How much should I save for retirement?
One of the simplest and most effective ways to save for retirement is through your workplace retirement plan. Many financial professionals recommend saving 10% to 15% of your total income. Yet how much you should save largely depends on your retirement goals, age, and income.
Age may be the most important factor. The earlier you start, the more time your money has to work — so you generally can begin with a smaller amount and work your way up over time. The closer you are to retirement when you start saving, the more you’ll need to put away to reach your goals.
Value of Investing Today
One of the most powerful principles of investing is compound returns. Compounding enables you to earn an investment return on your initial account deposit and on prior years' investment returns. And the more time you allow your money to work, the more it compounds, which makes it best to start saving early.
Let’s look at a simple example: