Percentage Of Income To Save For Retirement

Everyone isn't going to save the same amount of money for their retirement

. This is because everyone makes different amounts, and will want to live on different amounts when they are retired. So how do you know how much to save? Well, one way that makes things simple is to look at the percentage of income to save for retirement, as this number can be used for everyone. This is a good way to get started saving and make a realistic plan, however, eventually you'll want to further evaluate how much you actually need to save total to make sure that you will, in fact, have enough.

In terms of a percentage plan, however, ten percent is a great place to start. To be more precise, if your income allows you, you should hopefully be saving twenty percent of your income each month, ten percent of that can go towards your other savings goals (down payment on a home, a new car, college tuition, etc) and then the other ten percent for retirement.

You can invest these savings in a variety of ways. You could always simply save it in a normal savings account, but with less than 3% in returns, you're probably not even going to beat inflation this way. Other options include 401k plans through your employer, or IRAs (independent retirement accounts) that you can set up with almost any financial company. These vehicles allow you to invest your savings in a variety of ways that will earn you returns and further increase your savings.

No matter how much it is you're actually able to save, the point is to save. Too many people aren't saving for this at all, and end up reaching retirement age without actually being able to stop working. While social security will hopefully still be around, it's really not going to be enough to live a comfortable life.

Make sure you put aside a percentage of income to save for retirement each month, and you'll be ahead of most of the people around you.

by: Jennifer Quilter

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