How Much Do I Need to Save for Retirement?

Let's look at the two extremes to get an idea of what this table is saying.

First, if you work and save for 20 years and then want to live in retirement for 40 years on 70% of the salary you were making when you were working—and you're only willing to use a portfolio that is 40% stocks—you need to save 66% of your income each year. 

On the other hand, if you're willing to work for 40 years, have a retirement of 20 years, live off 50% of your final salary, and use an 80/20 portfolio, then you only need to save 6.3% of your salary.

These types of charts are interesting: 

They do have the one major drawback due to most folks income over their lifetime will yo-yo.  

Income bouncing all around so use this chart as a basic guideline only.

Due to the U.S. low birthrate Social Security is once again moving into limelight with a possible 23% haircut within the next 79 months unless Congress acts shoring up the difference with general taxation.  Therefore the obvious choice is 70% replacement of income with Social Security the now Social In-Security! 

Note that on the chart there is no savings rate of 15% (lowest is 17.99%) for 30 years able to make the grade for a 70% replacement of income over a retirement lasting 20+ years.  I’ve always advocated investing 25% of one's income as the minimum with folks looking at me as if I’m insane.  Any wonder on my blog I call money Financial War?  Now you know.

Till Next Time