A Guide on How to Save for Retirement
One of the important financial decisions that you should make when still young is saving for your retirement. Once you retire, you might not have a reliable source of income, and the only means of survival is your life savings. Therefore, when you still have a job, you should not spend everything on mortgage and lifestyle. A significant portion of your salary should go to your savings accounts. How much should you save for your retirements? This is usually a difficult question, especially for people with a fixed income. If you are wondering how much of your income you should save, then you are on the right page. Below, you will learn a few retirement saving plans that you should consider.
One of the saving rules that you should consider is the 15% rule. The 15% rule says that you should save 15% of your pre-tax salary for retirement. This is a suitable rule for saving for retirement, but you should know that it has its drawbacks. One of the flaws of the saving rule is that you will have to start saving early. The key to ensuring that you have enough to spend during retirement is starting to save before you hit 35. The other challenge with this saving formula is that it does not take into account that your salary fluctuates. On the homepage of this website, you will get to learn some of the flaws associated with the 15% rule of saving for retirement.
If you don’t like the 15% rule, you should consider the 80% rule. 80% saving rule means that your savings should be enough for you to draw 80% of your salary at the end of your final salary. The flaw of this saving rule is that the other sources of income are not considered. In this site, you will discover more about the 80% saving rule.
4% rule is the other saving plan that can suit you. 4% saving rule works towards attaining the 80% saving rule. The biggest challenge associated with this rule is generating the right amount to save. The right means of using this saving rule is working with a financial advisor. A financial advisor will review the details of your income and recommend the most suitable saving plan for you. Read more here for more info. regarding how to find a good financial advisor.
If you don’t like working with the percentages, you should salary multiples as a saving formula. Salary multiple is a simple rule that states that you should have saved twice your annual salary by the time you are 40, four times your annual salary by the time you are 50, and six times your annual salary by the time you are 60, and the sequence continues. There will be no need to worry about surviving once you retire if you use the above-discussed rules to save.
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