Starting a new job gave me the clearest look at retirement savings I’ve had in a while. Rules of thumb and estimates always seem to change, but this one-page calculation was pleasantly simple:
- How much of your salary do you want at retirement to travel, spoil grandkids, etc.?
- How much will you get from social security? (Assuming it’s still solvent in 30 years.)
- How much will your current savings grow to?
- How much more do you need to contribute as a percent of your paycheck to reach your total goal?
Sadly, the calulator is missing from Prinicipal’s online offerings, but perhaps there’s a similar one out there. For me, the results were encouraging. Saving early puts me about halfway there, leaving modest contributions going forward. And a few extra precent as a hedge against social security collapsing. 
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December 20th, 2007 at 11:15 am
Matt;
Quick calculation on retirement needs
Take your desired income figure and DIVIDE by 4%. This how much you need to put away into income producing savings (investments, 401K etc) to live comfortably long term. The 4% is conservative planning figure that assumes maintaining the principal untouched. Also, the income figure is after deducting any annuity-like income (pensions, social security) if you want to assume there’ll be any after we get done .
December 20th, 2007 at 12:42 pm
Good one, Dave! That comes out pretty close to the more involved calculation.