I’m nearly three months into my new job, but the human resources department continues to blow up my inbox with reminders on one remaining bit o’ paperwork – retirement planning.
Like most corporate gigs, my employer offers a 401(K) retirement savings plan, which allows me to funnel pre-tax dollars directly into a Fidelity account to stow away – and grow, with the help of compounding interest – for my more (ahem) golden years.
I’ve been contributing to 401(K) accounts since the age of 24, so this isn’t anything new to me, but for some reason, I’ve found myself floundering over the percentage that I should contribute. Up until now, throughout my twenties, I’ve contributed between 7 and 9 percent. (Clearly, double digits frighten me.) But having reached 30 – in my mind, official adulthood – I feel like I solidify my game plan.
One of the recent musings that’s stuck in my head came from personal finance expert Jean Chatzky, who I heard recommend in an interview (and here) this simply rule: By age 35, your retirement savings should include an amount equal to your annual salary.
Does that comfort you… or frighten you? I like this advice, because it feels concrete and I feel like I’m on track to achieve it.
More broadly, most personal finance experts preach that 10 – 15 percent of your income should go directly toward retirement to build a realistic cushion for your later years. I’ve finally nudged myself to contribute a full 10 percent (I should note that I also automatically funnel money into my savings accounts each month, too) and am operating with the mindset that I won’t miss what I never see. We’ll see if I can slowly work my way up to 15 percent… I’m not holding my breath. Yet.
In the meantime, I follow several non-professional finance-related blogs to help keep me motivated to save money and live below my means – an especially difficult task when Nordstrom’s Anniversary Sale rolls around. Scrolling through blog posts and reading inspiring comments from people at all levels of financial freedom makes smart budgeting feel nearly addictive.
You can check out a few of my favorite money / career blogs here; what are yours?