When figuring out how much to save and invest for your retirement, know that there's no hard-and-fast guideline that suits everybody. We're each different, in different situations. Here are some questions to consider as you prepare to plan:
1) How many years are left until you retire?
2) How old do you plan to be when you retire? (This influences how long your retirement is likely to last.)
3) How much do you have saved up for retirement now and how much more will you be able to sock away each year until retirement?
4) How well do you want to live during retirement -- or, more to the point, how much money will you want to live on during retirement? (Any plans for extravagant travel adventures? Do you plan to move to a region with a lower cost of living?)
5) How are you investing your nest egg money? What kinds of returns do you expect to earn? (If your money is all in Treasury bonds and you're expecting it to grow 20% per year, you'll probably end up with an unpleasant surprise.)
6) What's your risk tolerance? Are you comfortable investing your long-term money in stocks? Stocks are riskier than bonds, but offer the chance of higher returns.
These are just some of the considerations you'll need to ponder. Once you've thought about them for a bit, spend some time reading up on retirement issues and perhaps plugging some numbers into our online retirement calculators. And keep this guideline in mind: If you want to be sure your money will last 20 to 30 years of retirement, plan to spend just 4% to 6% of your savings annually.