What is a good amount to set aside for retirement?

Question

I'm 22 years old and my husband is 23. What is a reasonable amount to set aside each month for retirement if we want to retire at 65? We make about 35000 annually currently but I'm not yet done with school. When I am done (in two years), we will be making closer to 80000. We just want to know how much is a reasonable amount to plan for.

Answer 1

10-15% if you can afford it.  

Think of it this way.  One hour of every day that you work should be saved so you never have to work again.  :)

Answer 2

If you go to an investment agency, they will tell you how to safely invest your money. According to trends in the last hundred years, that money will double every seven years. So if you put 10

dollars in now, by the time you are 64, it will have increased to $640. Obviously, you should put in more than 10 dollars, originally, though, but that amount depends on how much money  you have available and how much you think you will need for retirement.

Answer 3

Here is the simple truth.  AS MUCH AS YOU POSSIBLY CAN AFFORD TO...

1st Make a budget (everything that must be paid and all the things that make life worth living)

2nd put into a liquid account (easy to get to in a hurry) 6 months of expenses in case something comes up (and it will).

3rd save, save, save...  a little bit saved today makes up for a whole lot later... all these calculators show that if you put a decent amount aside now and stop someone that starts in 15 years has to put a whole lot  more and longer and still won't catch up.

4th 401k's are protected... only debtor's that can get to it are the IRS or an ex in case of divorce so they survive most bankruptcies...

5th Set aside money for big purchases... If you can save instead of borrow you will save 10's of thousands over the years... so again

SAVE AS MUCH AS YOU CAN

Answer 4

It used to be said that a person would need about 60% of what they were earning in their final work years as a retirement income.  With people retiring early and living more active lives in retirement that is no longer true.  The answer to your question is to save as much as your budget allows.

If your employers offer a 401k try to max it out if you can.  You can always start small and increase the amount as your income changes.  Keep in mind that all of your other investment such as bank savings, CD's, stocks, bonds, real estate, etc. can also be used to fund your retirement.

If you were retiring now with a combined income of $80,000 and wanted to continue live as well as you are now you would need about $1,600,000.00 in retirement money.  That is considering a conservative return of 5% annually.

Consider that if you are earning $80,000 a year now and get 5% annual increases in 35 years you will be making in excess of $441,000.  Now that means that you would need about $8,800,000. in retirement money.

Now that I have scared you to death, it is not that bad.  We only wish our salary would increase about 5% a year.  If you can shoot for $1,000,000 to $2,000,000. you will do well.

Answer 5

At minimum 10%. 15% is better still.  Having $2-3 million at retirement is not an unreasonable goal.

1. Open Roth IRA's and contribute the maximum each and every year. Those contributions will not lower your income tax but the money will be tax free when you retire.

2. Join the 401(k) program at your employer and contribute the maximium allowable amount. Those contributions will lower your income tax.

3. Pay off any debt that you have and stay away from credit cards.  Credit card debt is like quicksand only the death is much slower.

4. Don't finance anything that loses value over time, like a car.  Save up the money and pay cash,  that way you make the interest instead of paying the interest.

5. If you own a home and have a mortgage, pay extra on the principal each month and get the mortgage paid off as soon as possible.

The two of you are very smart to start planning now.  Since you are starting so early, you may be able to retire as millionaires much earlier than 65, but you will definitely be millionaires.

Answer 6

Starting at your ages, if you could set aside 10% of your income in retirement accounts every year, you will have a very big retirement nest egg when the time comes.

Answer 7

The best advice I have heard is 15%.  Your income does not change the rate.  Neither does your age.

Note:  15% of $80,000 comes to $1,000/month.  At the historical average return for the US stock market, in 40 years, that will be worth around $11 million.