One of the important financial decisions that you should make when still young is saving for your retirement. At some point, you will not have a source of income, and the only means of survival will be your savings. Therefore, when you still have a job, you should not spend everything on mortgage and lifestyle. From every salary that you receive, you should save part of it. How much should you save for your retirements? Many people find it hard to decide on the right amount that they should save towards retirement. If you are not sure about the saving formula to adopt, then you are in the right place. Below, you will learn a few retirement saving plans that you should consider.
The most common saving rule is the 15% rule. This rule requires one to save up to 15% of their pre-tax salary for retirement. In as much as it is a common saving plan, it has its flaws. One of the flaws of the saving rule is that you will have to start saving early. It is best that you start saving before 35 so that you can have enough to spend once you retire. Fluctuation of income is not usually taken into consideration when it comes to this saving plan. read more here about the challenges of the 15% rule saving plan.
80% rule is the next saving plan that you should consider for your retirement. 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. One of the reasons why people avoid this saving plan is that it does not take into account other sources of income except salary. click here to learn more about the 80% rule of saving for retirement.
Next, you should consider the 4% rule. 4% rule is a technique to use in calculating the amount you need to save to achieve the 80% rule. Most people usually find it hard to generate the right amount to save. In case you are not sure about the right plan to use to save for retirement, you should consult with a financial advisor. Based on your income, a financial advisor will find the best saving formula. In this website, you will learn the factor you need to consider when choosing a financial advisor.
If you don’t like working with the percentages, you should salary multiples as a saving formula. It is an easy approach to saving that requires one to save a certain amount by the time they reach specific ages. Using these saving plans, you will not have to worry about economic hardship when you retire.