vania-janet/multiturn-rag-retrieval-data huggingface dataset:
Emergency funds make people really think about that portion of savings. And thinking about saving before spending helps avoid situations where you shortchange savings. Let's pretend that retirement accounts don't exist (perhaps they don't in your country). Your savings is some mix of stocks and bonds. You have a mortgaged house. You've budgeted enough into stocks and bonds to cover retirement. Now you have a major emergency. As I understand your proposal, you would then take that money out of the stocks and bonds for retirement. But then you no longer have enough for retirement. Going forward, you will have to scrimp to get back on track. An emergency fund says that you should do that scrimping early. Because if you're used to spending any level of money, cutting that is painful. But if you've only ever spent a certain level, not increasing it is much easier. The longer you delay optional expenses, the less important they seem. Scrimping beforehand also helps avoid the situation where the emergency happens at the end of your career. It's one thing to scrimp for fifteen years at fifty. What's your plan if you would have an emergency at sixty-five? Or later? Then you're reducing your living standard at retirement. Now, maybe you save more than necessary. It's not unknown. But it's not typical either. It is far more common to encounter someone who isn't saving enough than too much.
"What percent of my salary should I save? is tightly coupled with its companion, What size “nest egg” should my husband and I have, and by what age? Interestingly, Mr.Christer's answer, 10%, is the number that plugs into the equation that I reference. Jay's 25X rule is part of this. We start with the assumption that one's required income at retirement will be 80% of their pre-retirement income. That's high by some observations, low by others. A quick look at the expenses that go away in retirement - The above can total 35-40% It would be great if it ended there, but there are costs that go up. The above extra spending is tough to nail down, after all, you knew what you spent, and what's going away, but the new items? Crapshoot. (For non-native speakers - this refers to a game with dice, meaning a random event) Again, referencing Mr Christer's answer ""financial planners whom you could pay to give you a very accurate number,"" I'm going to disagree with that soundbyte. Consider, when retirement is 30 years away, you don't know much If I can offer an analogy. I once had the pleasure of hearing Jim Lovell (The astronaut played by Tom Hanks in Apollo 13) give a speech. He said that for the first 99% of the trip to the moon, they simply aimed ahead of their target, never directly at the moon. In this manner, I suggest that with so many variables, accuracy is impossible, it's a moving target. Start young, take the 10% MrC offered, and keep saving. Every few years, stop and see if you are on target, if not, bump the number a bit. Better to turn 50 and find that after a good decade you've reached your number and can drop your savings to a minimum, perhaps just to capture a 401(k) match, than to turn 50 and realize you've undersaved and need to bump to an unsustainable level. Imagine planning ahead in 1999.
You should also stick with your job until you become fully vested. The money you have in retirement accounts does you no good when you are young. There is a significant penalty for early withdrawal, and that age is currently 59 1/2. Doing the math, it would be around 2052 when you would be able to have access to that money. You should hold onto a certain amount of your money and keep it in a higher interest rate savings account, or a money market account. You say that your living situation will change in the next year as well. Take full advantage of living as cheaply as you can. Don't make any unnecessary purchases, try to brown bag it to lunch instead of eating out, etc. Save as much as you can and put it into a savings account. You can use that money to put a down payment on a house, or for the security and first month's rent. Try not to spend any money from your savings, and try to support yourself as best as you can from your income. Make a budget for yourself and figure out how much you can spend every month. Don't factor in your savings into it. Your savings should be treated as an emergency fund. Since you have just completed school, and this is your first big job out of college, your income will most likely improve with time. It might make sense to job hop a few times to find the right position. You are much more likely to get a higher salary by changing jobs and employers than you are staying in the same one for your entire career. This generally is true, even if you are promoted at the by the same employer. If you do leave your current job, you would lose what your employer contributed if you are not vested. Even if that happened, you would still keep the portion that you contributed.
Are you working? Does your employer offer a 401(k) and if so, is there any match?  Saving should be taught to kids at the same time they are old enough to get an allowance. There are many numbers tossed around, but 10% is a start for any new saver. If a college graduate can start by saving even 15%, better still. If you find that the 10% is too much, just start with what you can spare, and work to build that up over time, perhaps by splitting any future raises, half going toward savings, half to spending.  Good luck. Edit  - my 12 yr old made good money this summer baby sitting. I'm opening a Roth IRA for her. A 10 yr head start on her retirement savings. Edit (Jan-2013) - she's 14 now, 3 deposits to the Roth total $6000, and she's planning to up the number this year. Her goal is to have $50K saved in her Roth by the time she graduates college.  Edit, by request (July-2017) 18, and off to college next month. Just under $24K, all invested in an S&P low cost index. We are planning to continue deposits of $4-$5K/yr, so the $50K is still a good goal.
There are two steps. First you take the age at retirement and annual benefit. Say it's $10,000/yr. You can easily look up the present value of a $10k/yr annuity starting at age X. (I used age 62, male, at Immediate Annuity. It calculates to be $147K. You then need to look at your current age and with a finance calculator calculate the annual deposits required to get to $147K by that age.  What I can't tell you is what value to use as a cost of money until retiring. 4%? 6%? That's the larger unknown.
The fact that you are planning to move abroad does not affect the decision to contribute to a 401(k). The reason for this is that after you leave your employer, you can roll all the money over from your 401(k) into a self-directed traditional IRA. That money can stay invested until retirement, and it doesn't matter where you are living before or after retirement age.  So, when deciding whether or not to use a 401(k), you need to look at the details of your employer's plan: Does your employer offer a match? If so, you should definitely take advantage of it.  Are there good investments available inside the 401(k)? Some plans offer very limited options. If you can't find anything good to invest in, you don't want to contribute anything beyond the match; instead, contribute to an IRA, where you can invest in a fund that you like.  The other reason to use a 401(k) is that the contribution limits can be higher. If you want to invest more than you are allowed to in an IRA, the 401(k) might allow that.  In your case, since there is no match, it is up to you whether you want to participate or not. An IRA will allow more flexibility in investing options. If you need to invest more than your IRA limit, the 401(k) might allow that. When you leave your employer, you should probably roll any 401(k) money into an IRA.
"My basic rule I tell everyone who will listen is to always live like you're a college student - if you could make it on $20k a year, when you get your first ""real"" job at $40k (eg), put all the rest into savings to start (401(k), IRA, etc). Gradually increase your lifestyle expenses after you hit major savings goals (3+ month emergency fund, house down payment, etc). Any time you get a raise, start by socking it all into your employer's 401(k) or similar. And repeat the above advice."
Bringing your spouse on board a financial plan is key to success.  The biggest part is to have a shared dream.  Having retirement saving doesn't mean that you can't work. It does mean that you both will have some level of security as you age.   Does your husband really want you to be impoverished when he dies?  I doubt it, he probably just hasn't given it much thought.  A strong nest-egg can help you after his is gone even if you are still working. My wife and I follow Dave Ramsey's baby steps.  It has worked like a champ for us and can help you as well.  You can look up his plan, most of the materials are free.  A few highlights: So in short, don't worry about retirement until you two are out of debt.  Once you two are out of debt then save for your retirement, kids college and pay off your home early. Building a shared dream with your husband is the best way to get him onboard.  Talk about helping the kids, freedom to vacation, your parents struggle, whatever gets him to see the importance of having some savings.
I am in the process of writing an article about how to maximize one's Social Security benefits, or at least, how to start the analysis.   This chart, from my friends at the Social Security office shows the advantage of waiting to take your benefit. In your case, you are getting $1525 at age 62.  Now, if you wait 4 years, the benefit jumps to $2033 or $508/mo more. You would get no benefit for 4 years and draw down savings by $73,200, but would get $6,096/yr more from 64 on. Put it off until 70, and you'd have $2684/mo.  At some point, your husband should apply for a spousal benefit (age 66 for him is what I suggest) and collect that for 4 years before moving to his own benefit if it's higher than that.  Keep in mind, your generous pensions are likely to push you into having your social security benefit taxed, and my plan, above will give you time to draw down the 401(k) to help avoid or at least reduce this.
How to start is pretty simple.   With your next pay check set aside an amount and open a separate savings account.  Since this is an emergency fund - you want it someplace where you can get to the money quickly (so a CD or mutual fund is not good), but you want it in a separate account so that you don't accidentally use it.    Once the account is opened I'd recommend setting up an automatic transfer, or make it part of the direct deposit if you do that, so that you put in some money regularly (every pay check).  By adding to it regularly and not using it, you'll more quickly achieve your goal.   I'd recommend stopping, or slowing any retirement savings or other investing, until you get the emergency fund in place.  If you have an emergency, the money in the retirement fund isn't going to do you much good as it costs too much to do an early withdrawal.  The whole point of the emergency fund is to have liquidity when you need it so that you don't incur the costs of unplugging your longer term investments. Also don't worry overly much about making money on this money.  This isn't an investment it is there for emergencies.
If you ever need the money in three years, imagine that today is 2006 and you need the money in 2009.  Keep it in savings accounts, money-markets, or CDs maturing at the right time.
One of the downsides of UK pensions is that you have very little control over the money until you reach a certain age. Tactically I suggest saving up to build a cushion consisting of cash or near cash assets; the size of the stash should be such that it is enough to cover all of your expenses from a minimum of 2 months to a maximum of a year. The exact size will depend on your personal comfort level, whatever social net you have (parents, wife, partner) and how hard it will be to find a new source of income should the current cease to produce cash. On a strategic level you can start looking into investing any surplus cash into the foundation of what will bring joy and happiness into the next 40 years of your life. Your or your partners training and education is one of the most sensible choices whilst you're young. Starting a family is another one. Both might help you reach you full earning potential much quicker. Finding what you love to do and learning how to do it really well - cash can accelerate this process bringing you quicker there you want to be. If you were a start-up business in front of a huge uncaptured market would you rather use cash to pay dividends or finance growth?
It's not so much pros and cons as much as it is what are your savings goals? While it's best to start early to save money for retirement, you may have numerous short- to medium-term savings goals (school, down payment, etc). Here's a template you can consider. I would suggest that you open up an RRSP mutual fund or brokerage account and invest a certain amount that you feel free locking up for the next few decades and investing it in some sort of growth product (perhaps look at portfolios using the Couch Potato strategy). Then, also open up a TFSA mutual fund or brokerage account and use it to invest for medium-term goals (i.e. 5-10 years). Invest in products that will allow for some growth but with low chance of losing principle in that time frame. What I wouldn't do is open up a TFSA savings account and use it for day-to-day savings. The tax you save is negligible and you would need to keep track of deposits and withdrawals to ensure that you don't overcontribute for the tax year. Similarly, an RRSP savings account or GIC is far too conservative at your age, IMHO. Think of RRSP and TFSA as investment vehicles rather than accounts per se. Either type allows for you to invest in a vast array of products, including mutual funds, equities, some derivatives, gold, bonds, GICs, etc.  To conclude, my view is to use RRSP to invest for conventional retirement goals, and use the TFSA to invest for medium-term and early retirement goals.
First of all, make sure you have an emergency fund.  Ideally this should be at least 6 months of living expenses in an easily accessible place. Do you have any credit card debt, school debt, or other debt?  Work towards becoming debt free, especially of higher interest debt and debt on things that are only depreciating (cars, for example).  If you have extra income, consider putting it towards debt. If you currently have access to a 403b, you should begin investing immediately.  If not, look into a Roth IRA.  The community has provided suggestions for good places to get one.  With a Roth IRA you take post-tax income money and invest it into this retirement account and when you reach retirement age you get it and all the interest as tax-free income.  You can't withdraw the principal until retirement age.  You should put up to the legal limit into a retirement account - if you can't do this at first work towards this goal. After an emergency fund, becoming debt free, and fully funding your retirement, save for goals such as a house or other things you are working towards. The exact order of doing these things might vary, but in general you need the emergency fund first.
"Donbey since you mention your expenses are very low, I'm going to assume that social security will cover your expenses once you qualify for it.  Since you have no savings currently the first and most important job for this money is to make sure that you can live comfortably until social security kicks in.  Social security could start for you as early as 62 so you need to set aside at least two years worth of money plus another chunk as a safety measure. Also, if you don't have health insurance please look to get a plan through your local ACA exchange as not having health insurance is by far the most common way someone your age ends up bankrupt.  Insurance will eat up a good chunk of the money, but will be much cheaper after the first year if you continue to have no income. Now, if your expenses are low enough, you can look to use this money to delay when you start taking social security as long as possible as the longer you delay social security the more money you get.  The AARP has a calculator where you can see how much more per year you will get from social security if you delay taking it as long as you can.  This is a great way to insure you live as comfortably as possible even if you live to 120.  Assuming you are reasonably healthy, this is a very secure and very meaningful way to ""invest"" this windfall. Once you have set aside the money for your expenses, emergencies, health care and delaying social security in a combination of checking and high-yielding savings accounts, yhen it can be in your interest to invest any remaining amount.  Common, solid, low-risk investments for a 10+ year time frame would be either: While Glen is correct that it is possible for even the best bond fund to lose money it is rather unlikely that you will end up losing money over a period of 10 years.  The nice thing about the bond fund is that most funds (find the right one) don't charge a fee if you need to need to take your money out early.  CDs guarantee that you won't lose your money, but if you have to take the money out in an emergency the fees will eat up way more money than a bond fund would normally lose.  Also, a good bond fund will generally yield a bit more than a CD. Investing in stock is generally much too risky for this sort of time frame without large savings to back it up."
"I am pretty sure you could find a number of financial planners whom you could pay to give you a very accurate number, but the rule of thumb I like best is Save a dime of every dollar.  10% (Savings means save for retirement, not vacations.) Here is a nice article from radio personality Clark Howard with some adjustments based on your age: Saving for retirement later in life?  If you're getting started saving for retirement later in life, the   dime out of every dollar rule won't cut it for you. So for you, The   Baltimore Sun has crunched the following numbers: Jayraj has a particularly good and just as simple bit of math. https://money.stackexchange.com/a/30751/91 Your retirement and financial planning should not end with a flat percentage.  In fact, the chances that any simple math formula is adequate are very low.  My percentages (or Jayraj's simple math) are only starting places.  If you are at the point where you are asking ""where do I start"", starting with this super easy no-brainer approach is great because the key is starting and doing it."
Eliminate debt and you will have $500-800/month that you can comfortably allocate towards retirement. But you also need to learn (educate yourself) how to invest your money to grow your money, and earn income from your savings. This is an area where many struggle, because we are taught to save, but we are not taught how to invest, choose investments wisely and carefully, and how to decide our goals. Investing needs to be addressed separately, but you need to learn how. Live in an affordable house, and pay off your mortgage. Consider that the payment on a mortgage on even a modest $200K house is over $1000/month. Combine saving the money you would have paid towards a mortgage payment with the money you would have paid towards credit card debt or a car loan. Saving becomes easy when you are freed from these large debts."
I like many of the answers, but here is a summary of reasons: Almost everyone will retire, and it is almost certain that government or company pensions schemes will not alone give you a lifestyle you would like in retirement. Money invested early is worth much more in retirement than money invested late, thanks to the miracle of compound interest. In some countries there are tax advantages to investing a little bit of money every year, compared with nothing for a few years and then a lump sum later. Much investment advice is given by investment consultants, who profit when you make investments. It's always in their interests to have you invest as early and as often as possible (that doesn't invalidate the first three reasons). Having said that, it isn't always in your best interests to invest in retirement funds very heavily at the start of your career. You might want to consider paying off any debts, or saving for a house, or even having a bit of fun while you are young enough to enjoy it. That back-packing trip to Nepal is going to be a lot easier when you are 23 than when you are 40 with kids.
The absolute best advice I ever received was this: You will need three categories of savings in your life: 1) Retirement Savings This is money you put away (in 401-Ks and IRAs) for the time in your life when you can no longer earn enough income to support yourself. You do not borrow against it nor do you withdraw from it in emergencies or to buy a house. 2) Catestrophic savings This is money you put back in case of serious events. Events like: prolonged job loss, hospitalization, extended illness, loss of home, severe and significant loss of transportation, very large aplliance loss or damage. You do not take trips to the Bahamas or buy diamond rings with this money. 3) Urgent, relatively small, need savings. This is the savings you can use from time to time. Use it for bills that arise unexpectedly, unforseen shortfalls in your budget, needed repairs such as car repairs and small appliance repairs, surprising fines, fees, and bills. Put 10% of your income into each category of savings. 10% intro retirement savings, another, separate, 10% intro Catestrophic savings, and yet another 10% intro urgent, small need, savings. So, as you can see, already 30% of your income is already spoken for. Divide up the remaining 70% intro fixed (I recommend 50% toward fixed expenses) and variable expenses. Fixed includes those things that you pay once every month such as housing, utilities, car payment, debt repayment, etc. Variable includes discretionary things like eating out, gifts, and splurges. Most importantly, partner with someone who is your opposite. If you are a saver at heart partner with a spender. If you are a spender partner with a saver. There are three rules to live by regarding the budget: A) no one spends any money unless it is in the budget B) the budget only includes those things to which both the saver and the spender agree C) the budget can, and will, be modified as the pay period unfolds. A budget is a plan not a means to beat the other person up. Plans change as new information arises. A budget must be flexible.