How Much Annual Pay Should I Be Saving – Experts recommend that about 20% of your annual salary should be going toward a savings account. One of the first things you should do is pay yourself by finding the highest yield account with your local credit union or bank. This should make a good emergency fund, but you also need a retirement plan, such as a 401k or an IRA.
Your income, and what you pay for your monthly bills, will determine how much money you can save. If you haven’t done so yet, write down everything that you pay each month; using a computer spreadsheet is even better. Then deduct this amount from your income to find out how much money you will have left for retirement.
If you find yourself short on your saving goals for retirement, then you will need to get a higher-paying job, a second job, or you will need to cut back on your monthly expenses.
Some people still expect a nice Social Security check to fall back on. This is never a good idea because Social Security is already bankrupt and Congress hasn’t figured out how to fix it. The baby boomers are now collecting, which raises more concerns, since the program will be paying out more than it gets in.
When it comes to saving for your retirement, you need to put your future first, and this should be more important than having the most expensive premium cable package for your television.
This generation has big challenges ahead, with higher taxes and an unpredictable future when it comes to retirement.
If you want to have a fancy lifestyle after you leave the workforce, you need to be saving extra money so that you can take control of your future – because no one else will.
When people ask, “How much annual pay should I be saving?” the easiest way to answer is to remind them of the challenges ahead. You will need to save anywhere from 70-100% of your income to live how you do today. Most people will not be able to afford much after they leave the workforce at age 65.