what's the percentage I should contribute to my pension from my paycheck each month?

Question

for a 34 yr old male, who can look to receive anywhere from 8-10 percent annual return with a wife and 2 kids who wants to retire when he's 65.

Answer 1

I would definately contribute as much as the company will match.

Answer 2

Hello, This is still a tricky question to answer even if you have a good grasp of the whole pensions system. I'm assuming your talking about a private pension & private pension contributions. I was told a rough formula for calculating this goes as follows:- Take your present age 33 and divide it by x2=16.5, then you should be putting 16.5% of your total annual income into private contributions. So for example if your annual salary was £20,000, divided by 16.5% that would equal =£3,300 a year or £275 per month. **for your spouse 45 divided by x2=22.5, then he should be putting 22.5% of his annual income into private contributions. So example again if he earned £23,000 a year,divided by 22.5% =£5175 a year or £431.25 monthly. **NOTE: the older you become the BIGGER the % of your annual salary needs to go into your pension pot. **But of course the earlier you start your pension fund the longer time you have in theory to build up your pot. **Even if you are close to 50ish I'd still say try and save something, some provision is better than nothing at all. **Finally DONT rely on your state pension alone for your retirement otherwise you might be in for a very nasty shock when the day comes and you find out what you'll have to live on each week. (words like poor as a church mouse come to mind!!). Hope that helps? IR

Answer 3

You should contribute the maximum amount allowed in subsidized savings like IRAs, 401Ks, company pensions that you can afford AFTER PAYING the mortgage on your home and insurance for your family.

As your children grow and family matures, trade up into the most expensive home you can afford to pay the mortgage on (the government subsidizes that in the form of the mortgage interest tax deduction) and reduce the amount of insurance as your equity builds - the equity in your home becomes your insurance policy and eventually your pension when it's sold (tax free) and the proceeds used to buy a much smaller home and make investments that you should by then be familiar and comfortable with.

Leverage is the name of the game when planning for a decent retirement after a life of relative comfort - using the equity in one's home is the primary form of leverage for most of us. It makes sense to invest in assets one can enjoy while owning them - cash in excess of that can go into investments that can't be enjoyed but do provide a financial security blanket facilitating the enjoyment of the more tangible assets.

And, investments that can be collateralized at a bank to get a temporary low cost loan during emergencies are better than those which cannot.

Answer 4

Most companies will match a certain percentage, for example, if you contribute 6% they will match and put an extra 3% in for nothing. They will have a maximum that they will put in. If your company does an employer match, contribute the amount that will give you the maximum employee match at least, because if you do not you are passing up free money.

The other part, weneed to know what you make, and how much risk you want to take, and how much you want to have at the end in order to give an answer.

Answer 5

I don't know a whole lot about financial planning, but since I am in the process of opening an IRA myself I have seen some really good Retirment Calculators on the web. I think you will find them very helpful. I like the one AG Edwards offers-it is easy to understand and you can make adjustments to recalculate the different amounts you are contemplating contributing. I hope this helps!

Answer 6

In general, a minimum of 10% - 12% of your gross should be saved for retirement throughout your entire career. If you have not saved that much so far, you should aim for at least 12%.

Answer 7

That's really your call, depending on current needs and how much you want to have to retire on. But anything saved now will have lots of time to grow, especially any part that's in tax-deferred instruments like 401K or IRA.

Answer 8

as much as you can.