How much should I save for retirement? Follow Fidelity’s easy 50/15/5 rule of thumb
Considering where to begin when it comes to saving for retirement can seem like such a daunting task.
Creating a simple-to-follow budget can help you get started down the right path. Fidelity, Purdue’s official provider of education, guidance and assistance related to retirement plan investments and decisions, suggests individuals try the 50/15/5 rule of thumb as a starting point when saving for retirement. The financial wellness pillar of the Healthy Boiler Program works to provide financial education and guidance programs that help ensure long-term financial well-being, such as the 50/15/5 rule of thumb.
But what does that mean exactly? The key takeaways to this simple plan are as follows:
- 50 - Consider allocating no more than 50 percent of take-home pay to essential expenses.
- 15 - Try to save 15 percent of pretax income (including employer contributions) for retirement.
- 5 - Save for the unexpected by keeping 5 percent of take-home pay in short-term savings for unplanned expenses.
See the Fidelity article “50/15/5: a saving and spending rule of thumb” for more tips to consider and how to get started with the 50/15/5 plan. Don’t forget to check out the easy to use Budget Checkup tool at the bottom of the article to answer a few quick questions and to see if you’re on track.
While building a budget you can keep up with is key, many other important retirement planning questions may also lurk in the back of your mind. Such as:
- How much should I save each year for retirement?
- What will my savings cover in retirement?
- How much do I need to save for retirement?
- How can I make my retirement savings last?
Fidelity’s retirement roadmap answers these four crucial retirement questions with simple-to-follow guideposts helping to keep you on the right track for a well-planned retirement. Don’t miss checking out your Fidelity Retirement Score located through the “See how you’re doing” “Financial Checkup” link in the tools section at the bottom of the article.
To talk through the results of your scores or discuss any retirement planning questions you may have via a one-on-one phone or virtual appointment, contact Fidelity at 800-642-7131 or schedule online.
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- How much should I save for retirement? Follow Fidelity’s easy 50/15/5 rule of thumb
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