How much should someone in their late 20s save each month for a decent pension for retirement?

Public Comments

1. There are many factors to consider. What are your goals for retirement? Do you live pay check to pay check? Will you already own your home or will you still be paying for it after you retire? So, it really depends on your situation. It also depends on your employer. Do they have a matching 401K? Do they have a pension plan? Good luck but worrying about retirement in your late 20's is a bit overzealous. You still have to work for at least 35 years to be able to retire. Why worry about it at this point. Save YES but don't worry about it.
2. Absolutely as much as you can.
3. Depends on what you call "decent". Many people rely solely on Social Security for their retirement. I do not consider that to be a decent retirement. If you have a 401K and/or pension plan at work you should take full advantage of them and put away as much as you can on a pre-tax basis. At my job I can put up to 15% of my gross into the 401k and the pension plan is company funded. I reduce my taxable income by 15% right out of the gate with the 401k and the company matches a portion of what I put in. The general rule is that you will need to replace between 50-75% of what you are making at retirement to live the same life style.
4. The best approach is to save as much as you can while still living a decent (not lavish) life now. The more you save the better, especially early in life when there's lots of time for that money you save to grow through investments. Hard numbers are difficult because there are so many variables, but here's one set of numbers. If you assume: - 3% wage growth per year - 3% inflation per year - you invest in stocks and earn 10% per year (which is reasonable based on long-term historical stock performance, but by no means certain) - you have no company-paid pension - you won't get any money from Social Security (I always use this assumption when planning because I don't have much confidence that the politicians are going to do what it takes to save Social Security as we current know it) then saving 15% of your pre-tax income for 35 years would allow you to replace 80% of your income at retirement. If you want 100% of your income at retirement, save 19% now. If you're getting company matching funds in a 401k, you can count that toward the amount you need to save. If you're afraid of stocks and are going to invest in "safe" investments like bonds, money market accounts, etc. then you'll need to save much more because your money won't earn as much for you over the years.