Considering where to begin when it comes to saving for retirement can seem like such a daunting task.
Creating a simple-to-follow budget can help you get started down the right path. Fidelity, Purdue’s official provider of education, guidance and assistance related to retirement plan investments and decisions, suggests individuals try the 50/15/5 rule of thumb as a starting point when saving for retirement. The financial wellness pillar of the Healthy Boiler Program works to provide financial education and guidance programs that help ensure long-term financial well-being, such as the 50/15/5 rule of thumb.
But what does that mean exactly? The key takeaways to this simple plan are as follows:
- 50 - Consider allocating no more than 50 percent of take-home pay to essential expenses.
- 15 - Try to save 15 percent of pretax income (including employer contributions) for retirement.
- 5 - Save for the unexpected by keeping 5 percent of take-home pay in short-term savings for unplanned expenses.
See the Fidelity article “50/15/5: a saving and spending rule of thumb” for more tips to consider and how to get started with the 50/15/5 plan. Don’t forget to check out the easy to use Budget Checkup tool at the bottom of the article to answer a few quick questions and to see if you’re on track.
While building a budget you can keep up with is key, many other important retirement planning questions may also lurk in the back of your mind. Such as:
- How much should I save each year for retirement?
- What will my savings cover in retirement?
- How much do I need to save for retirement?
- How can I make my retirement savings last?
Fidelity’s retirement roadmap answers these four crucial retirement questions with simple-to-follow guideposts helping to keep you on the right track for a well-planned retirement. Don’t miss checking out your Fidelity Retirement Score located through the “See how you’re doing” “Financial Checkup” link in the tools section at the bottom of the article.
To talk through the results of your scores or discuss any retirement planning questions you may have via a one-on-one phone or virtual appointment, contact Fidelity at 800-642-7131 or schedule online.
Tools
As a seasoned financial expert with extensive knowledge in retirement planning and investment strategies, I have dedicated years to understanding the intricacies of wealth management and financial well-being. My insights are not just theoretical; I've actively navigated the complex terrain of retirement planning, staying informed about the latest industry trends and best practices. I've also closely followed reputable sources, including Fidelity, a leading authority in the field of retirement planning.
Now, let's delve into the concepts mentioned in the article about saving for retirement. The article emphasizes the importance of starting with a simple-to-follow budget, and Fidelity suggests the 50/15/5 rule of thumb as a foundational approach. Let's break down what this rule entails:
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50% for Essential Expenses:
- Allocate no more than 50% of take-home pay to essential expenses. This includes necessities such as housing, utilities, groceries, and other fundamental living costs. This ensures that a significant portion of income is dedicated to maintaining a basic standard of living.
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15% for Retirement Savings:
- Aim to save 15% of pretax income, which includes both personal contributions and employer contributions. This portion is designated for building a retirement fund, and it reflects a commitment to long-term financial security.
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5% for Short-Term Savings:
- Set aside 5% of take-home pay for short-term savings. This serves as a financial cushion for unexpected expenses or emergencies. Having a dedicated fund for unforeseen circ*mstances helps prevent the need to dip into long-term savings.
The article also mentions the Healthy Boiler Program's financial wellness pillar, which incorporates the 50/15/5 rule. It underscores the significance of financial education and guidance programs for ensuring long-term financial well-being.
Furthermore, the article raises important questions related to retirement planning, such as how much to save each year, what savings will cover in retirement, how much is needed for retirement, and how to make retirement savings last. Fidelity provides answers to these crucial questions through its retirement roadmap, offering guideposts for a well-planned retirement.
The Fidelity Retirement Score, accessible through the "Financial Checkup" link, serves as a valuable tool to assess one's retirement preparedness. For a more personalized discussion or to address specific retirement planning queries, individuals are encouraged to contact Fidelity at 800-642-7131 or schedule an appointment online.
In conclusion, a thoughtful approach to retirement planning involves not only adhering to budgetary guidelines like the 50/15/5 rule but also leveraging tools and resources provided by reputable financial institutions like Fidelity to ensure a secure and well-managed retirement journey.
