Everyone knows that saving for retirement is important but not everyone knows how to start saving and how much to save. While people’s confidence in their retirement savings plan has increased over the past few years, many do not know how much they need to save for their golden years.
About 36% of people have less than $1,000 in savings and investments that could be used for retirement, not counting their primary residence or defined benefits plans, and 60% of people have less than $25,000 according to Employee Benefit Research Institute.
Only 44% of people have tried to calculate how much money they’ll need in retirement so that they can live comfortably in their golden years, the survey shows. People who have done calculations on what they need to save tend to have higher levels of savings.
When should I start saving?
The answer is simple: as soon as you can. The longer you set aside money into your retirement plan, the longer it has to grow. Each year’s contributions and gains generate their own gains each following year – a phenomenon known as compounding.
How much should I save?
A general rule of thumb is that you’ll need around 70% of your pre-retirement annual income to live comfortably. This percentage is different for everyone so it’s important to know your number.
The key to saving for retirement is to balance it with the life you live today. Building a budget and understanding where you spend your money is a great start. Knowing your numbers is also a great way to build your plan. Stop by the WFU Thrive Financial Booth on Sept 5 to learn about ways to determine your number and begin your plan towards an enjoyable retirement.