Being able to retire when you want and with enough money is key to a comfortable, happy retirement. The average retirement age in the U.S. is 62 years old, according to a MassMutual survey. But no matter when you want to retire or where you’re at right now in your career, there are certain things you can do to ensure success.
Not sure where to start? Fidelity Investments advises people to keep these three “A” words in mind: amount, account and asset mix. Here’s why these things matter in crafting a winning retirement savings plan.
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Amount
The most important “A” word is “amount.” Why? Because it’s hard to retire comfortably if you don’t have enough savings in the first place.
As a general rule, Fidelity advises people to start saving as soon as they can for as long as they can. Every year, you should ideally set aside 15% of your gross (or pre-tax) income for retirement. This 15% doesn’t have to only come from your base salary. It can also come from employer-matching or profit-sharing contributions, which you might get from a 401(k), 403(b), 457(b) or similar plan.
Say you can contribute 6% of your gross salary to your retirement account each year, but your employer matches those contributions. This means you’ve already got 12% covered. All you’ll need then is to save an additional 3% to get the full 15% savings rate.
As an example:
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You earn $70,000 a year and contribute 6% ($4,200) to your 401(k) plan.
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Your employer offers 100% matching contributions for an additional $4,200.
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You need to save another $2,100 throughout the year to hit the 15% savings benchmark.
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Account
Where you keep your money is important, too. Someone who puts their entire retirement savings in a basic savings account with a 0.42% APY — the average rate right now — isn’t going to earn nearly as much on that money as someone who puts their funds in a tax-advantaged retirement plan.
The retirement account you choose can also impact how that money is taxed.
For example, your contributions to a traditional IRA or 401(k) are pre-tax. This means you’ll pay less in income tax for the year, but your withdrawals are taxable. Roth 401(k) or Roth IRA contributions are made using after-tax dollars. This means no upfront tax break, but your withdrawals are generally tax-free.
Retirement accounts do come with limitations. In 2025, the maximum contribution limits are:
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$23,500 for 401(k) plans
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$7,000 for IRAs ($8,000 for those ages 50 and up)
When deciding which account — or accounts — to use, consider the tax implications. Ask yourself whether it’d be better to pay taxes upfront or later. If you expect to be in a lower income tax bracket in retirement, a traditional IRA or 401(k) might be best. You could also have a mix of both types of accounts to spread out your tax savings.
Fidelity noted a few other savings plans that might be helpful to have, including:
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Self-employed 401(k)
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SIMPLE
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SEP IRA
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Spousal IRA (if you’re married and only one spouse works)
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Health savings account (contributions are tax-deductible, while qualified withdrawals are tax-free)
Consulting a tax professional, wealth advisor or retirement planner could be a good idea, especially if your finances are complex.
Asset Mix
Last but not least, crafting a successful retirement plan involves investing strategically. You could invest in traditional options like stocks and bonds. You could instead opt for alternative investments. You could even do a mixture of both.
When choosing your asset mix, Fidelity suggests considering the following:
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Your risk tolerance
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Your financial situation
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Your time horizon (when you plan to retire)
Here’s how certain key asset mixes have performed over the years, based on Fidelity Investments and Morningstar Inc. data:
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Conservative portfolio (6% foreign stock, 14% U.S. stock, 50% bonds, 30% short-term investments): 5.78% average annual return
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Balanced portfolio (15% foreign stock, 35% U.S. stock, 40% bonds, 10% short-term investments): 7.83% average annual return
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Growth-focused portfolio (21% foreign stock, 49% U.S. stock, 25% bonds, 5% short-term investments): 8.89% average annual return
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Aggressive growth-focused portfolio (25% foreign stock, 60% U.S. stock, 15% bonds, 0% short-term investments): 9.62% average annual return
Note: These are historical averages using data from 1926 to 2024. Each asset mix has its own volatility level and is not a guarantee of success. It can be a good starting point when planning out your retirement plan, however.
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This article originally appeared on GOBankingRates.com: Fidelity: 3 Essential Tips for a Winning Retirement Savings Plan
