How Much of My Income Should I Save For Retirement?

May 20, 2014

"As much as you can" is the standard advice. Many financial planners recommend that you save 10% to 15% of your income for retirement, starting in your 20s.

But that's just a general guideline. This is your retirement we're talking about, so it pays to get a little more specific. It's a good idea to establish a savings target — one that tells you roughly how much you should set aside over time to meet your retirement goals.

As a general rule, you'll need at least $15 to $20 in savings to cover each dollar of the annual shortfall between your income and your expenses. For example, if your projected retirement expenses exceed Social Security and pensions by $20,000 a year, you might need a nest egg of $300,000 to $400,000 to bridge the gap.

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