Whether you’re ready to start talking about it or not, it’s a concern most people have, regardless of age. No one really wants to “have to” talk about their financial future, but the fact remains the same. The earlier you start incorporating a solid, comprehensive retirement plan into your life, the higher chance you have of securing the future that you envision for yourself, and for your family.
Regardless of your current retirement saving efforts, there is always that nagging voice in the back of your head that asks “am I saving enough?”.
So what it is the ideal number or percent of your income that you should be saving for your future retirement?
The truth is, there is no golden number that every person should abide by. Retirement plans should be customized to your own set of financial, lifestyle and personal goals. Your end goal being, maximum financial wellness during your retirement.
There are also often times where the gap in anticipated expenses and priorities during a retirement period vastly differ between individuals. You might have a child at home that still relies on your income, even after retirement. That changes things. Or maybe, you’ll be paying off a second home that you bought later on in life. That also would require a deeper look into your current retirement savings and investment strategy.
Keeping those additional, anticipated expenses in mind, there are some key takeaways that we think can help to make retirement planning a bit more digestible. And for the most part, should be integrated into every successful retirement savings plan.
- Does your employer have a matching contribution program? If so, and if your current budget allows it you should try to contribute the full match. So, for example if they’re offering a maximum 4% contribution max, then you should also be contributing at least 4% to your 401k plan. If not, you’re essentially giving away free money that your future self could rely on.
- If your employer doesn’t have a matching contribution program…where do you start? We believe that saving 10% of your pay is a good start. That being said, during times of financial difficulty, you may need to lower this. And vice versa, during times of financial stability, you should reassess if it’s possible for you to be contributing more.
- 70%. That’s the percentage of your working income now that you ideally should aim to replace by the time you retire. Meaning that if you’re making $100k a year, you should have enough saved to provide an annual income of $70,000 per year in retirement. Some of that will be provided by Social Security benefits, so it’s a good idea to factor that in when you’re planning how much to save.
With all of that being said, your personal, professional and financial lives are constantly evolving. We believe that an effective retirement savings plan should evolve along with all of those changes. We know that financial jargon can sometimes get a bit complicated and saving for the future can feel incredibly overwhelming. Luckily, we consider ourselves to be somewhat an expert on the matter and are here to help along the way.