You've heard all kinds of formulas for how much money you should save for retirement. But this week the nation's largest 401(k) administrator, Fidelity, is taking out the guess work.
The new guidelines for how much you should be saving might make you a little bit nervous.
Your golden years are going to be a lot more golden if you have eight times your final annual salary saved by the time you're 67. Fidelity says that will meet just your basic income needs during retirement.
“Anytime they talk about savings, it's beautiful. It gives people a goal; they put it in their mind and start attacking it," Rob Huber of First Financial said.
Attack it, by saving at least the equivalent of one year's salary by the time you're 35 and twice that amount by the time you hit 40.
“Although it makes me nervous, it at least gives me a target to shoot for that's recommended," Craig Markhardt said.
“You have to pay yourself first. Get your priorities in line; get a budget out, pay yourself first and then the bills come later," Huber said.
“I think it's good to have guidelines and goals to shoot for and good to have some advice on what those goals should be from a well-known group like Fidelity. Too many people kind of operate on a hoping they're going to get where they need to be and this gives them a way to measure their progress of where they should be," Paul Batcheller said.
While it may be a little overwhelming, taking advantage of your 401(k) plan at work and your employer's match is the best place to start.
“It's free money and if people are turning away that free money; that's crazy. That's like seeing a $20 sitting on the ground and you don't pick it up," Huber said.
If you're way behind the eight ball when it comes to these new retirement savings guidelines, don't despair. Even if you don't start until you are in your 40's, you have a good 20 some years to save before you hit Social Security age.