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Financial Rules of Thumb: Save 10 Percent for Retirement

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Over the last few weeks, we've been talking about financial rules of thumb, and whether they apply as universally as we may have been led to believe. Today, I want to talk about the old adage that everyone should save 10 percent of their income for retirement.

This is a good rule in that it gets people saving and thinking about the long term, and it's a nice round number. What this rule doesn't take into account is where you actually are right now on your savings journey.

The 10 percent rule could be spot on for someone who started saving young and kept putting money away constantly. This person has time on their side and is likely reaping the benefits of compounding that typically come with starting early.

However, if you're say, in your 40s and just now starting to save, I would probably recommend a more aggressive savings plan to try and catch up some. Others might have been through a financial hardship such as job loss or divorce, and might need to target a different number while they get back on their feet in other areas.

Our team loves to work with people at all stages and in all areas of their financial life. If you'd like us to take a look at your current savings strategy and how it fits into your overall financial picture, give us a call, whether you're a current client who needs a checkup, or a new client seeking a second opinion. We're here to help.

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