Last Updated: February 28, 2023
Saving for retirement is something we are all told to do.
The general advice is to save 15% of your income towards retirement. This is the 15% rule of thumb for retirement.
However, is this really enough to get you through retirement?
There may be other planning and savings you need to do to ensure financial security in your retirement age.
To know if 15% is enough for retirement, there are six factors to consider:
Lifestyle factors can be:
Understanding your personal situation in relation to these factors can help you decide if 15% is enough or if you will need to save more.
If you haven’t started saving for retirement yet or need to save more than 15%, there are three strategies to help increase your retirement savings.
If you need to save more money, try increasing how much you are saving and put those savings towards retirement.
If you can raise your savings even by a small percentage, you will see the power of compounding. Small increases, especially at a younger age, can greatly impact your account.
This may seem like a no-brainer, but so many people don’t think about saving for retirement until they are in their late to early forties.
You will have to save more than 15% if you are starting that late in life. The earlier you start, like in your 20s and 30s, the more you can expect your accounts to grow and compound.
You can save a lower overall amount and retire with more money than someone who contributed much more but later in their life.
If you are not at your retirement goal, consider delaying retirement for a few more years if you can.
This can give you more time to save and allow your accounts to grow. Delaying retirement can make a big difference in savings.
While saving 15% of your income is a great rule of thumb, there are so many other factors that will require you to save more than 15%.
Understanding how you will calculate how much you need in retirement, from lifestyle to healthcare, can give help build your strategy. If you need to save more than 15% or start late, find ways to boost your retirement savings as fast as possible.
March 23, 2023