Retirement Saving Challenge - Choosing A Goal

It's six days from the start of My Wealth Builder's Retirement Saving Challenge, which will start on Sunday, July 1, 2007. By now one should have set a saving goal. I have presented approaches which offer two very different goals. The first approach is to save 12% of one's salary. The second approach is to to save enough to have a nest egg of 12 times one's current salary by age 65. For reference, here is a comparison of the two approaches.

12% of Salary

	12% Of Salary By
Salary	Year	Month	Day
$20,000	2,400	200	6.58
$30,000	3,600	300	9.86
$40,000	4,800	400	13.15
$50,000	6,000	500	16.44
$60,000	7,200	600	19.73
$70,000	8,400	700	23.01
$80,000	9,600	800	26.30
$90,000	10,800	900	29.59
$100,000	12,000	1000	32.88
$110,000	13,200	1100	36.16
$110,000	14,400	1200	39.45
$130,000	15,600	1300	42.74
$140,000	16,800	1400	46.03

Saving Rate to Achieve Next Egg of 12 Times Salary at 65

	Daily Savings Amount by Age
Salary	20	30	40	50	60	Target 12X salary
$20,000	1.48	3.41	8.24	22.68	106.97	$240,000
$30,000	2.22	5.11	12.35	24.02	160.45	$360,000
$40,000	2.96	6.81	16.47	45.35	213.94	$480,000
$50,000	3.70	8.52	20.59	56.69	267.42	$600,000
$60,000	4.43	10.22	24.71	68.03	320.91	$720,000
$70,000	5.17	11.92	28.82	79.37	374.39	$840,000
$80,000	5.91	13.63	32.94	90.71	427.87	$960,000
$90,000	6.65	15.33	37.06	102.05	481.36	$1,080,000
$100,000	7.39	17.04	41.18	113.38	534.84	$1,200,000
$110,000	8.13	18.74	45.29	124.72	588.33	$1,320,000
$120,000	8.87	20.44	49.41	136.06	641.81	$1,440,000
$130,000	9.61	22.15	53.53	147.40	695.30	$1,560,000
$140,000	10.35	23.85	57.65	158.74	748.78	$1,680,000

For this Retirement Savings Challenge, it pays to be young :-) Until around 37.5 years, the saving amount to achieve a nest egg of 12 times salary is the lower number. After 37.5 years, the saving amount for 12% of salary is lower number, because one has to make up for lost time to achieve a 12 X nest egg. To get started, try to save at the lower number of the two approaches and work towards the higher number over the next year.

For more on Strategies and Plans Ideas, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

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