How Much Should I Save for Retirement?

One of the most common questions we hear in the retirement income planning world is, How much should I save for retirement? Unfortunately, there is no single answer to this question that will work for everyone. Depending upon your life expectancy, your expected lifestyle in retirement, and the amount of money you can actually afford to save, your savings goal may vary slightly or even significantly from your friends or co-workers.

Rather than asking how much you should save, ask yourself whether you’re saving all that you can. It’s difficult for us to predict the future or know whether you have set aside enough money for retirement. But we do know that saving everything you can is always a great idea!

This year, you can save a bit more than in previous years. This is because the IRS changed retirement account contribution limits, allowing you to set aside more of your earnings with taxes deferred until you begin taking distributions.

The new contributions limits are:

●     With 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan, you can set aside $18,000 in 2015.
●     If you’re aged 50 or older, you can make additional “catch up contributions” to the aforementioned retirement accounts. Limits have been raised from $5,500 in 2014 to $6,000 in 2015.
●     If you’re aged 50 or older, you can contribute a total of $24,000 to your retirement account in 2015, up from $23,000 in previous years

Call your payroll department at work, and ask how much you’re contributing to your retirement plan. Make sure that your automatic contributions are increased, so that you can take full advantage of the new savings limits. When you save the maximum amount allowed by the IRS, you’re helping to ensure a healthy financial future and comfortable retirement.

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