Percentage of Net Worth in Retirement Funds

[Glen Mauldin]

I know that everyone’s circumstances will vary based on age, risk tolerance and other factors but in general, What is a reasonable percentage of one’s total net worth to have in retirement accounts such as IRA, 401K, etc?

[Ashish Acharya]

@Glen Mauldin ,

Although I am not yet a financial planner (I am studying to be the one right now). There is not Ideal % of net worth that should be retirement asset. It’s based on need, what is your post retirement income need?

This one way to look at the progress at the retirement goal.

Your investment balance( that includes retirement account) should be the percentage of your gross pay at various ages.

INVESTMENT ASSETS TO GROSS PAY BENCHMARKS TO ACHIEVE RETIREMENT GOAL
Benchmark for Investment Assets as a Ratio of Gross Pay by Age
Age		From	to
25 to	29	0	0.2
30 to	34	0.6	0.8
35 to	44	1.6	1.8
45 to	54	3	4
55 to	64	8	10
65 to		16	20

So, if you are 45-45, your investment accounts should be 1.6 to 1.8 times your annual salary. That was you will progress towards your retirement goals.

This ratio assumes that your retirement account is earning a market return and you started saving/investing at age 25. 

If you are on this track, and you have extra cash flow, it would be advisable to invest in the risky asset for more return since you are covered for retirement.