Episode 72: How Much Should I be Saving in my 401(k)?
Have your question answered on the Money Wisdom Question Series!
Heath Grossman here with Money Wisdom Question Series. Today’s question is in regards to 401(k)s. Specifically, how much should I be saving in my 401k?
Just Starting Out
The short answer to that question is: as much as you possibly can. But realistically, when I sit down with somebody, maybe that’s a little bit on the younger side and just starting out, I try to set the expectation that they should be saving somewhere between 10% to 15% of what they make. It’s a very good goal, something that is certainly achievable for many people.
Increase in Increments
If you’re not there, don’t feel bad. Maybe increase your 401(k) contribution by 1% and do that for six months or 12 months and then increase that by another one percent. If you do that incrementally, it’s not going to feel overly burdensome. All of this is a little bit of a balance. You need to have a certain amount coming in your paycheck to be able to live your lifestyle and put food on the table and pay a mortgage.
5-10 Years From Retirement
If you’re someone that’s getting a little bit closer to retirement, anywhere from 5 to 10 years away, we have to start thinking a little bit differently. We have to start thinking about the income planning aspect of retirement. Retirement is all about making sure that you have enough income coming in to live your lifestyle and do the things you want to do. What we suggest folks do that are 5 to 10 years away from retirement, is start to put together a retirement income plan. This also helps you work backwards mathematically to figure out if you are saving enough in your 401k. If we conduct a retirement income plan and you’re short, that starts to help us understand how much more you need to be saving and make sure that you’ll have enough in your 401(k) to produce enough income for yourself.
Thanks for joining me and I hope you found this information helpful!
Download Now
The Ultimate 401(k) Guide
Learn the 5 decisions you need to make regarding your 401(k) in this book by Eric Hogarth, CFP®. He’ll help guide you through the many options you have with your 401(k) and to provide the clarity you need to help you make the important decisions that will provide the foundation for you and your family’s financial future.
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
What Age Should I Start Social Security?
Among the many decisions you’ll make in retirement, when to take Social Security is certainly one of the most impactful. You can collect Social Security as early as age 62, receive the full amount… -
Adjusting Your Money Mindset
An important shift must occur when you enter retirement: your money mindset needs a reset, and your financial strategies must evolve to match your new objectives. While growth is still important, … -
Podcast Episode 416: 5 Must Know Numbers (Before You Retire)
Prefer to watch? Click here to watch and listen on YouTube. Retirement success isn’t a game of luck — it’s about knowing your numbers before you take the leap. From your expected income and tot… -
Working with a Financial Advisor
You wouldn’t let just anyone manage your money or guide you through one of life’s most pivotal milestones. Knowing who to trust with your retirement can make all the difference. With so much on yo… -
Podcast Episode 415: Retiring Soon? How to Adjust to Life Without Work
Prefer to watch? Click here to watch and listen on YouTube. Retirement isn’t just a financial milestone; it’s a major life transition. After decades of building a career, how do you redefine yo… -
How Much Should I Keep in Cash During Retirement?
Having cash on hand can provide a sense of stability and peace of mind at any stage of life. However, in retirement, holding too much cash may limit your long-term returns and erode your purchasin… -
Retirement Planning FAQ
Planning for retirement often raises important questions about managing your finances wisely, reducing your tax burden, protecting your wealth, and making the right decisions for you and your fami… -
Podcast Episode 414: What Does the Big Beautiful Bill Really Mean for Your Retirement?
Prefer to watch? Click here to watch and listen on YouTube. There’s been a lot of noise around the One Big Beautiful Bill Act (OBBBA), an 887-page piece of legislation that just reshaped key el… -
How Much Money Do I Need to Retire Comfortably?
You’re not alone in wondering how much you need to save for a comfortable retirement. After all, you’ve worked hard to reach this milestone, and there’s peace of mind in knowing you’ve taken all t… -
3 Avoidable Retirement Surprises
Even the most carefully crafted retirement plans can go off track if you haven’t accounted for some of the biggest surprises along the way. While many factors can impact your retirement, the good …