3 ms·
As far as the amount to save, I've always figured that about 7.6% will get you the same pre-tax income at retirement assuming net growth of 7% (after 45 years o
by derekp7 8y ago
As far as the amount to save, I've always figured that about 7.6% will get you the same pre-tax income at retirement assuming net growth of 7% (after 45 years of work -- age 20 - 65) minus FICA (since you don't pay FICA on 401k withdrawals or investment interest income). You can also probably get by with less in retirement, if you have a house paid for by then and don't drive as much. But you will have to pay some amount a month for medicare, so that should be factored back in.
If you assume 5% growth, then you will need to save about 14% of your income. Here, I'm using the average returns of the stock market minus inflation should get you 7%.