What percentage of my paycheck should I put into my Deferred Comp?

Question

I'm 26 and currently I put 3% its that too much, or too little.
I tried to put 10% for a year and it was too much.
Is there a system I don't know about.

Answer 1

If your employer matches any part of your contributions, put the maximum amount they will match if you can afford it. If not, put in whatever percentage you can afford. Keep some extra funds in regular savings, or whatever liquid investments you prefer, so if you need a little extra cash sometime, you don't have to cash in your nest egg and pay penalties for early withdrawal. Any saving is good saving.

Answer 2

Sit down and figure out what 1% of your paycheck is. Since you are currently putting in 3%, put 1% into a savings account. See how that works. Then add to both as you can. I think 5% is the minimum you should be putting in there. My personal suggestion would be to work up to 5% in Deferred Comp and 5% in a savings account. Saving for retirement and for a rainy day are both important. Most people live check to check. Its not good to get into the habit of spending everything you make.