If you're in your 40s, your 50s, your 60s, you've probably seen some of those online charts

that show you how much you need to have saved by your age. And if you're like most people, those charts either make you feel anxious because you don't have that much or you do have that much, but you still don't feel quite confident. That number has anything specific to do with you. If you're feeling that way, you're exactly right. And what I want to do in today's video is share with you some general rules of thumb,

some helpful rules of them and show you why they exist, but then give you a better way of looking at how much should you have in your portfolio at certain ages to make sure you're on track to retire. So let's start with these rules of thumb. In just a second, I'm going to share with you three specific examples that show you how these rules of thumb can be quite off when you're used as the sole purpose of understanding how much you'd have. But for some basic rules of thumb, if you're 40, you should have three times your annual income saved for retirement. In fact, you can see that on this chart right here. If you're 50, you should have six times your annual income saved for retirement. And if you are 60, you should have eight times your annual income saved for retirement. Do some simple math. If you have $100,000 at age 60, and that's your salary, you should have about $800,000 saved for retirement. Now, if you look all the way at the end of this graph, you can see by age 67, you should have 10 times your annual salary saved. So let's look at an example of where this rule of thumb actually works before looking at examples of where it doesn't. You're 67, you're making $100,000 per year, and you want to retire. The first thing we need to start with is after taxes, what are you actually taking home? This depends on are you married? What are your deductions? What state do you live in? How much are you saving for retirement? But let's just assume for simple numbers, 100,000 is what you earn. And 70,000 is what you take home after all taxes and deductions. Of that 70,000, if you're 65, you might have a good portion of that covered by Social Security.

Let's just assume $30,000 per year.

So $2,500 per month of benefits leads to $30,000 per year.

If you want $70,000, there's a $40,000 gap there.

That $40,000 gap just so happens to represent 4% of a $1 million portfolio.

So you can see how this rule of thumb generally works.

What's the after-tax take-home pay you might have at your income level today? And then how might a portfolio of 10x that amount in retirement give you the distributions needed to supplement

social security and meet your income needs for the rest of your life? So that's why this rule isn't a horrible place to start, but it's very cookie cutter. They don't apply in all situations equally. Example number one of where this doesn't apply. Let's look at Emily. Emily is 40 and she earns $100,000. I'm going to pull back up this graphic from Fidelity that shows you, in their opinion, or in this rule of thumb,

Emily needs to have $300,000 saved.

Well, Emily does have that $300,000 saved, so she's feeling really confident about her

ability to retire.

But here's the thing.

Emily wants to retire at 55, not at 67.

What happens at 55?

Well, Social Security hasn't kicked in.

That's a lot fewer years that she has

to compound her existing $300,000 to be able to be in a position to create income for her.

And that's a much longer time horizon that she needs that money to last for. Now all of a sudden,

that $300,000 probably is not nearly enough for her to be in a position to retire 55 if she's

already 40. So one of the main things that skews this is actually the timing of your retirement.

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