Previously posted March 11, 2015

Okay, I borrowed this headline from an article I read recently.  The one edit I would make is broadening it to “everyone is saving, but not enough”.  The Principal Financial Group (PFG) published a study relating specifically to the 25-35 age cohort and the conclusion was what has already been stated.  This group is saving and understands that it is important, but they are not saving enough.  A totally unscientific study done by me, for me, about me, confirms this conclusion and expands it to the folks in the GenX cohort.

The PFG study notes several reasons for the lack of savings relating to other obligations (housing, transportation, food, student loans), as well as the mentality that one only needs to save up to the point that the employer matches.  This makes logical sense and it tracks right along with my own experience.

How much is “enough”, in the eyes of the study?  Ten percent of income is the target, and that is exactly what the Perpetual Wealth Code recommends.  The 10-20-70 rule has been around for a long time and allocates 10% to savings, 20% to pay creditors, and the remaining 70% to living expenses.  The first step is to figure out where you are in relation to the 10-20-70 rule.  If your savings are below 10%, you are not alone.  Just remember that is still the target.

My personal preference is to avoid the qualified (401k, etc.) retirement plans, but the important thing is to start saving.  If you have questions about the Perpetual Wealth Code, click here to send me an email or give me a call.  Looking forward to hearing from you.