Your Retirement Savings Challenge
Saving for retirement could be a challenge for most average people today; with their question being how much is needed? Various surveys undertaken have suggested that while it is generally appreciated that we should save more, but do not put this knowledge into actions. Various recommendations have been put forward about saving for retirement including a figure of between six and nineteen percent of our annual income. The response from respondents in a survey regarding this proposal was that less than one-third were at that level.
A more positive view regarding, saving for retirement is shown by the news that more people are beginning to save at a younger age. Among those surveyed it was found that of people aged between twenty nine and forty four, fifty one percent started saving for retirement at ages between twenty five and thirty four. A guideline to what is enough for your retirement is having saved eight times your salary.
A study was undertaken of savings behavior patterns in 2.2 million workers in seventy eight large companies. It revealed that with only a 401(K) plan, a twenty five year old person needs to save fifteen percent each year of pay, including the company match, to be able to retire at sixty five with sufficient resources. For a comparison, those who start saving for retirement at the age of thirty will need to save nineteen percent of their pay. These figures were based on an employee contribution of nine percent each year over forty years and a company match of six percent.
There are various assumptions included in these statistics regarding, saving for retirement, including that you will work continuously to the age of sixty seven and will die at the age of ninety two. It is also estimated that investments will earn you 5.5% and you salary will increase by 1.5% a year, beyond a general inflation rate of 2.3%. Should you have plans to travel or spend more on recreation and leisure activities, you will need to increase your saving for retirement.