Thursday thoughts: Are you saving enough for retirement?

Clark Howard had some interesting information on his show this week about how much the financial gurus are now saying we should be saving for retirement. Is 10% still enough? Are you comfortable with your rate of savings for retirement?

Do you agree with Clark? Have you even been saving 10% per year? On the show, Clark says that the average savings is actually more like 4% per person, which would not be enough for many to live on when it is time to retire.

Do you work for a company that offers a pension? They are few and far between. How about a match on your 401K? Since my husband and I are self employed, we have no matching contributions so it's all up to us.  If you are wondering where some of my coupon savings goes, it's towards our retirement.  Last year, we were able to save 10% of our income. That hasn't happened every year we have been married, but we got there last year. Based on what Clark is saying, it wasn't enough. In addition,  I really have no idea if there will be Social Security benefits available when I retire so we are planning as if we won't have that money (but hoping that we will!).

In addition, it's also important to look at your vision of retirement. Do you plan to hang out on the hammock in the backyard and read books from the library all day or do you plan to jump in the car and travel for weeks at a time? How you plan to spend your retirement will significantly influence how much you will need to save.

For some folks, they will have enough at retirement because their income is more than they are spending. They may be making loads of money or they may simply be frugal and living within their means and saving every single month. For many people I have spoken with at classes and online, it is not that simple. In this difficult economy of lay-offs and high unemployment, they are barely making enough to make ends meet, let alone save 10 - 15% for retirement. During a time when they should be building up the retirement account, they are struggling to pay everyday expenses. In that case, it is even more important to make sure you are living as frugally as possible so you don't incur additional debt that will be very difficult to dig out from under.

If you have an employer match, take advantage of it! It's free money! At least save up to the matching amount. The best way to guarantee you are saving each month is to have the money direct deposited into the savings account so you don't have to make the choice each month as to how much to save.

In the end, it's important to start thinking seriously about your retirement savings if you are not already on track to reach your goals. Visit some of the retirement calculators in the GetRichSlowly article to get an idea as to how your current savings compare to what you need to be saving.

Here's a pretty clear picture using some basic numbers. This does not take into account interest earned on investments or pension or Social Security benefits. If you expect to need $40,000 per year ($3,333 per month) to live on during retirement, you will need approximately $1 million in retirement savings based on a 25 year retirement. That's a lot of money! 

So, are you on track to retire comfortably? What are you doing to ensure you will be able to retire when the time comes? At what age do you hope to retire?

I'd love to hear your thoughts and retirement goals!