As a certified financial planner (CFP) and fee-only financial advisor, I often hear questions about financial benchmarks. One common query is, “How much should I have saved by 40?” It’s a valid question, and while there are general guidelines, it’s crucial to understand that these are just starting points. Your personal circumstances, goals, and risk tolerance will always dictate the most appropriate savings strategy. As a fiduciary and registered investment advisor (RIA), my commitment is to provide advice that is solely in your best interest.

Understanding Savings Benchmarks

Many financial institutions and experts offer rules of thumb for savings by age. These typically suggest having a certain multiple of your annual salary saved by specific milestones. For instance, a common benchmark suggests having 3x your annual salary saved by age 40. These figures are designed to provide a broad idea of whether you are on track for retirement, but they are not rigid mandates.

Why Benchmarks Exist

Benchmarks serve as helpful indicators. They can motivate you to save more, provide a sense of progress, and highlight potential shortfalls early on. For someone working with a fee-only advisor, these benchmarks can be integrated into a comprehensive financial plan, offering a clear picture of where you stand relative to common expectations. The XY Planning Network (XYPN), of which Brooks Wealth Management is a member, emphasizes personalized planning over generic rules.

Common Savings Multiples by Age

While the exact numbers can vary, here’s a general idea of what some benchmarks suggest:

• Age 30: 1x your annual salary
• Age 35: 2x your annual salary
• Age 40: 3x your annual salary
• Age 50: 6x your annual salary
• Age 60: 8x your annual salary
• Age 67 (Retirement): 10x your annual salary

These multiples assume a steady career progression, consistent savings, and a reasonable return on investment. It’s important to remember that these are gross figures and do not account for taxes or inflation directly, though a good financial plan will.

What if You’re Behind?

Discovering you are behind these benchmarks can be disheartening, but it is not a reason to panic. Many people find themselves in this position for various reasons, including career changes, family responsibilities, or unexpected expenses. The key is to take proactive steps.

Strategies to Catch Up

1. Increase Your Savings Rate: Even a small increase can make a significant difference over time. Aim to save at least 15% of your income, or more if you are behind. Consider automating your savings to ensure consistency.
2. Boost Your Income: Explore opportunities for career advancement, negotiate a higher salary, or consider a side hustle. Increased income provides more capital to allocate towards savings and investments.
3. Optimize Your Investments: Ensure your investments are aligned with your risk tolerance and long-term goals. A certified financial planner can help you review your portfolio and make adjustments. As a fiduciary, I prioritize strategies that are in your best interest, not those that generate commissions.
4. Reduce Unnecessary Expenses: Conduct a thorough review of your budget to identify areas where you can cut back. Every dollar saved is a dollar that can be invested for your future.
5. Utilize Retirement Accounts: Maximize contributions to tax-advantaged accounts like a 401(k) or IRA. For 2026, the IRS contribution limits for 401(k)s are $24,500 and for IRAs are $7,500 (or $8,600 if age 50 or older). If you are 50 or older, you can also make catch-up contributions.

The Value of a Fee-Only Fiduciary Advisor

Working with a fee-only financial advisor like myself ensures that the advice you receive is unbiased. Unlike advisors who earn commissions from selling products, a fee-only model means my compensation comes directly from you, the client. This eliminates conflicts of interest and aligns my recommendations with your financial well-being. Brooks Wealth Management is listed on the Fee-Only Network, further demonstrating our commitment to this transparent approach.

As a registered investment advisor (RIA), I am legally bound by a fiduciary duty to act in your best interest at all times. This is a higher standard of care than suitability, which many commission-based brokers operate under. When you work with a CFP, you are engaging with someone who has met rigorous education, examination, experience, and ethical requirements set by the CFP Board.

Conclusion

While savings benchmarks by age, such as having 3x your salary saved by 40, provide useful guidance, they are not the sole determinant of financial success. Your unique financial journey requires a personalized approach. Whether you are on track or looking to catch up, consistent effort and strategic planning are paramount. A certified financial planner can be an invaluable partner in navigating these complexities.

Ready to assess your financial health and build a personalized savings strategy? Book a free consultation with Brooks Wealth Management today to discuss your goals and how a fee-only, fiduciary advisor can help you achieve them. Visit us at /contact/.