{"id":4367,"date":"2023-09-22T17:04:57","date_gmt":"2023-09-23T00:04:57","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=4367"},"modified":"2025-05-15T18:37:47","modified_gmt":"2025-05-16T01:37:47","slug":"how-much-should-you-save-for-retirement","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/how-much-should-you-save-for-retirement\/","title":{"rendered":"How Much Should You Save For Retirement?"},"content":{"rendered":"
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How Much Should You Save For Retirement?<\/h2>\n

In a perfect world, you would start saving for retirement with your very first paycheck and keep at it until the day you left your job some 40 years later. Unfortunately, not everyone is able to save consistently. Sometimes life steps in with job losses and unexpected illnesses that sidetrack our goals. The good news is that it\u2019s never too late to build up your retirement savings.<\/p>\n

If you\u2019re in your 20s, 30s or 40s (or even 50s) and haven\u2019t started saving for your retirement, now is the time. The sooner you begin putting money away, the larger your bucket will grow.<\/p>\n

So, exactly how much should you be saving for retirement? <\/em><\/p>\n

Like so many things, it really depends. A good rule of thumb is to save 15% of your income \u2013 20% if you can swing it \u2013 which includes any matching retirement funds from your employer. There are also a series of benchmarks aimed at helping people figure out whether or not they are on track for retirement.\u00a0 Fidelity Investments, for example, recommends that by age 30, you should have 1x your income socked away for retirement. By 40, 3x. By 50, 6x. By 60, 8x. And by retirement, 10x. Do this and you\u2019ll typically be able to replace about 80% of your pre retirement income for a period of 30 years. Of course not everyone will hit those marks on schedule.<\/p>\n

The EBRI Retirement Security Projection Model<\/a> shows that 40% of people aged 35 to 64 risk not having enough to meet their retirement expenses.\u00a0 Similarly, the National Retirement Risk Index<\/a>, produced by the Center for Retirement Research at Boston College shows 50% of the population won\u2019t have enough to maintain their current lifestyle in retirement. And yet, \u201cretirement can be a lot cheaper than your working regular life,\u201d says Annamaria Lusardi, Professor of Economics and Accountancy at The George Washington University School of Business. \u201cYou may no longer have to provide for your children, you might not need two cars for the household anymore if both of you aren\u2019t working and you can even cut costs by moving into a smaller home.\u201d<\/p>\n

The point? One size does not fit all. Here are some guidelines for figuring out whether you are saving enough.<\/p>\n

Remember, It\u2019s Your<\/em> Retirement <\/strong><\/h2>\n

What do you want your retirement to look like? If you haven\u2019t asked that question, it\u2019s time. Only once you envision it can you begin to price it out. Because that\u2019s when you\u2019ll answer the questions about things like where you\u2019ll live, whether you\u2019ll work, if you\u2019ll move.<\/p>\n

The question of when you\u2019ll retire is similarly important. The longer you continue to work, the more time your retirement savings have to grow and the fewer number of years you\u2019ll have to rely on that stash to fund your lifestyle. Once you\u2019ve got the answer to these questions, sit down with pen and paper and start adding up the amount you\u2019ll need to live. If you\u2019re struggling, a sit-down with a financial advisor can help.<\/p>\n

Focus On Income Replacement<\/strong><\/h2>\n

Once you\u2019ve got a sense of the numbers, you can begin working on how to get there. Start with Social Security. How much of your estimated monthly expenses will that cover? If you don\u2019t know what you\u2019re expecting from Social Security, you can get your estimate at ssa.gov.<\/a> Many people start taking their benefits at age 62, but waiting means more money every month; for every year you delay taking benefits from 62 until 70 you\u2019ll receive an increase of about 8%. That\u2019s a huge help. Subtract that from the amount you estimate you\u2019ll need to live each month, then consider whether you\u2019ll be receiving any pension income.<\/p>\n

Although most people in the U.S. no longer have pensions, many military families and teachers do. If you have a pension, subtract your pension income from your monthly needs as well. What remains is the amount you\u2019ll want to cover with retirement savings. \u201cBased on the 4% safe withdrawal rule, a million dollar portfolio creates $40,000 of annual income,\u201d says David Littell, professor of retirement income at The American College of Financial Services.<\/p>\n

Savings Calculators<\/strong><\/h2>\n

There are dozens of tools and guides<\/a> to help you figure out if you\u2019ll have enough money to cover your basics. One free online retirement planning tool is the AARP retirement calculator<\/a>. It takes you through a step-by-step questionnaire that accounts for Social Security and other potential income sources, like proceeds from the sale of real estate and inheritances.<\/p>\n

Use it to get a detailed chart of your income sources over time and identify potential gaps. The calculator allows you to make a variety of adjustments to see how you can help improve your odds of not outliving your money.<\/p>\n

If DIY planning makes you nervous, it might be worth the cost to consult with a\u00a0 Certified Financial Advisor to help you create a customized roadmap and implement suitable strategies.<\/p>\n

Make Your Money Work For You<\/strong><\/h2>\n

Finally, as you mull over these questions of how much you\u2019ll need in retirement, you also want to be sure your assets are working to get you there. In other words, that they\u2019re invested in a way that lines up with your risk tolerance and time horizon. Your investment portfolio should be diversified, made up of a mix of stocks and bonds. Exactly how much of each depends on how long you have until retirement and how much risk you can withstand. If you have many years to go, you can take more risk, which means your portfolio may be more heavily weighted toward stocks and other high-growth asset classes. A target-date retirement fund is a one-and-done solution that can help keep your mix in check.<\/p>\n

But you should also consider getting some help. A financial advisor can help you create a road map to your future that takes your short and long-term goals into consideration. They can help get you back on course when you need to change your finances to keep up with your changing life.<\/p>\n

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What do you want your retirement to look like? If you haven\u2019t asked that question, it\u2019s time. Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":13,"featured_media":7908,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_searchwp_excluded":"","footnotes":""},"categories":[50],"tags":[],"class_list":["post-4367","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-life-finances"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/4367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/comments?post=4367"}],"version-history":[{"count":4,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/4367\/revisions"}],"predecessor-version":[{"id":15362,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/4367\/revisions\/15362"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media\/7908"}],"wp:attachment":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media?parent=4367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/categories?post=4367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/tags?post=4367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}