If you make $400k per year, this is how much you should already have banked by age 35

24/7 Wall St. Key Points

• Saving for retirement is easiest when you save a little at a time. If you’re behind on saving for retirement, it’s important to increase the amount of money you stock away to take advantage of compound interest. 
• You may also need to adjust your financial habits if you’ve saved far too much for retirement. Saving more in a retirement fund isn’t always a good thing!
• Also: Take this quiz to see if you’re on track to retire ^(Sponsored)

A household income of $400,000 places you in the top 2% of earners in the U.S., but maintaining your lifestyle in retirement requires careful planning. It’s important to save continuously throughout your working lifespan. By age 35, to ensure financial security, you should aim to have approximately $1.41 million saved.

This figure assumes a few key considerations, though:

• A consistent 15% pre-tax retirement contribution
• A 28% effective tax rate
• A 6% annual portfolio return before retirement
• A 5% annual portfolio return after retirement

It also accounts for Social Security benefits starting at age 65, inflation, and market volatility. 

If these numbers feel daunting, you aren’t alone! Here’s what you should consider whether you’re behind, on track, or ahead. 

How to Catch Up If You’re Behind

It’s never too late to start saving for retirement (or build some momentum). Here are some strategies I recommend:

• Increase Contributions: The easiest way to increase your retirement savings is to increase the amount you put in wherever possible. Max out your 401(k), IRA, or other tax-advantaged accounts. If possible, contribute to both a traditional and Roth account for tax diversification in retirement. Always take advantage of a 401(k) company match, too. 
• Cut Lifestyle Expenses: Consider decreasing your discretionary spending (like vacations or dining out). This can free up cash for investments to increase contributions. 
• Invest Aggressively (But Wisely): Consider a more growth-oriented portfolio, especially if you have some time before retirement. With more time before retirement, you have time to bounce back in the case of a downturn! Higher returns now can help compensate for a late start.
• Generate Additional Income: If none of the above work for you, another option is to increase the amount of money you make. Sometimes, it is easier to generate more income than to cut back on expenses. 

Tips for Those Ahead of Schedule

If you’ve banked more than $1.41 million by 35, congratulations! Leverage your head start with these tactics:

• Expand Your Portfolio: You might want to consider investing elsewhere if you’re ahead on retirement investments. For instance, you could consider real estate and stocks in a taxable account. 
• Plan for Early Retirement: Potentially, you could plan for an early retirement. 
• Lifestyle Upgrades: Consider upgrading your lifestyle, like traveling or purchasing a second home, as opposed to saving more for retirement (that you might not need). Alternatively, you can plan to do these things in retirement, as opposed to now. 
• Refine Your Tax Strategy: Work with a financial planner to minimize taxes on your growing wealth through trusts, charitable contributions, or backdoor Roth conversions.
• Accelerate Financial Freedom: Pay off debts, create a safety net for unexpected expenses, and continue to build passive income streams.