Podcast Episode 243: Should You Be Saving 15% of Your Income?

A question that we hear quite a bit is how much money should a person be saving every month? There’s a goal of 15% that might seem too lofty for many people, but is this the number you should be targeting? Today we’ll talk about building up savings ahead of retirement and which tools are best to do that.

If you’re reading a blog on a financial planning website then you probably already do a decent job of saving money, but are you doing enough?

We had a couple of questions come in this week and both were about saving money so we decided to bring them on the podcast and do our best to answer.

First up, should you be saving 15% of your income towards retirement? Have you ever heard of this benchmark and how close are you to achieving this number? Well, 15% is the ultimate goal to help generate the amount of money that will provide you with a comfortable retirement in most cases, but it’s all about taking baby steps.

If you’re in your late 40s or 50s, you should really make a serious effort to get to that level now. You don’t have as much time as you did in your 20s and 30s so close that savings gap by ramping up your contributions. By making some sacrifices now, you’ll be able to enjoy your money much more later in retirement.

We don’t have anyone that comes in and tells us they would have saved less through the years, but we do have clients that find out they are in better shape than they thought thanks to their saving habits. And that’s a great spot to be in because you can settle into a spending plan and not have to worry much about how you’re positioned for retirement.

The second question we discuss on the show is whether you should be saving more outside of a 401(k) account. One listener has been maxing that out but not saving much elsewhere. It’s not a problem to have a majority of your savings in a 401(k) and as you get within a couple of years of retirement, you’ll want to sit with your advisor and start looking at tax planning.

The one place that we would make sure you aren’t overlooking is an emergency fund. If you haven’t stashed enough away into that savings account, go ahead and move that up the priority list. Otherwise, if you’re getting close to retirement, it’s still a great idea to continue stuffing extra money into a 401(k).

If you need help with your savings or just want to look at what other strategies might work best for you, take advantage of our Money Map retirement review process. You can learn more about it on the podcast.

0:18 – Mailbag question on saving

1:48 – Can you save too much?

3:53 – Cultivating a savings mindset for your children  

5:59 – Mailbag question on saving beyond a 401(k)

7:30 – Money Map retirement review