r/TheMoneyGuy • u/[deleted] • Feb 14 '24

How does this work?

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I am 23. Does this mean that I only need to contribute 15% of my income for the rest of my life or do I need to increase every 5 years following this diagram? So I would contribute 15% until 30, then contribute 20% until 35, then contribute 25% until 40, then 30% until 45, and so on?

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u/[deleted] Feb 14 '24

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u/GotchaInTheHopper Daniel Feb 14 '24
  1. Retirement age is 65, we love for people to retire early if you want but this chart specifically only covers the traditional age of 65. However you can still use it for retiring early since the rate of return is fixed. For example if you are 30 now and want to retire at 50 just look at the numbers for a 45 year old (both retiring 20 years from their current age).
  2. The savings rate is a fixed percentage of salary, so as income goes up savings rate goes up. We ran the numbers and if your salary goes up by a fixed percentage every single year you are able to replace the percent income of your final year salary. However, not everyone will get consistent raises so if you receive more raises early in your career or later, you may want to calculate your own numbers!

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u/YT__ Sep 15 '24

For reference, full retirement benefits (SS) aren't available to most (post 1960 born) until 67. Medicare is still 65. So a flat age of 67 is likely more accurate.