2007-02-01 03:04:07 · 6 answers · asked by Smudge 2 in Business & Finance ➔ Personal Finance
Depends on what your employer(s) promised you based on your salary and years of service.
A pension or defined benefit plan is something that your employer promised you just for working for them. Unfortunately, that seems to have gone away in favor of the defined contribution plan, in the form of the 401k, where you have to plan for your own retirement and your employer, in varying degrees of generosity, helps you save for it.
Used to be that, if you worked for the same company for a long time, you could rely on your pension and Social Security benefits to live off of in retirement. That's not true today, with the rising costs of living and falling value of SS benefits and pensions, if you are offered them at all. At the same time, a lot of people bounce from one employer to another, never staying long enough to be vested in anyone's pension plan.
So now, on top of your present expenses and desires, you now have to save even more for your future. How much? Depends on what kind of retirement you want and whether you can afford it. No easy answer here.
2007-02-01 06:58:22 · answer #1 · answered by CMass Stan 6 · 0⤊ 1⤋
In order to live as you are now, you have to put 3 times your wages at retirement away for retirement. And invest monthly, because you get compounding interest, which means if you invest every month you get interest on your montly deposit all year. If you invest once a year you are not getting interest all year on that amount. If you work it out. Monthly investments for your retirement, in the long run will give you more money on your return. Take care Heather
2007-02-01 11:16:39 · answer #2 · answered by Anonymous · 0⤊ 0⤋
It depends on the person's age, their health, how much money they need per month during retirement (and for the rest of their life), what inflation rate to expect, how risky their investments can be and how long they expect to live.
For example, I have a friend of mine who is 45, his wife is 44. They want at $50,000/yr income from their investments (in today's $s) in 15 years from now and they want to assume they're going to live until they are both 90 y/o. They need $2.4million in 15 years from now in their investments to keep up with inflation. They're risky investors so if you can't handle as much of the stock market as they can, you'll need more than $2.4M. That's if you're close to their ages. If you're much younger, you'll need A LOT more!
2007-02-01 11:11:37 · answer #3 · answered by Anonymous · 1⤊ 1⤋
your annual expenses times the number of years in retirement
2007-02-01 11:12:06 · answer #4 · answered by jean 4 · 0⤊ 0⤋
Enter into your company's 401K. Put away about 10% or more of your salary. You won't even notice that they took it out since it's pre-taxed. If you're young, you'll end up with at least $450,000.00 which should be suffidient considering living costs and bills.
2007-02-01 11:13:47 · answer #5 · answered by Carrie 2 · 0⤊ 2⤋
You should ALWAYS put money in a 401(k) if being matched by your employer. Generally, 10% of gross pay is a great target.
2007-02-01 11:08:09 · answer #6 · answered by Anonymous · 1⤊ 2⤋