It’s Money Monday again! Weeks are flying by way too fast! Is December really almost here? My chilly hands and cozy Bearpaw slippers say oh no- but oh yes! One month till winter!!

My toasty Bearpaw slippers and happy pajama pants always make winter slightly more tolerable.

Since you guys seemed interested in retirement information after the post last Monday- 401K, Roth Ira, Retirement Accounts, Oh my! How Much Should I Save In My Thirties?– I thought I’d continue on the retirement questions path. This is good for me too, as I’m also figuring out retirement planning as I go along, so as I research, I learn more to tell you about as well.

I’m going to try to answer a major question here:

How much should you be saving every month towards retirement?

First things first! Do you have a retirement account? In the last money post mentioned above I talked about different retirement accounts. So if you don’t have a retirement account, check that out and choose the best type(s) for you.

In that post I also answered the question: “Do you need to start saving for retirement in your thirties?”

Answer: Definitely YES! Save as early as you can! (And it’s never too late!)

Secondly: If you have a retirement account, do you know which one you have and how it works? And if you don’t, do you know your basic account type options? I generally answered this question when I described the basic three retirement accounts- 401ks, Roth IRAs, and Traditional IRAs. 

Now a new question: How much should you be saving each month for retirement?

This question seems simple but the answer is actually complicated- It depends upon a number of variables such as when you plan on retiring, how much you’ll spend each year during retirement, social security possibly not being around anymore, return on investments, inflation, etc.

So let’s keep things simple here. There are a few rules of thumb, but I’m going to start with my favorites:

• Save what you can right now!

And also…

• Don’t freak out if you can’t save that much! Do what you can.  

Retirement planning can seem overwhelming, but if you start with the above two rules, and always go back to them, things will simplify. Now here are a few very simple rules of thumb:

1. Very loosely, by retirement, you should (according to the top financial advisors) have saved around 8x your maximum salary. This means that if you make $50,000 a year now and may make up to $100,000 a year in your lifetime, you should have saved at least 800,000 by the time you retire ($100,000 x 8). This may sound like a crazy large number, but it’s doable, even on smaller salaries. The key is to start as early as you can with what you can contribute, and use the magical power of compound interest  for your money to grow over time. A few benchmarks along the way are: by 35, you should have at least one year’s salary saved for retirement, 3 x by 45, 5 x by 55.

2. Another general rule of thumb laid out by financial planners is to contribute 10%- 15% of your salary towards retirement. I contribute 10% of my salary towards retirement right now, because that’s all I can do. If you can’t do 10%, do whatever works for you right now…even if it’s $20 a month, it’s better than nothing!

3. Below are two Retirement Calculators I like which can help you figure out how much you need in retirement:

• AARP Retirement Calculator

• T Rowe Price Retirement Calculator (For this one, just click start at the bottom of the diagram- you don’t need to register or anything. I LOVE this calculator because it really allows you to adjust and play around at the end and see the differences as you change the amounts slightly.)

So hopefully you’ve checked out the retirement calculators so you can figure out approximately what you might need in retirement.

If the calculators have you overwhelmed or worried, go back to the first steps I laid out- just do what you can! It’s not too late!

Please comment below with any feedback or questions you have…they help me too! I’d love to know if you find this interesting …or too complex… or too simple.

Thanks for reading!