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Originally Posted by anonymous_saver
The 10% savings amount is a somewhat arbitrary amount of saving towards retirement. Most just state this amount as a first step - it is a good goal to start off with.
I also would argue that it is more difficult for someone who makes $32,000 to put 10% into retirement over someone who makes $100,000 a year. Someone who makes $32,000 a year probably needs most of their income to pay for necessities, while someone who makes $100,000 a year doesn't (necessarily) need all of their money for necessities, they would likely have much more "wiggle room" to have more fun with their money. Just my opinion though.
It is really just a case by case basis. For example, I save 25% of my income and I have a pension. My goal is to retire by age 50-55 though (I'm 24 now and make $35,000/yr.) so that is why I am saving so aggressively.
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It is easier for the person making 32k to retire with close to their income level than it is for the person making 100k.
SS will replace close to 50-75% of the 32k income for the lower income person (and not be taxed?). So if person could not afford to save 10%, or missed the $1 M goal, SS will bail them out and it still might appear to be "normal".
For the 100,000 k earner, SS MIGHT replace 25% of income level, and depending on other sources of income, would be taxed. So the person making 100k needs to save MORE (as a % of income) than the person making 32k.