Are you saving enough?

As per the title, do you think that you are stashing away enough money? Are you saving 30%, 20% or nothing at all? Well, it's never too late to start but be warned that the later you start, the longer you have to work and the later you retire.

The amount of your salary that you save per month is directly co related to when you can retire. Let's say you save 25% of your income per month for a year. That would mean that you have a year or retirement saved up ready to be invested after every 4 years.(Presuming you have the same level of expenses after retirement) And if you save 50% of your income, you would have a years worth after 2 years.

An example would better illustrate this. Here are 2 friends, Jon and Mike, both 25 and are commanding the same income of $5000. Jon saves 25% and Mike saves 50%. They both invest their money at a rate of 8% and require $3,500 a month to cover their expenses when they retire.( Higher expenses due to dream of traveling and fulfilling other things they always wanted but did not have time to do)

With the power of higher percentage of savings and the magic of compounding, Mike would achieve retirement at the very young age of 35. Jon on the other hand would have to slog for another 6 years of this life to reach the same level as Mike and retire at the age of 41.

Are you ready to save more now to attain an earlier retirement? Or will you rather enjoy that little bit more now and have to retire later. I choose to save more now and retire earlier. For those with partners who differ in your views of saving versus spending, you can always apply the bad mood fund and adjust slowly to an amount you are both comfortable with. I mean, there is no point in starting your journey with an argument or fight with your special someone when one of the key reasons for early retirement would be to get to spend more time with them.

With this, I leave you to ponder your priorities as you yourself know which path to take best. I wish you wealth and happiness in whichever path you choose.

As always, save more, spend less and invest wisely.
P.