How Much Annual Pay Should I Be Saving? - Most people should know how much saving from their annual pay they should keep each year, but they don’t. In fact, the truth of the matter is that most people don’t have a clue.
In these trying economic times, people are not only worried about their current economic state, but the future and retirement as well. It has to be pretty frightening, especially for those entrepreneurs and those into real estate investing. Your pay is so unpredictable, it can make it difficult to save the right amounts.
How Much Annual Pay Should I Be Saving?
How Much Annual Pay Should I Be Saving?
Any real estate investing training you take or financial workshop should include a section on saving. This is the most important thing you can do over the course of your working career. It doesn’t matter if you have a regular job or are out everyday fighting for your share of the days take. Personal finance and saving is at the core of all of our activities.
There are several answers to the question of how much annual pay should you be saving and I would like to address all three of them if you don’t mind.
#1 As Much As You Can - This isn’t much of a strategy , but it is the truth. No matter what you think your retirement goals are or how your financial situation is currently, you should be stocking away as many dollars as possible. It is found most people average living expenses consume anywhere from 50% to 80% of their annual income.
Hopefully, your living expenses are on the lower end of this spectrum because it gives you far more flexibility and options on how much you can save. When you living expenses take 80% of your pay, then you don’t have much choice after paying down debt and incidentals. You would be lucky to save 5%. However, no matter that number start saving something each month.
#2 10% to 20% of Annual Income - This is conventional wisdom talking here. The thought is that at retirement, you are going to need anywhere from 70% to 90% of your current income to maintain your standard of living. This means at the minimum, you need to be saving 10 to 20 percent of your income and starting at an early age. If you don’t, then you are putting yourself behind the race for retirement and this isn’t good at all.
#3 25% to 35% of Your Annual Income - I am not going to lie, this is going to be very tough. Unless you have a spouse who is matching your money or paying a considerable amount of bills, then this bracket is going to be tough.
However, I tell you what? If you are serious about hitting your retirement goals and making sure your family secure, then hitting these target numbers will get you there. Reaching this level of saving will require you to make some major sacrifices to your time, budget, and fun, but it will be worth it at the end of your working life to know you are safely taken care of by the income you have generated over a lifetime.
Don’t fool yourself into thinking retirement will be taken care of by the magic retirement fairy. That being doesn’t exist. The only way you will be fine is if you bust your butt to make sure you are saving a good portion of your check each and every month. - How Much Annual Pay Should I Be Saving?
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