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When it comes to saving for retirement, a general rule of thumb is to put away 10% to 15% of your income each year. But that amount may not be suitable for everyone, especially if you’re starting out late, want to retire early, or have additional expenses, such as a dependent or two.
Financial planner Mari Adam of Mercer Advisors says it’s important to have a retirement savings plan that’s catered to your specific needs, and the sooner you can get one, the better off you’ll be when you get to your retirement years.
“One of the things I tell people is you really need a roadmap,” Adam says. “Imagine you’re trying to drive cross country and you have no phone, no maps, no nothing. And you have no idea where you’re going — that’s kind of what people are doing when they’re planning for retirement without a plan.”
Adam shares four key things you should be doing, no matter your age, to figure out what steps you need to take to set yourself up for retirement.
1. Figure out what you want in retirement
First off, you need to put some thought into what retirement means to you. The answer to this question will depend on your expenses, your current income, when you plan to retire, and your lifestyle.
Some things to think about are whether you will still have a mortgage when you retire, or any big expenses such as a second property, vehicle payments, or even a dependent. Once you have a better idea of your personal needs, you may realize that following a general rule, such as tucking away 10% to 15%, may not be enough for you.
“Ten percent is kind of the minimum; it could be much higher depending on when you start [and] what kind of Social Security you’re going to get, which is a function of how much money you made, how long you might live, how you invest. There are all these variables,” Adam says. “The 10% we use as a rule of thumb, but right now it’s the bare minimum I would say.”
2. Take inventory of your assets
Adam recommends taking inventory of your assets once a year or, at most, every five years. This will make staying on track easier, because …read more
Source:: Business Insider