By Mckenzie Esposito
Sage financial advisors would suggest you save as much as you can. For the average person looking to save for retirement, around ten to fifteen percent of your income should be diverted to some form of retirement savings plan. Furthermore, you should plan on starting your retirement savings as early as you can to take advantage of interest building up over time.
While ten to fifteen percent is a typical savings range, it may be more beneficial to determine how much income you will need in retirement. This will allow you to set an end goal with smaller targets along the road to your retirement date.
There are calculators available online that will help you figure out the total amount you need to be saving for as you earn during your career. Most calculators offer a breakdown of your total required savings based on your target and how much you should be setting aside at certain intervals (like each pay check).
Each individual has unique retirement needs and will take a different path based on retirement savings accounts and the benefits received from their workplace. However, a standard assumption is that you will have to have between $15 and $20 saved for each dollar missing between your income and expenses in retirement. If your expenses are $20,000 more per year of retirement than your pension and/or retirement benefits from your employer will provide, you should have over $300,000 in additional savings to make up the difference.
For those looking to truly retire and enjoy it fully, the ultimate goal is to save as much money as possible while you are still working. Budgets should be created and adhered to diligently to ensure a commitment to and fulfillment of saving. It is a good practice to update budgets regularly, removing and adding expenses and income as necessary. Look for unnecessary expenditures and areas you might be able to sacrifice to save even more of your income each year.
The biggest takeaway for those looking to save for retirement, particularly younger savers, is to stay focused on the goal. If your current income does not support large dollar amounts being sent to savings accounts, then you should be diligent with saving what you can. Look for opportunities to make large contributions to savings with bonuses or unexpected gifts. Sacrificing a vacation now could lead to a better retirement later.
To sum the answer up, you should be saving as much as you can for retirement. As your career progresses, that number will probably go up. Staying focused on budgets and goals will help provide an enjoyable retirement in the long run.