Fidelity: 3 Essential Tips for a Winning Retirement Savings Plan

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.

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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:

• You earn $70,000 a year and contribute 6% ($4,200) to your 401(k) plan.

• Your employer offers 100% matching contributions for an additional $4,200.

• 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:

• $23,500 for 401(k) plans

• $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:

• Self-employed 401(k)

• SIMPLE

• SEP IRA

• Spousal IRA (if you’re married and only one spouse works)

• 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:

• Your risk tolerance

• Your financial situation

• 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:

• Conservative portfolio (6% foreign stock, 14% U.S. stock, 50% bonds, 30% short-term investments): 5.78% average annual return

• Balanced portfolio (15% foreign stock, 35% U.S. stock, 40% bonds, 10% short-term investments): 7.83% average annual return

• Growth-focused portfolio (21% foreign stock, 49% U.S. stock, 25% bonds, 5% short-term investments): 8.89% average annual return

• 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