After decades of hard work, you want and deserve a comfortable retirement. That's a given. Unfortunately, you won't get there on Social Security alone -- not even close.
If you're lucky and cuts don't happen, those benefits might replace about 40% of your pre-retirement income. However, most seniors need about twice that much income to maintain a decent standard of living. And that's where your personal savings come into play.
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But how do you know whether you're saving enough? There's one easy way to find out.
How much of my income am I saving each year?
Unfortunately, there's no specific annual savings target that guarantees a comfortable retirement. But as a general rule, if you're socking away 20% of your income for the future (or more, of course), there's a pretty good chance you'll end up with a large enough nest egg to live the lifestyle you want once your career has wrapped up.
So, if you're unsure you're headed toward a comfortable retirement, ask yourself how much of your income you're currently socking away. If it's 5%, you may end up falling short. If it's 10%, you're in a better spot, but there's still work to do. If it's 15%, you're definitely in a good place. But if you want to really be confident about your financial future, aim for 20%.
And keep in mind that you don't have to start out saving 20% of your salary. It may take a while to work up to that point.
But by the time you're established in your career and earning a decent wage, push yourself to hit that target. If you set that money to go toward retirement savings automatically, such as by automating transfers to an IRA or participating in a workplace 401(k), in time, you probably won't miss it. But chances are, you'll end up in a great spot once retirement rolls around.
