In relation to retirement planning, a lot of people say to save as much as you can, but if you’re like most people, you’re probably wondering exactly how much you need to save to be comfortable during retirement. Wondering which percentage of your income you should save? Here’s how to figure that out.
How Much Money You Need to Save for Retirement Planning?
To nail down how much you should save, start by adding up the income you’re likely to receive during retirement. Then, subtract that from the annual amount you need to live.
For instance, if you’re going to receive $30,000 from a guaranteed pension and $24,000 from Social Security, you have $54,000 coming in, but you want to spend $100,000.
To make up the shortfall, you need an extra $46,000 per year. To ensure you have that, you should save $15 to $20 per dollar.
When you multiply $46,000 by $15, you get $69,000, and when you multiply $46,000 by $20, you get $92,000.
So, you need to save between $69,000 and $92,000. If you have 30 years to save, you should save between $2,300 to $3,066 per year.
Percentage of Your Income You Should Save
Use the tips above to guide you toward how much you need to put away per year. Then, divide that amount into your annual income to figure out which percentage you need to save.
If you earn $100,000 per year, and you want to save $2,000 or $3,000 per year, that’s 2 to 3% of your income. If your income is lower than that, you need to save a higher percentage for retirement planning.
