 TITLE: How Much You Should Have Saved for Retirement by Age CONTENT: How to Save for Retirement\n--------------------------\nFidelity's saving recommendations assume that an individual has saved 15% of their annual income every year since age 25 and that they invest 50% of their retirement savings in stocks.\nStarting to save for retirement as early as possible will allow you to take greater advantage of compounding. Compounding allows you to earn investment returns on not only your contributions but on your previous returns as well. Investing in stocks rather than only in low-risk, low-reward investments like cash and bonds allows for investment returns that, historically, average about 10% per year (about 7% after adjusting for inflation).\nThe type of investment account you can use to save for retirement often depends on whether you're employed by a company that offers a workplace retirement plan. But anyone can, and should, save for retirement, no matter their employment arrangement. Here are your options:\n*   **401(k)**: This type of plan is sponsored by an employer and allows you to contribute to a retirement account directly from your paycheck. Since contributions are made before they're taxed, traditional 401(k)s require you to pay income tax when you make withdrawals in retirement. With a Roth 401(k), however, you make contributions with money that's already been taxed and can withdraw it tax-free. Many companies offer to match employee contributions to a 401(k) up to a percentage of the employee's annual earnings. Small businesses can offer their own version, called a SIMPLE 401(k) plan, to their employees, and self-employed people can open a Solo 401(k). You can start taking 401(k) withdrawals penalty-free at age 59½, or at age 55 under certain circumstances.\n*   **Individual retirement account (IRA)**: If you don't have access to a 401(k), or you want to save extra for retirement, you can open an IRA. These also come in traditional and Roth versions, and the income qualifications and tax treatment differ between the plan types. Like with the different types of 401(k), Roth IRAs are funded with post-tax income and traditional IRAs are taxed upon withdrawal. A Self-Employed Pension (SEP) IRA is available to freelancers, the self-employed and sole proprietors, and a SIMPLE IRA is available to small businesses.\n*   **Other investment accounts**: Once you're working toward saving for retirement with a 401(k) or IRA, you can also invest in a brokerage account—potentially with a robo-advisor or the help of a financial planning firm. Compared with dedicated retirement accounts, investing in a non-retirement brokerage account can let you skip certain restrictions on how much you can contribute and when you can withdraw money for retirement. Your money is still subject tax treatment by the IRS, including capital gains tax. END