How does one calculate how much to save for retirement?

[emanon1501]

How does one calculate how much to save for retirement? I want to save as much as I can, but I want to enjoy life at the same time. For example, I am passion about boating, and I want to buy a 30 ft mid-cabin cruiser. But, at the same time, I do not want to short change myself for retirement. I am not into big fancy house, cars, etc. Just boat, but more of mid level boat and it would be 10 to 20 years around valued about 20,000 to 40,000. The new one like it would go for well over 150,000. I will never pay that much. I am not looking for your approval, I am just trying to explain that I am looking for a balance between enjoying life and saving for retirement.

So, how does one calculate how much to put away in 401K and IRA to ensure that my wife and I live comfortably when we retire?

[disneysteve]

There are a few guidelines one can follow.

1. Save a minimum of 15% of your gross income each year toward retirement. This assumes that you start that saving early. If you are getting a late start, you might need to save more than 15%.

2. Your savings goal should be 25 times your pre-retirement income. That allows for a withdraw rate of 4% in retirement which is the standard recommendation. 4% in year one adjust annually for inflation.

Of course, you also should be completely debt-free and have a 6-month emergency fund before considering the boat. I'd also say an outright luxury like a boat should only be bought with cash. If you have to finance it, you can't afford it.

[thefrugaltoad]

Check out the retirement calculator on Vanguard's website. Easy to use and very informative.

[Bud1225]

Thanks Disney Steve for sharing the answer of this question here (How does one calculate how much to save for retirement?)OK I have to know as my income is 2000& and what will be the gross profit of 15% of my income please calculate the amount for me thanks.