As part of your Baby Steps plan, you always advise people to put 15 percent of their income toward retirement. Would you explain the details of this, please?
For starters, Baby Step 4 of my plan involves saving 15 percent of your gross annual pay for retirement. You don’t have to be a complete nerd about this figure. I mean, you probably won’t end up in the poor house if you set aside 12 to 14 percent. The bottom line is you should be able to save $7,500 a year if you make $50,000 annually. That’s just a little over $600 a month.
However, the only way you can do this is by giving up stupid things like credit cards and car payments. When you get out of debt, it’s easy to set aside an emergency fund of three to six months of expenses—which is Baby Step 3—and start throwing 15 percent at retirement during Baby Step 4.
Did you know you can retire a millionaire if you save 15 percent of a $50,000 a year income, and invest it in good growth stock mutual funds starting at age 30? Sounds worth it to me!