Monday, June 25, 2007

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

Saving Rate to Achieve Next Egg of 12 Times Salary at 65
Daily Savings Amount by Age
Salary203040 5060Target 12X salary
$20,0001.48 3.418.24 22.68106.97$240,000

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.

Copyright © 2007 Achievement Catalyst, LLC

1 comment:

Anonymous said...

Great tables! Our rate was 20% - 30% of income in the past. These days it's negative because we're coasting on one income temporarily. Hopefully in the next couple of years things will change back to heavy saving again.