The Bogleheads' Guide to Investing, 2nd Edition

Chapter Six How Much Do You Need to Save?

You really don’t need to begin saving for retirement before you reach 60. At that point, simply save 250 percent of your income each year and you’ll be able to retire comfortably at 70.

—Jonathan Pond

The answer to this question is probably uppermost in the minds of most investors who are trying to plan for their retirement. Some (perhaps most?) investors don’t have the foggiest idea of where to start. They just hope and pray that things will work out in the end, and that they’ll somehow be able to enjoy a comfortable retirement. However, since they’re not sure just how much they’ll need to retire comfortably, there’s always that nagging feeling in the back of their minds that they might not be saving enough. Needless to say, this causes them to worry that they might not be on track to reach their retirement goals.

In this chapter, we’ll give you some helpful guidelines and tools that you can use when you’re doing your retirement planning. While the results won’t be precise, these tools and guidelines will help to give you a better idea of how much you’ll need to be financially secure once you reach retirement age.

There are a number of factors that will help us determine the amount we need to accumulate to achieve the retirement of our dreams:

1. The amount we save. Obviously, the more we save, the better off we’ll be.
2. Our current age. This helps to determine how many years we have to save and invest, and how long our retirement investments ...