It’s a good idea to start saving a small percentage of your pay as soon as possible. Here’s a simple way to make sure you’re ready for retirement.
As a rule of thumb, most financial advisors recommend that you save 10% to 15% of your earnings.
Here’s a case study, assuming you start with no savings, plan to retire at age 65, and invest in investments that earn 6% annually.
If you want to retire with $2 million, you’ll need to invest about 12% of your salary as $100,000 starting in your 20s. Waiting until you’re older will require a larger portion of your salary. If you wait until your 30s, that number is closer to 17% of your salary. In your 40s, the percentage of your salary you’ll need to save increases to 35%. This doesn’t account for variables like potential salary increases or decreases, employer matches, inflation or any of life’s other curveballs.
watch this video To find out how much money you’ll need to invest to save $2 million for retirement, split by age.