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How much a household will need in retirement is one of the biggest questions people need to answer. More than a third of Americans would have trouble coming up with $1,000 in an emergency without selling something or going into debt. There is the possibility that these people are artificially cash-poor because they max out their retirement accounts each year. However, this is an unlikely scenario. Most will have very little saved for retirement. Saving for retirement requires a great deal of discipline, but a desire to make saving for retirement a priority can pay off in the long run. 

Traditionally, retirement experts recommended that employees invest 10% of their annual salaries toward their golden years. That amount of savings, when combined with compounded interest, was supposed to provide for a comfortable retirement. This was back in the days when pension plans were the norm. However, company pensions are no longer a major source of income for most future retirees. This means that most people will need to save more to have a solid stream of income rolling in when they retire. Today, personal finance gurus recommend putting 15% to 20% of income toward retirement to offset the loss of a pension. Additionally, many people worry that Social Security will have to cut payments in the future due to funding gaps. This makes saving more imperative. 

Relation To Salary
Another option for saving money looks at the number of times an annual salary an employee should save. There are some online brokerages that recommend employees save 12 times their annual salaries to ensure a comfortable retirement. Other retirement planning software options recommend around eight times an employee’s annual salary

 It might seem difficult for an employee to save up to 12 times her annual salary. However, compound interest means that every dollar saved early in life should grow and be worth several dollars by the time retirement comes around. Starting small, with a savings rate of around 3% or 5%, will still start the ball rolling. From there, it should be possible to add a percent each year. This will become easier for those who receive annual raises. Over time, building up to the 15% recommendation should allow for a hefty retirement nest egg.