When it comes to retirement, you've probably asked yourself these questions:
When should you start saving for retirement? and How much should you save for retirement?
The answer to the first question is simple: As soon as possible. Unfortunately, the younger you are, the tougher the second question is to answer because of all of the unknowns.
So should you do?
The simplest answer is: At least save something.
After all, something is better than nothing. And if you invest wisely, that something will grow and compound and turn into a bigger something by the time you retire. Hopefully, it'll be enough that when you're older and closer to retirement, you'll discover that you've been successfully setting yourself up for retirement. And at the very least, when you're older and closer to retirement, you'll be in a better position than you would have been if you'd done nothing at all.
But if you want to get to a specific number, then there are several factors to consider:
1) How many more years do you plan to work?
2) What kind of lifestyle do you want in retirement?
3) How many years will you (likely) spend in retirement?
Retirement planning can be extremely difficult because of the sheer number of unknowns. For example, I only have a vague of idea of how long I plan to work, I'm not sure what kind of retired life I want to lead yet, and I certainly don't know how long I'm going to live!
Fortunately, there are people whose job it is to figure out life expectancy, and there are other people whose job it is to build retirement calculators. The historical advice has been to save up enough money to replace 70% or more of your pre-retirement income. If you like crunching numbers, you can determine that amount by hand, but nowadays, a Google search for "retirement calculator" will get you over 33 million results. The first page of results includes reputable sites and companies, and you might want to plug your personal information into multiple calculators to get a general range to shoot for. The information required by the calculators includes data like age, income, expected retirement age, amount of Social Security benefits, and how much you already have saved. Many calculators will break the big number down, project your rate of return, and give you an amount to set aside each month.
My personal experience has been that the number the calculators yield is so big as to be overwhelming. This is one of those times when the big picture isn't very productive, and I prefer to focus on doing what I can - or specifically, saving what I can. Which brings us back to where we started: Do something to save for retirement, because it's better than doing nothing.
