10. You just started on your brand new career and you want to make sure that you

Question

10. You just started on your brand new career and you want to make sure that you make the most of your future salary and want to save for retirement. You found an investment that will pay you 6.85% compounded quarterly and you want to put in 15% of your salary every paycheck, which is every other week (26 pay periods in a year. You start your new job at $42,000 a year and you are told that every 3 years you will get a 3.75% raise. How much will be in your retirement fund at the end of 42 years of working?

Explanation / Answer

When it comes to retirement savings, asking someone you haven't met how much savings they need is like inquiring how long they figure it will take you to get to Los Angeles. They really ought to respond with some very basic follow-up questions like "Where are you now?" and "Are you driving or flying?" When it comes to how much savings you'll need for retirement, there are several key questions and considerations you should evaluate as you contemplate a retirement, either with or without the assistance of a planner: Retirement Savings Consideration # 1 - What do you envision for your retirement? Does your ideal retirement life look a lot like the one you have now? Or would you hope to step it up a notch? Alternatively, you may crave the idea of an earlier retirement even at the expense of a lower standard of living. There's no right or wrong answer, but your anticipated retirement lifestyle is a critical component in answering the "How much savings will I need?" question. Retirement Savings Consideration # 2 - What do you make today? Your current income is a useful starting point for calculating your retirement planning savings needs. Odds are that the more you make today, the more savings you'll need in retirement - thanks to the lifestyle creep prevalent in today's society. If you're different than most, congratulations - you can probably have less savings. But it won't matter, because you're already saving mo

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