We are living longer than we used to, thanks to improved standards of living and better healthcare. Many people are enjoying longer retirements than they planned for, but that can come with the prospect of not being able to make ends meet in later life.
So the sooner you start saving for retirement, the more you’ll be able to save, and the more comfortable you’ll be.
Everyone’s situation is different, so there is no single rule to follow that will tell you exactly how much money you'll need for your retirement. It will depend on many factors, including:
A good starting point is to assume you will need between half and two-thirds of your salary, after tax is deducted, to maintain your current lifestyle.
You may be entitled to social security, but in most cases it will be difficult to live on this alone. You should plan to supplement any social security with savings and investments of your own if you possibly can. Remember, too, that the laws guiding social security may have changed by the time you reach retirement age.
You may find that your employer has elected to contribute toward your retirement plan in proportion to your own contributions, up to a defined amount. It can help to grow your savings significantly, and you may also be entitled to tax relief on the combined amount saved.
When planning for your future, here are three key points to keep in mind:
