Retirement Planning – Make a Plan and Take Your First Step
You may want to save 12%, but not anywhere near that. What can you do?
Here are four relatively painless steps:
Forget about the past and commit to working toward your goal starting today.
Decide how much you can save each month out of your paycheck. Think about this in real dollars, no percentages. We’ll look at percentages later. Initially thinking about $50, $100 or $500 a month is easiest. Include any amount your employer is contributing for you.
To figure out what percentage of your salary you are saving, divide your savings amount by your salary. For example, if you make $30,000 a year and decide you can save $100 a month, your calculation would be:
$1,200 ($100 × 12 months)
$30,000 = 4%
Make a commitment to re-evaluate the amount you are saving annually with the goal of increasing it by 1% each year until you reach your target savings rate. If you normally receive an annual salary review and increase, review your savings at that time. If you get a pay increase, using part of that to increase your savings rate will be almost painless.
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