that the ruling by the 8th U.S. Circuit Court of Appeals required it to end the loan forgiveness under repayment plans beyond SAVE. As a result, the Pay As You Earn and Income-Contingent Repayment options no longer wipe debt away after a certain number of years.

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There’s some good news: At least one repayment plan still leads to debt erasure, said higher education expert Mark Kantrowitz. That plan is called Income-Based Repayment.

If a borrower enrolled in ICR or PAYE eventually switches to IBR, their previous payments made under the other plans will count toward loan forgiveness under IBR, as long as they meet the IBR’s other requirements, Kantrowitz said. (Some borrowers may opt to take that strategy if they have a lower monthly bill under ICR or PAYE than they would on IBR.)

Public Service Loan Forgiveness remains

Despite Trump‘s executive order in March aimed at limiting eligibility for Public Service Loan Forgiveness, the program remains intact. Any changes to the program would likely take months or longer to materialize, and may even need congressional approval, experts say.

PSLF, which President George W. Bush signed into law in 2007, allows many not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.

What’s more, any changes to PSLF can’t be retroactive, consumer advocates say. That means that if you are currently working for or previously worked for an organization that the Trump administration later excludes from the program, you’ll still get credit for that time — at least up until when the changes go into effect.

For now, the language in the president’s executive order was fairly vague. As a result, it remains unclear exactly which organizations will no longer be considered a qualifying employer under PSLF, experts said.

However, in his first few months in office, Trump has targeted immigrants, transgender and nonbinary people and those who work to increase diversity across the private and public sector. Many nonprofits work in these spaces, providing legal support or doing advocacy and education work.

For now, those pursuing PSLF should print out a copy of their payment history on StudentAid.gov or request one from their loan servicer. They should keep a record of the number of qualifying payments they’ve made so far, said Jessica Thompson, senior vice president of The Institute for College Access & Success.

“We urge borrowers to save all documentation of their payments, payment counts, and employer certifications to ensure they have any information that might be useful in the future,” Thompson said.

Other loan cancellation opportunities to consider

Federal student loan borrowers also remain entitled to a number of other student loan forgiveness opportunities.

The Teacher Loan Forgiveness program offers up to $17,500 in loan cancellation to those who’ve worked full time for “complete and consecutive academic years in a low-income school or educational service agency,” among other requirements, according to the Education Department.

(One thing to note: This program can’t be combined with PSLF, and so borrowers should decide which avenue makes the most sense for them.)

Student loan matching funds

In less common circumstances, you may be eligible for a full discharge of your federal student loans under Borrower Defense if your school closed while you were enrolled or if you were misled by your school or didn’t receive a quality education.

Borrowers may qualify for a Total and Permanent Disability discharge if they suffer from a mental or physical disability that is severe and permanent and prevents them from working. Proof of the disability can come from a doctor, the Social Security Administration or the Department of Veterans Affairs.

With the federal government rolling back student loan forgiveness measures, experts also recommend that borrowers explore the many state-level relief programs available. The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.

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Many Americans are worried about running out of money in retirement

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Many Americans are worried they’ll run out of money in retirement.

In fact, a new survey from Allianz Life finds that 64% Americans worry more about running out of money than they do about dying. Among the reasons cited for those fears include high inflation, Social Security benefits not providing enough support and high taxes.

The fear of running out of money was most prominent for Gen Xers who are approaching retirement. However, a majority of millennials and baby boomers also said they worry about their money lasting, according to the online survey of 1,000 individuals conducted between January and February.

Separately, a new Employee Benefit Research Institute report finds most retirees say they are living the lifestyle they envisioned and are able to spend money within reason. Yet more than half of those surveyed agreed at least somewhat that they spend less because of worries they will run out of money, according to the survey of more than 2,700 individuals conducted between January and February.

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Meanwhile, a Northwestern Mutual survey reported that 51% of Americans think it’s “somewhat or very likely” they will outlive their savings. The survey polled 4,626 U.S. adults aged 18 and older in January.

Since those studies were conducted, new tariff policies have caused disturbance in the stock markets and prompted speculation that inflation may increase. Meanwhile, new leadership at the Social Security Administration has prompted fears about the continuity of benefits. Those headlines may negatively affect retirement confidence, experts say.

With employers now providing a 401(k) plan and other savings plans versus pensions, it is largely up to workers to manage how much they save heading into retirement and how much they spend once they reach that life stage. That responsibility can also lead to worries of running out of money in the future, experts say.

How to manage the ‘fear of outliving your resources’

Because of the unique risks every individual or couple faces when planning for retirement, the best approach is typically to transfer some of that burden to a third party, said David Blanchett, head of retirement research at PGIM DC Solutions.

Creating a guaranteed lifetime income stream that covers essential expenses can help reduce the financial impact of any events that require retirees to cut back on spending, Blanchett explained.

That should first start with delaying Social Security benefits, he said. While eligible retirees can claim benefits as early as 62, holding off up until age 70 can provide the biggest monthly benefits. Social Security is also unique in that it provides annual adjustments for inflation.

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Next, retirees may want to consider buying a lifetime income annuity that can help amplify the monthly income they can expect. Admittedly, those products can be complicated to understand. Therefore Blanchett recommends starting out by comparing very basic products like single premium immediate annuities that are easier to compare.

“Unless you do those things, you just can’t get rid of that fear of outliving your resources,” Blanchett said.

Without a guaranteed income stream, retirees bear all of the financial risk themselves, he said.

 “Retirement could last 10 years; it could last 40 years,” Blanchett said. “You just don’t know how long it’s going to be.”

Among retirees, there has been some hesitation to buy annuities, said Craig Copeland, EBRI’s director of wealth benefits research. Such a purchase requires parting with a lump sum of money in exchange for the promise of a guaranteed income stream.

“We see great increase in interest, but we aren’t seeing upticks in take up yet,” Copeland said. “I do think that’s going to start to change.”

What can help boost retirement confidence

To effectively plan for retirement, it helps to seek professional financial assistance, experts say.

Meanwhile, few people have a plan of their own for how they may live on the assets they’ve worked hard to accumulate, according to Kelly LaVigne, vice president of consumer insights at Allianz Life.

“This is something that you should not plan on doing on your own,” LaVigne said.

While the survey from Northwestern Mutual separately found individuals think they need $1.26 million to retire comfortably, the real number individuals need is based on their personal situation, said Kyle Menke, founder and wealth management advisor at Menke Financial, a Northwestern Mutual company.

In thinking about how life will look in 30 years, there are a variety of things to consider, Menke said. This includes stock market returns, taxes, inflation and medical expenses, he said.

Even people who have enough money for retirement often don’t feel confident in their ability to manage all of those factors on their own, he said. Financial advisors have the ability to run different simulations and stress test a plan, which can help give retirees and aspiring retirees the confidence they’re lacking.

“I think that’s where the biggest gap is,” said Menke, referring to the confidence Americans are lacking without a plan.

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Trump tariffs will hurt lower income Americans more than the rich: study

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Shipping containers at the Port of Seattle on April 16, 2025.

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Tariffs levied by President Donald Trump during his second term would hurt the poorest U.S. households more than the richest over the short term, according to a new analysis.

Tariffs are a tax that importers pay on foreign goods. Economists expect consumers to shoulder at least some of that tax burden in the form of higher prices, depending on how businesses pass along the costs.

In 2026, taxes for the poorest 20% of households would rise about four times more than those in the top 1%, if the current tariff policies were to stay in place. Those were findings according to an analysis published Wednesday by the Institute on Taxation and Economic Policy.

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For the bottom 20% of households — who will have incomes of less than $29,000 in 2026 — the tariffs will impose a tax increase equal to 6.2% of their income that year, on average, according to ITEP’s analysis.

Meanwhile, those in the top 1%, with an income of more than $915,000 a year, would see their taxes rise 1.7% relative to their income, on average, ITEP found.

Economists analyze the financial impact of policy relative to household income because it illustrates how their disposable income — and quality of life — are impacted.

Taxes by ‘another name’

“Tariffs are just taxes on Americans by another name,” researchers at the Heritage Foundation, a conservative think tank, wrote in 2017, during Trump’s first term.

“[They] raise the price of food and clothing, which make up a larger share of a low-income household’s budget,” they wrote, adding: “In fact, cutting tariffs could be the biggest tax cut low-income families will ever see.”

Meanwhile, there’s already evidence that some retailers are raising costs.

A recent analysis by the Yale Budget Lab also found that Trump tariffs are a “regressive” policy, meaning they hurt those at the bottom more than the top.  

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The short-term tax burden of tariffs is about 2.5 times greater for those at the bottom, the Yale analysis found. It examined tariffs and retaliatory trade measures through April 15.

“Lower income consumers are going to get pinched more by tariffs,” said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.

Treasury Secretary Scott Bessent has said tariffs may lead to a “one-time price adjustment” for consumers. But he also coupled trade policy as part of a broader White House economic agenda that includes a forthcoming legislative package of tax cuts.

“We’re also working on the tax bill and for working Americans, I believe that the reduction in taxes is going to be substantially more,” Bessent said April 2.

It’s also unclear how current tariff policy might change. The White House has signaled trade deals with certain nations and exemptions for certain products may be in the offing.

Trump has imposed a 10% tariff on imports from most U.S. trading partners. Mexico and Canada face 25% levies on a tranche of goods, and many Chinese goods face import duties of 145%. Specific products also face tariffs, like a 25% duty on aluminum, steel and automobiles.

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