Skip to main content

What Percentage of Your Income Should Go Toward Retirement?

How much money do you need in retirement depends on your individual goals and interests, but national averages and benchmarks provide targets to guide savings. As a PERA member, you’re ahead of many Americans because you and your employer make monthly contributions toward your retirement. If you’re in PERA’s defined benefit plan, you will have retirement income for life, but you may still need additional savings to protect against inflation, unforeseen expenses or for that special vacation. 

Research indicates that it is best to start saving early in your career to capture the time value of money and that individuals should save about 15% of their annual income toward retirement. Many advisors suggest your retirement income should be about 70% to 80% of pre-retirement income[1]. However, that amount may vary based on lifestyle choices, spending habits, and annual expenses in retirement. The average PERA member retired at age 58.9 with 22.8 years of service credit [2]. This equals about 55% of their highest average salary at retirement age. If that is your goal, you could choose to work longer and increase your service credit for a higher retirement income, or you could learn how to enroll and invest in a voluntary retirement plan such as a PERAPlus plan

While not everyone is able to save 15% of their income toward retirement, saving any amount will be helpful. Start by creating a plan and stick to it, even when markets are volatile. Historically, the stock market outperforms traditional savings accounts over the long-term. A study by Fidelity of 1.5 million workplace savers found that those who stayed in the stock market during the Great Recession were better off than those who pulled their investments and returned later [2]. While diversification of your investments does not guarantee gains or prevent loss, it can help control risks and make investing simpler. You don’t need to be a finance expert to meet your retirement savings goals. PERAPlus 401(k) and 457 plans offer both professional management and online advice through Empower to help you optimize your retirement investments. Working with a financial advisor may also be a good option to help balance your retirement needs with other financial goals like saving for a house or college.  

Another item to consider in your retirement savings is how to control the cost of investing. Some investment companies charge a percentage of your portfolio or a flat fee to manage your investments. While you may not be able to control how the stock market performs, you can control the costs by evaluating the fees upfront and selecting a plan that matches your goals. PERAPlus plans work to keep fees low and may be less than you would find at some investment firms. 

The bottom line is retirement planning can be complex. If you develop a savings plan and stick with it, you are more likely to achieve your financial retirement goals. To learn more about voluntary investment options with PERA, visit our website and browse our webinar schedule. Our team hosts presentations on Enrolling in PERAPlus, Investing Made Simple, and Developing a Savings Plan.  


  1. Center for Retirement Research at Boston College. "How Much To Save For a Secure Retirement,,” Page 4. 
  1. PERA, Comprehensive Annual Report, 2020., Page 236 
  1. Fidelity. “Six Habits of Successful Investors,;!!IqUM-JgTaSZ3!7UxLei0xDL6BGitwvl-hWZuRScy6OCQRMpOk1IpgP9ga_HGSz6CUdhwTgiViRG7aFl7Rk6Gc1rVquZ7HshByrYgpzEkCrQ$.”