SACRAMENTO - Many financial advisors will tell you, you need to be putting 10 to 15 percent of your income towards retirement. But, most workers are only putting away six to seven percent of their annual income into a 401k or workplace retirement plan.
Even smaller increases can help in the long run. A one-percent increase today can make a big difference and create hundreds of dollars in potential income in retirement.
Some workers who have delayed retirement savings will have to put away 20 to 25 percent of their income.
A recent analysis by Fidelity found that the average 401k balance was $80,600 at the end of June, and for those steady savers who were continuously employed in a workplace plan for the past decade, that balance was at $211,800.
But for many, that's still not enough, especially considering that the average 65-year-old couple retiring today will spend about $220,000 on health-care costs alone.
And there are many workers as it turns out, who are taking money out of their 401k early to pay bills, and that's something financial advisors say is a terrible idea.
Let's say you want to retire at age 67, and that you will live until age 93. Fidelity broke it down and found that a 25-year-old would need to put away about $160 each month to generate $1,000 in monthly income. Start saving at age 35, and that goes up to $270 month to generate that same income. At 45 years old it goes up to putting away $500 a month, and over $1,000 for someone at age 55 who starts a retirement plan at that age.
So that just shows it pays off when you start saving early.
Financial advisors say there is no magic bullet. Even with the best investments in the world, you're not going to reach your retirement goals if you just set aside $500 a year in your IRA or 401k.