Final answer:
To be on track with retirement savings, save 15% of income and utilize the power of compound interest starting early. Each individual should assess how much they will need based on a target of living on 70% of pre-retirement income. Use a retirement calculator and invest wisely to reach these goals.
Step-by-step explanation:
To determine how much to save for retirement at different ages, it is essential to consider factors such as your desired retirement income, the rate of return on investments, and the time you have left until retirement.
Economists recommend aiming to save 15% of your income throughout your working life to ensure that you can maintain approximately 70% of your pre-retirement income during retirement. If Yelberton, in our example, wishes to retire comfortably at 60 and live off his retirement savings until the age of 85, he must make crucial choices about how much to consume now and how much to save for the future.
Using the power of compound interest, even a small amount saved early in life can grow significantly. For instance, a $3,000 investment at a 7% annual rate of return over 40 years would grow to approximately $44,923. This emphasizes the importance of starting to save early and consistently over time.
To further encapsulate your retirement plan, you may consider using a retirement calculator and learning about investment strategies to make well-informed decisions about your retirement savings.