Your retirement might be many years away, however, making a plan can help you to have enough money when the time comes. But just how much money should you save for retirement? Do you need to save thousands every year or just a few hundred? We’re going to look at this now to help you retire respectably.
How Much Should You Save?
It’s thought that you should save at least 15% of your income every year. In other words, 15% of the money you make before you pay tax. This figure includes any contributions that your employer may make. However, if you want to save more than 15%, you can. Just make sure you can afford to save 20%, for example.
Your Lifestyle
Your lifestyle can have an impact on how much money you wish to save. If, for example, your income is quite low you might not wish to save 15%. Alternatively, if your outgoings are low, you also might not want to save quite so much.
If you tend to spend most of your earnings, you could reconsider your outgoings. Think about where you could make a few changes and see which retirement services suit your needs.
How Much Money Is Enough?
It’s hard to say for certain just how much money is enough. Everyone has a different lifestyle so everyone will have a different monetary target. Let’s imagine that you start saving for retirement at the age of 25 and you plan to retire at 67. You will need to save approximately 60% to 80% of your current income. This is so that you can maintain your current lifestyle. If you are having trouble determining how much to save or invest, it's best to use a retirement calculator for assistance.
Where Will The Money Come From?
The money that you receive when you retire will not just come from your savings. It’s likely that you will also receive money from Social Security. If you have a 401(k) or another type of workplace retirement fund and it matches or is a profit-sharing fund this will go towards your savings.
Let’s imagine that you earn $60,000 a year and you’re 25 years old. By the time you retire your salary should be more than $100,000 a year. If you want to maintain your lifestyle after you retire you will need to save around 45% of your income. The rest of your income will come from social security.
How To Save More For Retirement
The more money you save now, the more you will have when you retire. So how can you save as much as possible? Here are a few tips that could help make a relaxing retirement a reality:
• Start saving as early as possible
• Delay your retirement by at least a few years
• Save more than 15% if you can, the more, the better
• Open a savings account and put some money in it every month
• If you’re 50 years old, for example, try to save more so you can catch up
Saving for your retirement might seem quite complicated. However, the more you save now, the more you’ll have when you do finally retire.
