Are you saving enough?

Are you saving enough?

Two recent articles really concern me and I hope my readers do not fall into either of these groups.
The first had to do with how much Millennials think they need to save to retire comfortably.  And the Second had to with the fact that Most Americans can’t cover a $1,000 emergency.

In one of the post on my blog I talk about how much cash you need. While most of my writing centers on the need for long term saving and investing, this post talk about short term savings, how much cash you should have on hand and what you should do with it. If you are reading my post hopefully you are not one of the many Americans that have failed to put any money aside in an emergency fund. If you do not have an emergency fund I hope this article will help encourage you to set one up immediately.  Not having one will make any emergency you face that much worse both in the short term and for you long term financial stability.

One of my recent posts was about how easy it is to generate over a million dollars of tax free money if you start early. That was the good news. The bad news is many people will need a million dollars or more when they retire if they want to maintain their standard of living.  As I talk about in my writings it is important to have a plan in place to figure out how much you have to save. While a million dollars sound likes a lot of money you have to look at how much income it will generate and how much income you will need.


Many good financial planners will tell you that you can only count on spending 3-4% of your nest egg every year if you want it to last the length of your retirement. Using the more generous 4%, that only gives you $40,000 a year on a million dollars. If you are struggling to make it on $40,000 now what makes you think you will be able to make it on that when you retire?  If you are young you also have to realize that 20-30 years from now that $40,000 may only buy you a third of what it can today because of inflation.  So whether you have 10 years until retirement or 40 years to retirement make sure you are realistic about how much income you want your nest egg to generate each year to live the life style you want to. Once you figure out how much income you want multiply that number by 25 and it will give you a rough estimate of how big your nest egg should be by the time you retire.  

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