The starting place for that question is to look at your annual or monthly income (gross). If you make 120,000 per year combined or single, a good place to start is 10% of your income. Adjustments can be made from that number based upon goals and lifestyle.
Now the question comes in for those of you that have kids, "what about college savings?" Anything above and beyond the 10% may be earmarked for the kids college. Do not reduce retirement savings for the sake of the kids college. I am going to use an anectode here: When you are flying on a commercial airline (any of them) and the flight attendant is covering the oxygen mask issue if the plane suddenly loses altitude... is that little light going off in your head yet? Who does the attendent tell you to put the mask on first? Your child or you?
Well if you panic and try to put the mask on kids face and pass out trying that's not good for anyone is it? It goes on you first so you don't pass out then your children. Same with retirement.
When it comes to college, where there is a will there is a way. Just this week there was an article about Ivy League schools dipping into their large endowements to offset tuition for low and middle class wage earners (sometime middle class is defined as $100,000). The Ivy league pretty much detached from reality, but its not a bad thing in this case.http://finance.yahoo.com/expert/article/generationdebt/64241;_ylt=Anc94pn36aKC9sa226owuoK7YWsA
1 comment:
hey PK
Good to see you sharing you knowledge with us dumb ex-college roomates.
Oh yeah, panic doesn't have a k. I trust you with my money but not as a spelling teacher.
Heff
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