1) WHEN should I start saving for retirement?
2) HOW MUCH should I save for retirement?
The answer to both questions is, “it depends”. It depends on a number of factors that are individual to you and your unique situation.
However, the answer to the first question is usually more simple. If you’re making an income, and haven’t already started saving, it is ususally in your best interest to start saving now. Your total retirement savings and the regular amount you’ll need to contribute to meet your total retirement savings goal will be more in your favor, the earlier you start saving.
As you can see from the chart below, the earlier you get started, the easier it will be to reach your goal at retirement. One of the most important variables in the retirement formula is time because of the power of compound interest.
This chart shows the monthly contribution required to reach $1,000,000 at age 65 given an average rate of return of 7.5% in an investment.
The answer to the second question, How much should I save for retirement?” is more difficult to answer without understanding your situation. That is why it is a good idea to talk to a professional financial advisor. I say “professional” because there is always an abundance of advice floating around by individuals that may have strong opinions, but lack necessary training and licenses to be able to give trustworthy counsel. I have often heard, “Russ what you are telling me is interesting, but my wife’s brother-in-law told us that we should be doing (insert any number of things here)”. The brother-in-law or other “advisor” is almost always someone other than a licensed financial advisor.
A professional financial advisor incorporates years of training and experience along with knowledge of the laws and current trends in the industry to interpret your specific current situation, your goals, and what’s important to you at retirement. There is no one size fits all plan or strategy.
For a free consultation and to allow me to provide you with answers to these questions, specifically for you, please call 909-714-1830 or email firstname.lastname@example.org.