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The average person should start saving for retirement between the ages of 18 and 21, when basic education is complete and income is being generated. For many, that sounds too early. But when you consider the benefits of starting early, it's a no brainer. The earlier you start saving for retirement, the less you'll have to sacrifice during your working years and the more your nest egg will grow.

That's right — save less each year AND end up with more in the end. That's the beauty of starting early.

So now that you understand the time to start saving for retirement is now, let's get to it.

How much do I need to save?

The average person should save between 10-15% of their pre-tax income. (That's your salary, not your take-home pay.) Determining exactly how much to save at various points in your life will depend on a few things:

  • How old you are, when you plan to retire, and how long you expect to live.
  • How much you already have saved for retirement.
  • How much high-rate debt you have.
  • What your expected rate of return is.

Use our Retirement Savings CalculatorOpens in New Window to help you calculate a savings plan to meet your goals. Play it on the safe side and plan to live until at least age 95. After all, those last few years of life can get expensive, so even if you don't live that long, the extra savings will help meet any additional care needs.

Consider how much high-rate debt you currently have and how long it will take to pay it off. What will that debt cost you in interest charges? Determine if it would be more financially beneficial to turbo-charge those payoffs or consolidate to a low-rate loanOpens in New Window before increasing your retirement contributions to 15%.

Your expected rate of return will have a huge impact on the growth of your retirement savings. Be careful not to overlook this detail and assume a rate that is unrealistic for your particular retirement plan. Use our Retirement Savings CalculatorOpens in New Window to plug in different rates and understand the impact. Higher interest rates are associated with higher risk, so consider what types of investments you will be comfortable in. In any case, it's always better to err on the conservative side. You'll need to estimate the average rate of return for your pre-retirement and post-retirement years.

Remember, the closer you get to retirement, and certainly once in retirement, the less risk you should take with your investments. Therefore, in many cases, you should expect a lower rate of return during post-retirement years.

Be sure to revisit this area of calculation often. As the economy changes, so will your rate of return. You may need to compensate by saving additional funds to meet your goals.

Financial Calculators

Use these savings and retirement calculators to help give you a better idea of how to save for your retirement.

How much will I need to save for retirement?Opens in New Window
How much will I receive in Social Security?Opens in New Window
I'm retired, how long will my savings last?Opens in New Window
How much can I save with my 401(k)?Opens in New Window
Compare Roth 401(k) and Traditional 401(k) retirement savings plans.Opens in New Window
How much will inflation affect my retirement?Opens in New Window

Ready to Get Started?

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