How Much Do You Need to Save for Retirement?
Planning for your retirement is an important financial decision that you should make early enough. Once you retire, you might not have a reliable source of income, and the only means of survival is your life savings. Therefore, when you still have a job, you should not spend everything on mortgage and lifestyle. From every salary that you receive, you should save part of it. How should you save for your retirement? Many people find it hard to decide on the right amount that they should save towards retirement. If you are wondering how much of your income you should save, then you are on the right page. The article herein discusses some of the saving plans that one should try to live an independent life after retirement.
The most common saving rule is the 15% rule. The 15% rule says that you should save 15% of your pre-tax salary for retirement. This is a suitable rule for saving for retirement, but you should know that it has its drawbacks. One of the flaws of the saving rule is that you will have to start saving early. If you have not started saving by the time you are 35, you might have enough in your account to sustain you when you retire. The other challenge with this saving formula is that it does not take into account that your salary fluctuates. read more here about the challenges of the 15% rule saving plan.
Another saving rule that you should consider is the 80% rule. This saving rule states that your savings should be enough that you can draw down 80% of your financial salary each year. The flaw of this saving rule is that the other sources of income are not considered. click here to learn more about the 80% rule of saving for retirement.
4% rule is the other saving plan that can suit you. 4% rule is a way of calculating the amount you need to save to attain the 80% rule. The biggest challenge associated with this rule is generating the right amount to save. A financial advisor is the right expert to consult with if you don’t want to mess when using this saving formula. A financial advisor will review the details of your income and recommend the most suitable saving plan for you. Read more here for more info. regarding how to find a good financial advisor.
The retirement saving method that you should consider is salary multiples. In this rule, your annual salary by the time you hit a particular age should be of a certain multiple. Therefore, if you are wondering how you can save for retirement, you should consider the above-discussed rules now!