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Old 11-05-2012, 03:54 PM
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thesimplemoneyblog thesimplemoneyblog is offline
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Default Re: How much to put away from each pay check?

The answer is: it depends. The more you can sock away, the better you may be off later in life when it comes time to retire. The younger you are (if you are in your 20's or 30's), the less you may need to set aside. It also depends on your other goals (children's education, vacation, paying down debt, paying off your home, etc).

It used to be a good rule of thumb that a normal savings rate was about 10%, but given the realized investment returns by investors over the past decade+ have been low as well as the potential concerns with the sustainability of Social Security, the figure may be closer to 15-20+% in reality.

It would be important to seek a competent financial advisor to help you with the question of how much you need to save, to help you periodically review your scenario each year to see that you are on track, and to see if any modifications may be needed.

There are a lot of different ways to save for retirement (IRAs, 401(k)s, regular savings, regular investment account, etc.), so it depends on what you have access to. It can make sense to maximize your contributions to your 401(K) to take advantage of any employer matching first and then contribute to an IRA (if you are able given the income limits).

Hope this helps!
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