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Retirement

It's a completely different issue. SS payroll taxes collect money from today's workers to fund today's retiree benefits. The amount is not based on what is necessary to fund a retirement investment account for your future retirement.
 
You should put away at least as much as your employer's match, otherwise you're literally throwing away money.

The older you are, the more you need to put away soon. The younger you are, the more you need to put away if you want to live well when you retire.
 
I don't think there is enough information here to give any real advice on how much you should put away for retirement each year. Even still, I don't think you can know enough to get to a perfect percentage of income to put away for retirement each year, since some factors vary, such as inflation. Basically, what I'm saying is that the best advice you can get on this topic is going to be a heuristic. Anyways, to contribute to the discussion, I would simply suggest adopting a general attitude of frugality and, possibly, look into invest your nest egg until you need it. I can't say whether 15% is a good or bad heuristic, but I think it will generally depend upon how soon you plan to retire, the state of inflation, how much you make per year, ect.
 
daenku32 said:
I started wondering how much I should put away for retirement. According to MSN article, it would be 15% per year. I'm pretty far behind on that, so I should probably double this number.
http://moneycentral.msn.com/content/Retirementandwills/Createaplan/P142702.asp

But, my SS withholding are only 6.2% (+6.25% employer match), so how come my private plan would require MORE money than SS?
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It is very unlikely that SocSec will be around in it's current form in even 10-15 years. They will have to bump-up the eligible age and decrease the benefits. Think of your SocSoc payments as insurance against abject poverty - NOT a retirement system. Anyway SocSec is not on actuarially sound footing. They are paying out considerably more in benefits then are "deserved" for the contributions.

bpesta22 said:
You should put away at least as much as your employer's match, otherwise you're literally throwing away money.
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Wrong - you might be throwing your employers money away, but you really need to consider what the tax rates will be in the future and what the consequences of tying your money up in an IRA/401k/E.Roth are. The government has records of retirement investments, but they have no record of your conventional savings. So they MAY means-test your social security payments based on your retirement savings for example. The ideas that social security will contnue as before and that tax rates will be lower in retirement are not reasonable (well maybe after 2040 or 2050) .

Real costs in retirement don't decrease that much, and after-inflation, after-tax earnings on your savings can be pretty modest - 2% is good.

==

Any source that tells you need to save X% is automatically full of baloney - it ignores your particular case.

There are a load of unknowns - so you need to plan for a reasonably bad scenario;
assume you live long and only get a pittance from social security and the tax rates on investment income are high. Then see how much inflation adjusted money $1M in savings will pay out for your retirement lifespan, then multiply to get to the income you'll need.
http://www.krabach.info/retire/retire_calculator.htm
 
daenku32 said:
And not enjoy my life? Then what's the point behind retirement?
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Well, you only have finite lifetime resources. It's the parable of the ant and the grasshopper; the more you defer your enjoyment now, the more you will have to enjoy then.
 
drkitten said:
Well, you only have finite lifetime resources. It's the parable of the ant and the grasshopper; the more you defer your enjoyment now, the more you will have to enjoy then.
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That's not quite the same as saving as much as I can afford to..
 
drkitten said:
Well, you only have finite lifetime resources. It's the parable of the ant and the grasshopper; the more you defer your enjoyment now, the more you will have to enjoy then.
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Exactly. Do you buy the 60 inch LCD flat screen now for $2000 and enjoy it for 10 years, or do you invest that $2,000 for the next 20 years where it turns into $20,000 which pays for a Mediterranean cruise?

There is no "right" answer.
 
daenku32 said:
That's not quite the same as saving as much as I can afford to..
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By "afford" I mean whatever is leftover after reasonable expenses, which includes things like flat screen TVs and cable and internet and cell phone, etc...

I'm not proposing you live in a cardboard box.
 
re 401k contributions-- unless the marginal tax rate is 100%, how would future tax brackets make it stupid to take 100% of the employer match now, especially since most people will not have millionaire retirement funds?
 
If SS had been privatized at some point, and that retirement index fund was the size required to do the payoffs SS has been predicted to do, how big would that index fund be? I'm wondering if anyone has done that calculation?
 
daenku32 said:
If SS had been privatized at some point, and that retirement index fund was the size required to do the payoffs SS has been predicted to do, how big would that index fund be? I'm wondering if anyone has done that calculation?
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To make a valid comparison, you would have to figure out where the money would have come from to pay the benefits that were paid out while you were investing the premiums.
 
Michael Redman said:
To make a valid comparison, you would have to figure out where the money would have come from to pay the benefits that were paid out while you were investing the premiums.
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How about this way: how big of an index fund would something need to be to grow while sustaining $677 billion in withdrawals each year (current SS expenditures).
 
Put away as much as possible before tax in your 401(k) Most places, that's about 15%.
Don't be surprises if your take-home pay actually increases slightly. It shouldn't go down very much, because (depending on your salary) you end up withholding at a lower tax rate due to the "salary reduction".
Then add as much as you can comfortably afford in after-tax contributions.
 
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