Want to retire? Double your savings rate

That’s part of the message from the folks who organize America Saves Week — an annual opportunity for retirement savers, financial advisers and even the Social Security Administration to encourage people to assess their savings strategies. It’s not quite the Olympics, but it’s an event nonetheless. Give yourself a gold medal if you’ve amassed anything close to 10 times your final salary. If you haven’t — like most of us — get your trainers on and find new ways to save.

Well, saving 5% for 40 years whether it’s in a 2% or 4% real interest rate world may not help you accumulate a nest egg that will let you sustain your standard of living in retirement. In fact, you likely need to save at least 15% of your salary, which can include any match from your employer, according to Christine Fahlund a vice president and senior financial planner with T. Rowe Price. 

And the Employee Benefit Research Institute suggests that baby boomers in the lowest salary quartile would need to save 25% to achieve “retirement adequacy” 70% of the time, while generation Xers in the lowest income quartile would need to save about 16% to achieve retirement adequacy. 

DYI Comments:  Excellent article as Robert Powell of Market Watch comes up with the same numbers [as DYI] that is required to achieve the minimum for retirement.  As a standard policy I advocate every young person to accept the fact that every where they work to save 15% into their 401k.  Corporations that do automated enrollment is doing a great service for their employees.  However, most don't push the savings up to that 15% mark many end at 5% or 6%.

DYI