How Much Should I Save for Retirement?

When you’re young, retirement seems like a lifetime away, so why wonder how much to save for retirement? Well, the short answer is that by thinking about it now, you can plan for it now. Planning for it now means you will have more when you actually retire, thanks to compounding interest.

Even if you’re well out of your twenties, it’s not too late to start saving.  A common question is how much to actually save for retirement. The CGS Team is answering this question for you. Even if you can’t save as much as recommended below, start saving as much as you can right now.

Contribute What Your Employer Will Match

At the very minimum, you should be contributing at least what your employer will match. This is essentially free money and should not be passed up.  It may seem difficult to contribute up to 6% of your income, but once you do, you will realize you can get on just fine without it.

Think About Your Future Spending

This is may be extremely hard, especially if you are young. Who knows how many kids you will have, what job you will be in, or where you will even be living?! Don’t let that stop you from thinking about your future spending.  What do you want out of life? Do you know that you want to own a home? Do you know that you want to travel during retirement?

The goal is to project your monthly spending during retirement.  It’s ideal that your house will be paid off and your children’s tuition will be paid for, but overestimating is the best way to go. Here’s a great example from NerdWallet that shares what you may need to save:

“A 25-year-old who has $10,000 saved, earns $50,000 a year and wants to replace a little less than that level of income will need about $2,833 a month in retirement. Saving 12% of his income — a number that adds up to around $500 a month, and can include employer matching dollars — will allow him to retire by age 68.

A 35-year-old who has $30,000 saved, earns $70,000 a year and wants to replace a little less than that level of income will need about $3,670 a month in retirement. Saving 17% of her income — $1,000 a month, again including matching dollars — will allow her to retire at age 68.”

The earlier you start saving, the more you will have at retirement. Start putting away as much as you can now and reassess as your financial responsibilities start to take place.

What Income Bracket Will You Be In?

This is another hard question to answer right now, but it’s crucial in determining how much to save and how to save it. Depending on your current financial goals (do you want to own a business? Do you want to invest in the stock market?), it’s very likely that you will be in a higher income tax bracket when you retire than you are in now.

So what? Well, if that’s the case, why not pay taxes on the income you make now instead of the higher income you make later? Consider contributing to a Roth 401k or IRA. This means that your contributions are already taxed and taxes will not be taken out when you retire.  Sure, your contribution won’t be as high right now, but you will not have to worry about taxes on your income when you retire.

Related: How I Picked My 401k Selections


The ultimate answer to how much you should save for retirement is as much as you can. Financial experts recommend 10-15% of your income, but if you can contribute more, do it. If you can’t contribute that much, then do as much as you can. How much are you currently saving for retirement? Are you contributing pre-tax or post-tax dollars? Leave a comment below to share your retirement-saving questions and we will get you an answer!

-The CGS Team



4 thoughts on “How Much Should I Save for Retirement?”

  1. It’s interesting to see 68 floated as the new retirement age; I’m seeing that more and more lately. “Retire at 65” has been the drumbeat I’ve heard since I was little, but now I’m see people working into their seventies, which is great if they can and want to be active, but heartbreaking when it’s because they simply can’t afford to retire. I often see statistics about women falling behind in saving for retirement, in large part because we simply make less money, but also because more household expenses tend to fall to us.

    I would love to see more employers offer financial/retirement advice aimed specifically at women, and how we can make sure we’re prepared for the rest of our lives financially – especially since we tend to live longer than men do. I’d also be interested in hearing other CGS members’ thoughts on early retirement! Is anyone else saving towards that? What are some of your strategies?

    1. I’m not surprised at all that the retirement age would increase. I feel that people are living longer (and often want to work longer), but also the state of our economy needs the extra year of taxes from workers! I was fortunate enough to start contributing to my 401k when I was 21, and turned it over to Roth at 24 (I’m 27 now). However, I want to expand my retirement-saving horizons. I’ll likely start with an IRA. My portfolio consists of a majority of stock options, which can be risky (but rewarding). What are your thoughts on retirement-savings strategies? @baileythebookworm

      PS – How was vacation? 🙂

      1. I am all for people working as long as they’re willing and able – it’s always a shame to lose people with a lot of experience and ability from the workforce! I’ve been considering an IRA lately, they seem like they’d be a nice place to start building an additional line of savings. Right now I’ve got quite a bit going into my 401k, and have been working on developing some investments through Betterment, which I love. I’ve got one aimed directly at retirement – like yours, it’s a little more heavily aimed at the stock side of things since my plan is longer term, and a secondary one for emergency savings. It’s worked out well so far! I’m excited to see where I am in a year or so and things are a little further along. Once I finish my MA next spring, I’m also hoping to have time to start a side job doing copywriting and editing, which would be a nice bump for my retirement savings (and my fun money).

        Vacation has been awesome so far – I’m sad it’s almost over! How was yours? 🙂

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