How do you know if you're saving enough for retirement?

A Personal Approach

Unfortunately, calculators and rules of thumb can't predict the future. There are simply too many factors beholden to chance, including potential future salary changes and changes in financial obligations.

Only you know your needs. All those intangibles come down to a best guess, and in most cases, you're the person best qualified to make these guesses.

For many people, it would be doe-eyed optimism to imagine that a raise would allow you to put the savings pedal to the metal in future years. But if you're still in school (or graduate school) in your 30s or even 40s, it might be realistic to plan aggressive savings for a little further down the line. The flip side can also be true: How stable is your current job? If there's any risk in your financial future, now's the time to save. Consider putting away at least 20 percent of your current salary if there's any chance that a rainy day will come sooner than expected.

Other questions to ask yourself include the likely equity of your home at retirement age, the potential for decreased spending needs if you plan to retire to an area with a lower cost of living, potential windfalls from inheritance or potential money pits, like health needs or major home repairs.

One successful planning strategy is to start with the calculators listed on the previous page and then adjust their savings recommendations for your very personalized needs. With a secure job earning a yearly 4 percent raise, you might not need to adjust the recommendations at all. But if that's not your situation, use your head. Be realistic. And if you aren't confident in your ability to do this, it might be a good idea to get professional help. A couple hundred bucks spent on financial planning advice now will look like a drop in the bucket of your retirement savings later.

For more tips on retirement, check out the links below.

Related Articles


  • The Dough Roller. "Are You Saving Enough for Retirement? Check Out This Rule of Thumb." Feb. 13, 2008. (Jan. 16, 2011)
  • Farrell, Charles J. "Personal Financial Ratios: An Elegant Road Map to Financial Health and Retirement." FPA Journal. Jan. 20, 2006. (Jan. 16, 2011)
  • Reeves, Scott. "Saving For Retirement At Any Age." Forbes. Sept. 28, 2004. (Jan. 16, 2011)
  • Roth, J.D. "25 Useful Financial Rules of Thumb." GetRichSlowly. March 9, 2009. (Jan. 16, 2011)
  • Weston, Liz Pulliam. "16 favorite money rules of thumb." MSN Money. Dec. 18, 2009. (Jan. 16, 2011)