We know we’re  supposed to save for retirement but getting to the golden number of 10-15% of your income can seem unachievable. So let’s break it down.

If you are in your early 20’s you have about 40 years before retirement. In those 40 years let’s say your savings will have a good annual return rate of 7% (according to Investopedia that’s the S&P 500’s annual rate of return over the past 40 years with an adjustment for inflation). Now, where does that money come from? Well let’s take a look at some of the most common expenses to see where you can change things.

All calculations were completed using Compound Interest Calculator with a 7% interest rate, a 40 year calculation period, a base amount as the average monthly cost, and a regular monthly investment of the monthly cost. The average spending habits of Americans is according to the Bureau of Labor Statistics.

saving-retirement

Keep in mind you may not have all of these expense but I am sure you have at least one of them. If you cannot commit to eliminating an expense, consider at least relaxing it a bit and putting the extra you have towards your retirement. Something is better than nothing and if you get it invested early on then you have more time for your money to work for you! Are there any expenses we missed? Share with us the expense you plan to relax on or that you assessed to help you grow your retirement!

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This blog post is provided for discussion purposes, and is not intended as professional financial advice. It’s intent is not to be used as the sole basis for your investment or tax planning decisions. To get more information please speak with a financial planner. Under no circumstances does this information represent a recommendation to buy or sell securities.