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I know the general rule of thumb is you should save 15% of income to retirement, but I'm playing catch-up after years of neglect and contributing 25% until I catch up again. But how will I know when I'm on target again in the retirement account?

I already have an emergency fund in place & debt paid off apart from the house

If I knew when I was on target again, I'd be inclined to then reduce to 15% again and redirect the additional 10% into college funding for kids and/or paying the house off early. But I have no idea what the retirement fund should be at this point in time.

Is there some formula like: income x [some factor of my current Age] = current Retirement account target

EDIT:

I think this question is different from What size “nest egg” should my husband and I have, and by what age? as that question is asking what is the final end goal amount at retirement age. Whereas I want to know what the gap is in my current fund now.

And I think that knowing the current gap is actually more useful?

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MassiveAction
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3 Answers3

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Mmmm... Now I've had time to think about it, what about online retirement calculators & planners? Particularly, those found on the relevant government agency websites for each country may factor in any state benefits as ChrisW.Rea was suggesting

More complicated than a rule of thumb but more accurate in telling you if your current retirement fund is on course.

If you agree & know other/better online calculators, or for other countries, feel free to suggest or edit

MassiveAction
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Fidelity's guidelines on Retirement Savings Goals, by Age

Vasu
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Probably, but mainly consider your "burn rate" for retirement. How much money you expect to live off of based on your needs. I would go out as far as 30 years with some monthly social security thrown in

Interest from your retirement nest egg (perhaps in an annuity) is percentage based, offset by social security monthly, subtracted by how much you actually need to spend a month

If an annuity is making you 5% a year after management fees. How big does your nest egg need to be for 5% to be a worthwhile amount of earning?

(reference: 5% of $100,000 is $5000, while 5% of $875,000 is $43,750)

CQM
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