Final answer:
The statement about putting 10% into retirement plans after funding an emergency fund is false; financial experts suggest saving around 15% of your income. This ensures a comfortable lifestyle during retirement, aligning with contributions to plans like 401(k)s and 403(b)s.
Step-by-step explanation:
Once you have a fully funded emergency fund, it is commonly recommended by financial advisors to "pay yourself first" by allocating money for retirement. Contrary to the notion of saving just 10% of your income, financial experts typically suggest saving around 15% of your income to ensure a comfortable lifestyle in retirement, which means the statement about putting exactly 10% into retirement plans after funding an emergency fund is false. The rationale behind saving 15% is to allow for a retirement income of approximately 60-80% of your pre-retirement income. Starting to save for retirement early is crucial as it gives more time for your investments to grow through compounding interest and other rates of return. In addition, considering that defined contribution plans, like 401(k)s and 403(b)s, have mostly replaced traditional pension plans, it is important to contribute accordingly to these tax-deferred accounts, which also tend to be portable across employers.