Answer extracted from the Money Guy Show podcast — listen to the full episode below.
What savings rate do financial advisors recommend if you're getting a late start on retirement?
The Money Guy Show recommends a baseline savings rate of 25% of gross income. For those who are behind in their 40s, a rate of 35% or higher becomes necessary to reach retirement goals before stopping work.
The typical American starts saving for retirement between age 30 and 33, which already represents a delayed start for many. However, as discussed on The Money Guy Show, falling behind by your 40s requires more aggressive action to catch up.
A 25% savings rate serves as the foundation for wealth building, allowing compound growth to work over decades. This baseline assumes you've started saving in your early 30s and have roughly 30+ years until retirement.
When 25% isn't enough: The acceleration strategy for late starters
The critical shift happens if you're in your 40s and haven't built sufficient retirement savings yet. At this stage, pushing beyond 35% of gross income becomes the realistic target to compensate for lost time and still reach a comfortable retirement.
The difference between 25% and 35% is substantial—saving an extra 10% of gross income over 15–20 years creates a meaningful gap in final wealth accumulation. This higher rate doesn't mean deprivation; it means intentional prioritization of retirement over discretionary spending.
According to research cited in the episode on building wealth from behind, the median retirement savings for adults in their 40s is only about $45,000—far below the target for that age. This reality underscores why a higher savings rate becomes non-negotiable for late starters.
Beyond the percentage itself, the Money Guy Show emphasizes maximizing tax-advantaged accounts: 401(k) contributions, Roth IRA limits, and catch-up contributions available after age 50. The show explores specific strategies for deploying this higher rate efficiently across different account types.
Brian Preston — Certified Financial Planner at Abound Wealth Management. Preston hosts The Money Guy Show, a financial education podcast focused on helping ordinary Americans build wealth and achieve financial independence through practical advice on saving, investing, and long-term financial planning.
The reality for late starters is that the full episode covers lifestyle trade-offs and concrete examples of households that shifted from 20% to 35% savings rates—and how their trajectories changed as a result.
Key takeaways
- A 25% savings rate is the baseline recommendation for wealth building, assuming savings began in your early 30s.
- Late starters in their 40s should target 35% or higher to make up for lost compounding years.
- Maximizing tax-advantaged accounts (401k, Roth IRA, catch-up contributions) is essential to deploy a higher savings rate efficiently.
- The gap between typical American savings and retirement targets grows wider the later you start—aggressive action now prevents hardship later.
See also
How much should Americans have saved for retirement at different ages according to The Money Guy Show milestones?
The Money Guy Show recommends saving 20 times your gross income by retirement, using an 80% income replacement ratio. Milestones include 1x gross income by age 30, 3x by 40, 6x by 50, and continuing growth to reach the 20x target at retirement.
What is the median retirement savings by age group in the United States?
Median retirement savings vary significantly by age: under 35 it is less than $20,000; ages 35–44 it is about $45,000; ages 45–54 it is $115,000; ages 55–64 it is approximately $200,000.
What percentage of U.S. adults say they are behind schedule on retirement planning?
According to a CNBC poll cited on The Money Guy Show, 53% of U.S. adults said they are behind schedule in retirement planning and savings. Additionally, 69% of American workers are unsure that they will ever be able to retire comfortably.