The ‘Million Dollar Question’: what should you be doing now when you’re young to make sure you can live in style when you stop working?

Did you ever notice that almost every bank or finance advertisement features the same recurring elements and themes? They’re always trying to explain retirement and savings with the same tired comparisons. It’s usually ‘training for a marathon’ with investments that pan out over time, rather than a ‘short sprint’ with huge initial returns that fizzle.

Don’t forget those large noble elk roaming around the forest looking very wise and stately with their financial planning advice. My favorites were always all those sailing-themed commercials. Apparently Wedding Crashers was right, ‘Sailing’s like sex to these people. They love it.’

But really what it all boils down to is the one big question: how much of my yearly income should I sacrifice for the greater cause of my ‘savings’? That’s all I really want to know. Give me a number, a percentage, and I’ll just plug away at it until my ripe old age of 65. At which point I will hopefully be able to retire somewhere and steal small items from stores without fear of incurring any consequences for my actions.

Apparently that number is a very elusive figure to get a hold of. There’s practically an entire industry dedicated to keeping it a big secret. Between financial planners, retirement specialists, savings experts, and market analysts, you may have to fork over some serious dough to get the answers you’re looking for.

One thing that may help you is a handy social security calculator. Find out exactly how much you’ll be getting from those social security checks when you retire. If you are in your 20s and 30s now, a safe bet might be to not count on social security handouts paying any of your expenses.

These figures can be argued, but one could use them as guidelines for an estimate:

  • a steady 3% salary increase each year (lucky)
  • a 3% inflation rate increase (likely)
  • Then if you invest in stocks, you might hope for something like a 10% return on them annually (not counting any future recessions)

If you saved 15% of your pre-tax income for 35 years, that would put someone in their late 20s at 80% of their annual income upon retirement.

Also, this is not including anything you might put into a 401k or company matching retirement plan. You also might want to try and figure out how long you have to live. If you plan on dying very soon, maybe retirement isn’t for you?

There are also plenty of people out there who would be bored by retiring early and would rather keep working at a job they enjoy. Are you one of those people?

But to give you a general guideline, if you decided to save between 10% and 15% of your annual income, that would be a great start. Considering that almost no one in the United States believes in long-term savings, it would put you significantly ahead of the curve.

And who knows, maybe one day when you die you could screw your bratty kids out of your massive inheritance? We can all dream big, right?

USA Today: How Much Should You Save?

Social Security: Quick Calculator

Monster: How Much Should You Save?

MSN: Plan for Retirement