recommended category percentage of household retirement budget

Recommended category percentage of household retirement budget how to#

How to get to 15%: If contributing that amount right now is not possible, check to see if your employer has a program that automatically increases contributions annually until a goal is met. Starting early, saving consistently, and investing wisely is important, as is saving in tax-advantaged retirement savings accounts such as a 401(k)s, 403(b)s, or IRAs. That includes their contributions and any matching or profit sharing contributions from an employer. That’s why we suggest people consider saving 15% of pretax household income for retirement. In fact, we estimate that about 45% of retirement income will need to come from savings. Social Security probably won’t provide all the money a person needs to live the life they want in retirement. It’s important to save for your future-no matter how young or old you are. Take a look at which essential expenses are most important, and which ones you may be able to cut back on. If you need to significantly reduce your living expenses, consider a less expensive home or apartment. Consider a high-deductible health plan (HDHP), with a health savings account (HSA) to reduce health care costs and get a tax break. Also consider driving a more affordable car, carpooling, or taking public transportation. Small changes can add up, such as turning the heat down a few degrees in the winter (and turning your AC up a few degrees in the summer), buying-and stocking up on-groceries when they are on sale, and bringing lunch to work. Keep it below 50%: Just because some expenses are essential doesn’t mean they’re not flexible. Debt payments and other obligations-credit card payments, student loan payments, child support, alimony, and life insurance.Transportation-car loan/lease, gas, car insurance, parking, tolls, maintenance, and commuter fares.Health care-health insurance premiums (unless they are made via payroll deduction) and out-of-pocket expenses (e.g., prescriptions, co-payments).Food-groceries only do not include takeout or restaurant meals, unless you really consider them essential, i.e., you never cook and always eat out.

Housing-mortgage, rent, property tax, utilities (electricity, etc.), homeowners/renters insurance, and condo/home association fees.Consider allocating no more than 50% of take-home pay to “must-have” expenses, such as: Some expenses simply aren’t optional-you need to eat and you need a place to live.

Recommended category percentage of household retirement budget