I need to save HOW MUCH?

The pressure to plan for retirement and save for life's curveballs is higher than ever- Let's talk about it.

Saving for retirement is arguably one of the most common thought-about topics for anyone ranging from Gen Z to the Boomer generation. What is the right way to save and how do we keep from stressing over it?

Fidelity suggests saving at least 15% of your pre-tax salary for retirement. This recommendation is supported by most financial advisors and research from the Center for Retirement Research at Boston College.

If we are being realistic, saving for retirement is often more complex than just setting aside 15% of your salary. The 15% rule assumes you start saving early. To retire comfortably by following this rule, you’d need to start at age 25 to retire by 62, or at age 35 to retire by 65. It also assumes you’ll need an annual income in retirement equivalent to 55% to 80% of your pre-retirement income. Your actual needs might vary based on your spending habits and medical expenses, but 55% to 80% is a reasonable estimate for many.

Finally, the 15% rule doesn't account for all your retirement income. You'll likely receive some income from Social Security, for instance. Overall, the 15% savings rate should provide a steady income lasting into your early 90s, at around 45% of your pre-retirement income.

If you are someone who hasn't started saving for retirement or hasn't been able to put as much into investing and saving as you'd like, it is important to remember that you still have time! Here are a few strategies to keep in mind :

• Enhance Your Retirement Savings: Even though retirement might feel distant, it's essential to fully leverage your contributions to an employer-sponsored retirement plan, like a 401(k) or 403(b), as early as possible. Starting at 40, you still have a great window of opportunity for about 20 to 25 years to grow your investments.
  

• Broaden Your Investment Portfolio: Consider index funds or exchange-traded funds (ETFs) for broad market exposure at lower costs. Think about your risk tolerance, start a conversation with your advisor about finding that number. Your tolerance may change from your 20's to your 40's so keeping that communication open with an advisor can help keep your goals on track.
  

• Make the Most of Catch-Up Contributions: If you're over 50, catch-up contributions offer an excellent opportunity to boost your retirement savings. These contributions allow you to supercharge your retirement fund, even if you started later. Though your time frame might be shorter if you begin investing after 40, disciplined budgeting, minimizing debt, and consistently maximizing your savings can significantly accelerate your retirement goals.

Small amounts invested early in your career can grow substantially more than larger amounts invested later in life. The reality is that most Americans can't afford to set aside a full 15% of their income for retirement.

However, don't let this discourage you. Investing any amount for retirement allows you to benefit from compounding as soon as possible. Our advisors are ready to help set you on the path to financial wellness and achieving your goals!

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At Colmina, we are dedicated to building a community centered around the well-being of those we care for. Our commitment to fiduciary advice ensures our decision-making is always in the best interest of our clients. No matter the twists and turns of the financial market, our advice will adapt to match so that your plans can stay true to the course. 

Colmina strives to earn and maintain the trust of our clients. We are dedicated to crafting customized plans and personalized portfolios that are tailored to meet your goals.