How Much Annual Pay Should I Be Saving - Recommended Savings Percentage

Published: September 26, 2021

How much annual pay should I be saving? The recommended savings percentage is about 20 and that’s what you should be paying yourself from each paycheck. One of the first things you should do is find the highest yield savings account with your local credit union or bank. While this could be used as a rainy fund, you also need a retirement plan, such as an IRA or a 401k.

Trying to determine how much money to save will depend on how much you have left after paying your bills. Make sure you plan a budget accordingly. Write down all of your expenses and deduct the amount from your pay.

There are several viewpoints when trying to figure out how much of your annual pay savings should be for retirement. Their calculations all seem to take into account different assumptions and criteria, so it’s important to look at them all, and figure out which you think would work best for your situation.

Some of the criteria that may be wise when calculating how much you’ll need to save include your life expectancy, the costs of health care, how much inflation we’ll see and what type of lifestyle you’re living.

In addition, important is your age, your current income, how much of your annual pay savings you already have, your employment prospects in the future and how much you’re willing to sacrifice now for future security.

Most financial planners will say that people will need anywhere from 70-100% of their income in order to be able to live a similar lifestyle when they retire.

So remember, the recommended savings percentage is very important for your financial planning and it should be a priority for your annual pay.

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