How much should you save up for retirement? ?
don't say 40k/year and up because rarely is anyone getting a 40k plus pension! when you paid off your mortgage you don't 40k plus anyways. i heard companies are rarely doing pension plans. but how about 401k and other retirement plans companies offer. I heard only few companies have a pension plan anymore. How much would you need per year? 20k/year? considering your house is paid off.
Public Comments
- There are many considerations but let me give you few highlights: 1. how much can you afford to save? 2. What percentage of your current salary or the salary at your retirement age would you like to be available to you at retirement? 3. What do you think would be your life expectancy? The best avenue to take to save for retirement is one that has tax benefits. the 2 most common plans are 401K that is offered by employers and IRA saving plan in case your employer doesn't offer a 401K. There is a maximum limit of how much you can save a year in a 401K plan. Right now it is around $15,000. So. If you make $100,000 per year and you think you'll need around $80,000 a year in retirement and you'll start retiring at the age of 65 and you'll leave to be 95. You may want to save: 80,000*30 years=$2.4 Million. Now if you are 30 years old and have 35 years of saving ahead of you you may just make this target. Even if you start low and do not contribute the entire 15,000 per year but do so sometime along the way. Depends hoe much risk you're willing to take with your 401K investment. I for example lost %40 of my 401K value during the past year.
- You have the best answer to that question. Look at how much you spend every month - on everything, home, food, gas, and all the stuff just because you enjoy it. That is how much you need every month in retirement. If your house is paid off, you can drop the amount by your payment - but an older house requires more repairs - so keep some money in for that. Keep in mind, if you are retiring in 20 years, a gallon of gas or milk will cost a lot more than it does today. Inflation averages 2.5% or so every year.
