We all want to retire one day. Of course it would be nice to retire sooner, rather than later. Also, let's face it. There's a good chance that Social Security benefits will not be there by the time many of us retire.
That means it's up to us to fund our retirement. But how much money should you set aside? What if you don't have a lot of money to invest? Let's take a closer look at how much money you should save for retirement.
Everything Your Employer Will Match
First things first. If you have a 401(k) that your employer contributes to, you need to invest at least the amount that your employer will match. If not, you're literally throwing away free money. If you don't have a lot of money to invest, at least you'll know that what little money you can invest is being doubled.
The Money Left Over After the Necessities
Many of us are in tough spots that don't allow for a lot of extras. However, your retirement should never be thought of as an extra. You want to make sure you're investing in your retirement before you're investing in entertainment and all the other extras that aren't necessities. Think about it this way: Would you rather enjoy an expensive cup of coffee each morning or retire a bit sooner than your coworkers?
You want to create a budget and know how much you have left over after your mortgage, car payment, groceries, etc. You then want to take most of that money and invest it into a retirement fund. You still want to have some money left over to pay yourself fun money. However, fun money should always come after you've invested in your retirement.
Many money gurus recommend saving a percentage of your income towards retirement. If you're lucky enough to start saving in your 20's, you want to put aside 10-15% of your income. In your 30's, you want to boost that number up to 15-25-percent. You can play around with this calculator to determine what you should be saving now to retire at the age you want retire.
Believe it or not, saving for retirement doesn't take as much money as you might think. If you're still in your 20's, you'll only have to invest 10-15% of your income. Think about that. If you're making $25,000 a year, that's only around $210 to $315 a month. Treat it like any other bill. Utilize your 401(k) at work or take advantage of an IRA. Either way, make sure you're saving for retirement.