How Much Do I Really Need to Save for Retirement?


Q: What percentage should I be saving for retirement from each paycheck?

Generally, I recommend earmarking 10 percent of your paycheck for retirement during your 20s, then bumping it up to 15 percent in your 30s. The more you can put away when you’re young, the better, because your money has more time to grow.

That said, I get that many 20-somethings can’t spare 10 percent of their pay right out of the gate, especially when you factor in other priorities like paying off student loans or building up an emergency fund. So know this: Saving anything is better than nothing. And it’s okay to save 3 percent at first, for example, or the minimum to recoup any employer match.

After that, though, do your best to increase the percentage every year, even when you don’t get a raise or bonus—but especially when you do. Many people get pay bumps at work at the beginning of the year, so now could be a good time to up your contributions by 1 or 2 percent.

Every once in awhile, step back and look at the big picture. The fact is, how much money you’ll really need in retirement is solely based on your personal lifestyle and how you envision your post-work life. So even if you can save 10-15 percent of your paycheck, it’s important to calculate your own personal retirement target. Swapping out an arbitrary savings rate in favor of one that incorporates your individual needs may be the motivation you need to kick your savings into high gear.

Certified Financial Planner Mary Beth Storjohann is founder of Workable Wealth and an author, working to help clients in their 20s through 40s across the country make smart, educated choices with their money.

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