Retirement savings: Guideline targets to aspire to for a comfortable retirement.

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In their early 30s, most First-World citizens should have at least the amount of a full year’s income saved towards retirement. If not, then it’s time to start saving… at a suggested rate of circa 30% of annual income, no less.

The goal is to have the equivalent of circa 11 times the average annual income in a pension fund, or similar, by the time retirement kicks in. Only under 15s won’t panic at the thought – if the thought crosses their minds at all – but they are the age group best placed to start acting on it.

Under 15s can more easily secure comfortable retirement lifestyles if they save about 8% of their annual income throughout their lives. Beginning with circa 6%-8% of their normal living expenses in their teens (excluding savings towards education). After that, the later anyone begins saving, the higher the required amount per year will be.

As retirement grows closer, the contribution a bank pays all clients for keeping their savings with them (i.e.: the account’s interest) contributes less (i.e.: does not compound over many years); risk of financial loss is higher and sudden healthcare costs are at their most likely. Hence, the longer the wait to begin saving, the more a person will have to make an effort to offset risks and meet the lifestyle requirements they are accustomed to.

The Graph
The graph is an indication of what anyone should ideally save per year if they have yet to start a pension or retirement savings account. Find an age group and marvel at the recommended annual savings percentage…

100% of income means “as much of what is earned as can be spared should go into a retirement fund”.

The Opinion
Most of today’s Higher Education students are drowning in debt, many will have children under their care as well. Some will be marrying only to divorce too soon and see their purchasing power dissolve… I realise many of them believe life is for living it without care. I couldn’t disagree more.

There is no feasible way of enjoying life at any age without planning ahead. There will always be a difficult effort to make, or something to let go of, to meet a desired lifestyle. For the mayority of us anyway and because resources are scarce. More so as competition increases with population growth and global demand.

The economy changes, as does an individual’s life yet, considering this is only a guide, I found it to be fairly accurate. Estimate you annual living expenses and soon you’ll see why these percentages do work for First-World lifestyles.

Some reading:
http://business.time.com/2012/09/28/what-savings-rate-you-need-when-starting-at-age-15-25-35-and-50/
http://business.time.com/2012/09/21/what-you-should-save-by-35-45-and-55-to-be-on-target/
http://www.forbes.com/sites/davidmarotta/2012/09/24/how-much-should-i-save-toward-retirement-if-im-starting-late/2/

Some retirement calculators:
http://www.getrichslowly.org/blog/2009/03/26/how-much-do-you-need-to-save-for-retirement/

Costs of raising kids? Plan ahead:
http://www.theguardian.com/news/datablog/2012/may/21/child-care-costs-compared-britain
http://www.theguardian.com/money/2012/oct/26/maximise-returns-childrens-savings-account

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