Personal FinanceHow much to save for retirement

SpenderrificAugust 12, 201970011 min

Personal finance involves many aspects like paying for education, financing the acquisition of real estate and other durable goods, food, and health. But that’s not all. When it comes to managing your personal finances, your retirement should also be factored. However, the biggest conundrum of this is how much to save for retirement?

In general, the principle dictates that you save as much as you can for your retirement. But maybe this age-wise analysis of how much to save at each stage might help:

So, how much should one have saved by say, 30? Financial experts suggest about 50% of your annual remuneration. Achievable by saving 15% of your monthly salary. And 50% of it invested in stocks or some other income-generating enterprise. Consequently, at the age of 40, you should be saving two times your gross salary. At 50 four times and eventually the goal will be 10 times your annual salary as you progressively age.

How much should you save for retirement?  

The general rule is that you save 15% of your income for financing your retirement requirements. That is if you are young and you have just landed your first job. If you are in your 20s, then you have no cause for alarm. You have around 40 years before you retire but it pays to start early. 

However, if you are starting to save for retirement a bit later in life, say in your 30’s, then it is advisable to save for more than 15% of your income. Experts recommend saving at least 23% of your income if you fall into this category. This way, you will make up for the lost years of saving. 

How to get an estimate retirement figure 

The most efficient way to help you estimate how much you might need during your retirement is by looking at your present expenditure versus what will change after you leave the office.

That means envisioning the kind of retirement lifestyle you want for your golden years as a senior citizen. Being realistic about your retirement expenses would be the first step in the right direction. This will assist you in estimating how much you need to save for this eventuality.

To make your work easier, there are retirement calculators to help you get the math right- somehow. Calculators like this one from Bankrate or this one from will help you determine how much you need to save for your retirement. 

First and foremost, you should know how much you would spend on food, clothes, health, housing and ultimately vacations. This may include those expensive adventures on your bucket list. 

Time is the other component you need to factor in. When do you plan to go on retirement? How long will you spend the money before the final curtain call? It is foreboding and morbid but time consideration is of utmost importance.

The calculations are done on the basis of your current age, the age you wish to retire, your current household income, all sources of your money be it 401(k)s, IRAs and annuities, and the total amount that you have presently saved. The calculators also factor in the expected rate of return on investment, the income required at retirement and ultimately the years of retirement income. 

Unfortunately, there is no one answer that fits all when the question of how much money to save for retirement arises. And it is of paramount importance to note that as you progress through life the figure might change. So it is good to keep revisiting your calculations if and when need be. 

How to make your expected retirement a reality 


This could be your best retirement instrument. If you are working for an establishment that has a retirement benefits package, especially the 401 (k) you are in luck. Employer-sponsored retirement packages are almost like free money.  These carry high contribution limits and get you reasonable tax rates. 

However, this does not mean that if you are self-employed you have no saving options. The traditional Individual Retirement Account (IRA) is one way to look at it, though the contribution limits are much lower. You can still have a 401(k) account for business owners with no staff. 

You can also have personal savings and the amount you can save from this for retirement will largely depend on your contributions to the same.

Make some extra income 

Making some extra income is not only important to financing your current lifestyle, but also your future days in retirement. If you are looking for ways to save more so as to have more money to spend during retirement, then you will need to find extra sources of money to employ in savings. 

Living a frugal life before retirement 

Sometimes it will call for stringent measures in terms of budgeting and reigning in frivolous spending. Picturing the future life you want to live in retirement can give you the incentive for frugality. It has been said in different forums that a majority of people tend to overthink retirement. Buying cheap, investing for the long haul, being patient and consistent will reap you far much more income for retirement. Not forgetting your risk tolerance because high yield schemes always come with the inherent high risk.

This article is simply enlightening you on how much to save for retirement and how to go about it. But as previously stated, it is not a one answer fits all. It is a generalized view that applies to almost everyone. To make sure you make the right saving decisions, it is advisable that you see a financial planner. 

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