Before we figure that out we need to ask a few other questions first.

• Does your employer offer a 401k plan and will they match what you contribute to it?
• Do you have an emergency savings of at least 6 months?
• Do you have little to no debt?

If you answered NO to any of these questions you probably shouldn’t be contributing to a retirement plan just yet. If your employer doesn’t offer a 401(k) plan or they do not match what you contribute, you can also look into opening an IRA (Individual Retirement Account).  You’ll want to have an emergency savings set aside for obvious reasons. As for the debt, you’ll want to make sure you have at least most of it paid off because if you have credit card debt of say $10,000 and it’s at an interest rate of 19% but you’re also investing in a retirement account and only earning 8%, then your credit card debt is growing faster than your retirement account. Do not assume you will earn 20% or more on your investments. It’s not very likely. Pay the debt off first, then worry about saving.

With that said, don’t just sit there and use those reasons as excuses not to start contributing. If you know you have a ton of debt be aggressive and start paying it off. If you know you don’t have an emergency savings, start putting money aside for that. No matter what, just start! Small steps eventually turn into big steps.

Once you’ve gotten those things under control, you should start saving for retirement ASAP.  The younger you are the better but if you got a late start that’s ok. Don’t be discouraged. Better late than never holds true when talking about retirement also. Here are a few links to some great retirement calculators:

401(k) Calculator

Traditional IRA Calculator

Roth IRA Calculator

Enter your information and see what you’re on track to save. You should also play around with the numbers and see the effect of the changes you make (i.e. contribution amount, age of retirement, etc). Have fun with it and make sure once you find the combination that works for you, you put the plan in motion to save accordingly.

Looking for a way to jump start your savings or earn extra money to pay off debt? Check out our post on Creative Ways to Make/Save Money