Some myths on retirement savings
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During the annual benefits enrollment a while ago, I knew health insurance premium would go up quite a bit in 2011. So what can I do to offset that premium increase? Decrease the savings for 401k?
Just kidding. Over the years I have seen a lot of confusions and myths on the 401k savings. For me personally, I started my job without enrolling into the company 401k plan for slightly over a year. When I started to enroll, then came the questions such as saving percentage, and fund choices.
How much should we save in 401k (percentage-wise), should we just save enough to get employer match?
I read this article from Yahoo Finance a while ago 3 Ways to Get Free Money for Retirement, and I recommend it. Ultimately how much to save depends on how much we want to get after retire, and the investment return rate. My iPhone app myNestEgg is trying to get some mystery out of this process. For me personally, I’m now putting 15% of salary into 401k.
Social security, how much can we expect?
Unlike some of the rhetoric on topic, such as “Social Security will go bankrupt”, or “Social Security will not be there when we (gen X) retire”, I do have some faith on this program. I think I can count 30% of the retirement income from social security.
How much should I save?
I feel 70% of the “income ratio”, as shown in my iPhone app myNestEgg, is probably good enough.