How much should you contribute to your retirement plan?

If you do a simple Google search, you will get multiple answers. In fact, you may even get a formula or two. That ish is Bananas,

First of all, no one has a Baccarat crystal ball not even Wall Street nerds. Let’s start first by thinking about how much money you think you may need in retirement. How badly does that hurt your brain?

Instead of focusing on the income you need, think about how much you will be spending in retirement. Most people think they will need less than (70%-85%) their annual salary (pre-retirement) each year in retirement. That may make sense if you are able to pay off the mortgage on the house you live in but, the reality is a lot of people don’t. According to a Federal Reserve Consumer Finances Survey, 35% of people ages 65-74 have a mortgage. And what about health care? This will be a major cost in retirement. Medicare doesn't cover everything. You will have to pay for the things Medicare does not cover unless you have other health insurance or an additional Medicare health plan...which is an entirely different Glamsplain.

Also, what will you be doing in retirement? Aren't those the golden years where you, Blanche and Dorothy are hitting the town every night like there's no school tomorrow? We don't know about you but every time we leave the house we end up spending money...and not entirely on shoes either. We spend more money on weekends because Monday - Friday we are at work. What if every day was a weekend? What if you want to travel and hang out with Leo on that beach ? Then, we're going to need a little more dough.

When it comes to saving for retirement, save as much as you can comfortably. We know that sounds really random and not at all like an actual answer, but rock with us for a minute. You can always reduce your contribution if life gets a little too real and increase it again when you are in a better situation financially. The key is not to stop saving. Also, making your contributions on a percentage basis and not a specific dollar amount means that if you get a raise or cost of living increase, so does your retirement plan.

Things that make you go hmmm... Women have a 73% chance of reaching age 80 and a 34% probability of living until age 90. Most Americans think they will need more than $500,000 in retirement but have saved about $126,000 by the time they reach age 74.