Retirement is a dream of virtually every American. The time to start thinking about it is now. We all know that the sooner you start saving for retirement, the better. This is easy enough to understand. But a harder question to answer is this: how much should you save for retirement? Today, we’ll give you our thoughts on the matter.
No Simple Answer
Unfortunately, the short answer to the question of how much you should save for retirement is this: there is no simple answer. You may have heard such rules of thumb as 10% or 15% of your gross income. These are good places to start, but they’re exactly that—rules of thumb. They are just rough guidelines, and there is no ‘one size fits all’ magic number we can give.
Finding the right amount to save for retirement will take careful budgeting and planning. There are countless factors you should consider. Here are a couple of the big ones.
Predict Your Future Expenses
We know—no one can predict the future. You’d have to be darn lucky to perfectly predict your future income and expenses even a few years down the line. But this doesn’t mean you shouldn’t give some careful thought to how you expect your financial picture to look further on down the line.
What major changed expenses do you expect to experience in the future? Are you considering having children? How about buying a house?
At the same time, you should give careful consideration to the direction in which you think your career is headed. The further along you get in your career, the easier time you will have of knowing what your income might look like in subsequent years.
Learn About Your Retirement Plan(s)
How exactly are you going to be saving for retirement? There are a wealth of retirement plans from which you might be able to choose. You may have picked one or two when you were young, without giving too much thought to what exactly they entailed. Now’s as good a time as any to read up, and learn the ins and outs of the retirement plans you’ve chosen.
The good news is that there is an abundance of websites out there from which you can learn everything you need to know about the most popular retirement plans, from 401(k)s to personal IRAs. Our blog is one of them. A quick search on the web should teach you everything you need to know to learn the ins and outs of the retirement plans at your disposal.
Contact Bowman & Company Today
Bowman & Company CPA, PC provides all of our individual and small business customers with experienced, accurate, and affordable financial services. Our financial services aim to decrease your taxes and increase your net worth through responsible, timely, and accurate record keeping. We offer our services to clients throughout the Washington, D.C., metropolitan area, including Maryland and Baltimore County, Columbia, and Howard County. For more information on our offerings, contact us online or call us at (410) 381-8121. You can also find us on Twitter, Linkedin, Facebook, and Youtube.