How much should you save for retirement? There’s not a one-size-fits-all answer, unfortunately. It depends on your current financial situation and your long-term financial goals.
What do you want to do in retirement?
Do you want to travel? Are you hoping to pursue hobbies that will take some investment to get started (or to maintain)? Will your mortgage be fully paid off? Do you plan to live near people who can support you as you age? How much do you anticipate your expenses declining (or increasing)? Have you planned financially for medical expenses?
Fortunately, even though there’s no hard-and-fast rule for a specific dollar amount you should save, there are reliable principles that can help you achieve your retirement goals.
Watch the video below for part 2 of the Question Mark series on retirement planning.
So I’m often asked, “How much should I save?”
The first number one fundamental thing is to get in the habit of saving. So, it really doesn’t matter at first how much just get in the habit of paying yourself first. So, $5 a week, $25 a month start to save and get in that habit.
Then what I’m going to ask you to do is sit down and take a look at all of the income that you make, maybe on a monthly basis and take a look at all of the things you spend money on, all of your expenses, and come up with a number that’s left over, because that’s where you’re going to take your savings from.
As a general rule, try to save about 10% of that leftover money. If you can take that and put it away, you probably won’t need it or have to access it.
And now you’re getting in the habit, and over time you’ll increase that 10% to a greater amount. But that’s a great general rule to start.
For more answers to common retirement planning questions, check out the rest of the Question Mark: Retirement Planning series.