How Much Should You Save for Retirement?

In a recent episode of Decoding Retirement, host Bob Powell and guest Ann Lester discuss a Fidelity Investments study revealing that Gen Z and Millennials are falling short in retirement savings. The study indicates that the average savings for Gen Z participants is approximately $11,300, while Millennials have saved around $59,800. This raises concerns as Fidelity and other financial institutions recommend specific savings benchmarks—one times your salary by age 30, three times by 40, eight times by 60, and ten times by 67. Despite some young individuals potentially having previous retirement savings spread across various jobs, the overarching message remains clear: improving savings habits is crucial. Lester emphasizes that young workers should aim to not only contribute to their 401k but also to explore options like employer matches and automatic enrollment, as these programs significantly enhance contribution rates. Strategies are discussed for addressing daunting student debt simultaneously while preparing for retirement, with incremental savings strategies and budgeting heuristics recommended. Lester also offers pointers on managing insurances and planning finances to avoid underinsurance risks. The key takeaway is to encourage young individuals to start saving early and gradually increase their contributions as financial circumstances improve.