Forget 10% -- Here's Why You Should Be Saving 15% or More of Your Income for Retirement.
Regardless of income level or projected retirement lifestyle, the typical senior can't live off Social Security alone.
The latest estimates tell us that the average healthy 65-year-old couple today will need a whopping $400,000 or more for medical costs in retirement, and that doesn't include long-term care.
Keep in mind that the above calculations are based on an average yearly 7% return, which is just below the stock market's average.
Let's total up the costs we discussed above.
Let's also assume that you'll end up living in a nursing home for five years, which is reasonable, given that 70% of seniors wind up requiring some form of long-term care during retirement.
Over a 20-year retirement, that's $552,000 of income.
If we take that $552,000 and add in the $755,000 from above, which is based on a 10% savings rate, we arrive at $1.307 million -- which would leave you with roughly $5,000 a year, or just over $400 a month, to spend on utilities, cable, phone service, gifts, charity, home improvements, travel, and entertainment, assuming that money doesn't get eaten up by an unforeseen medical need.
If that sounds like enough for you, then by all means, keep saving 10% of your income for the future.
Based on the table above, saving 15% of your salary consistently would mostly leave you with enough money to cover your basic expenses without having to factor in Social Security.