What percentage of income should be saved to save for retirement

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What is the best way to understand that time is money? You can clearly see what percentage of income you need to set aside every month in order to independently provide yourself with a pension, for example, in the amount of 50,000 rubles.

Usually they start thinking about retirement at the age of 35. But there are those who do it later, because they simply didn’t think about money or finally paid off their mortgage, taught their children and an opportunity arose.

Let’s calculate how much you need to save for retirement, depending on the age at which you started doing it. The word “saving” means investing, because it will not be possible to accumulate on the deposit – all the accumulated interest will be eaten by inflation.

Initial conditions

Imagine that there are four women of different ages.

  • The amount of income for each is 100,000 rubles. per month (we do not take into account marital status and how many people in the family earn).
  • The desired amount of passive income in retirement is 50,000 rubles.

Why not 100% active income? First, saving for retirement should not become an unbearable burden, because creating capital for passive income is a long process that can take 10 or 25 years. To survive all this time, you need a balance between how much money you put into your current life and how much you save for your future.

Goal Cost Calculator

Calculates the future value of a financial goal adjusted for inflation by a given date

Secondly, if passive income is less than your current salary, this will not mean a deterioration in the quality of life. The fact is that throughout your active working life you save money for various purposes: for retirement, for housing, for a car, and so on. In fact, you do not live on the entire amount of the salary, but on a smaller one. By retirement, all these goals, or at least the largest and most costly part of them, will have already been achieved. That is, when calculating the desired passive income, it is necessary to take into account how much money you need for everyday expenses.

  • The amount that needs to be accumulated in order to receive a monthly passive income of 50,000 rubles is 6 million rubles.
  • The average annual inflation is 5%. For example, let’s take such a figure, if you wish, you can make a calculation with others. However, the Central Bank of the Russian Federation plans to return inflation to 4% as early as 2024, so 5% looks quite realistic. It is also important to understand that 5% is the average annual inflation, that is, it can rise or fall throughout the entire investment period.
  • The average annual return on investment is 10%. Why this particular number? If you have ten years or more until retirement, then a significant part of your capital will most likely be in stocks. The historical return of the stock market is 5.2% above inflation.
Savings calculator

Calculates the amount and term of savings, taking into account inflation and taxes.

What percentage of income should be set aside?

  1. Masha, 35 years old.
  • 25 years before retirement.
  • RUB 20,318,130 — the future value of the target adjusted for inflation. That is, in order to buy in 25 years as many goods and services as now can be purchased for 6 million rubles, Masha will need more than 20 million rubles. You can often hear the objection: “Yes, for 50,000 rubles. after so many years you won’t buy anything!”. But this is also taken into account in the calculations. Masha will receive passive income not 50,000 rubles, but more. But its purchasing power will be equal to 50,000 rubles. in 2022
  • RUB 16,474 – so much Masha needs to save every month in order to accumulate the necessary capital.
  • 16.5% – Masha will invest this percentage of her income to achieve her goal. Quite a lot, but quite comfortable. It is also necessary to take into account that if Masha’s salary grows annually by at least a percentage of inflation, then every year deductions will take up an ever smaller percentage of income.
  1. Katya, 40 years old.
  • 20 years before retirement.
  • RUB 15,919,786 is the future value of the target. In rubles, you need to save less than Masha, because the term is shorter, which means that inflation will have less effect on the cost of the goal.
  • RUB 22,164 – this amount must be set aside monthly. The amount of deductions has increased, as the term has been reduced by five years.
  • 22.2% – Katya will invest this percentage of her income to achieve her goal. This is more than in the example with Masha: retirement savings account for a fifth of all income.
  1. Zhenya, 45 years old.
  • 15 years before retirement.
  • RUB 12,473,569 is the future value of the target.
  • RUB 31,306 – this amount must be set aside monthly.
  • 31.3% – this percentage of income Zhenya will invest to achieve his goal. The amount of deductions has grown and amounts to almost a third of income, which is quite noticeable for the budget.
  1. Sveta, 50 years old.
  • 10 years before retirement.
  • RUB 9,773,368 is the future value of the target.
  • 48 900 rub. – this amount must be set aside monthly.
  • 48.9% – This is the percentage Light will invest to achieve its goal, which is almost half of the income. Postponing so much is morally difficult, since you will have to significantly reduce the costs of your current life. On the other hand, by this age, most of the goals have already been achieved: the mortgage is closed, the children have received an education. This means that the released money can be used to create pension capital.

The earlier the better

  • The sooner you start saving, the less will be the burden on the budget.
  • The more years to the goal, the less money is needed to achieve it. And the more you accumulate at the expense of interest, and not at the expense of your own investments. And it will be easier not only financially, but also psychologically.

But what should Sveta do if she thinks she won’t be able to invest almost 50% of her income? Abandon the goal? In no case. She can take the following steps:

  1. Change the amount of the desired passive income to 40,000 rubles. per month. Then it will be enough for Sveta to accumulate not 6 million rubles. in current money, and 4.8 million rubles. (7,818,694 rubles – adjusted for inflation). To do this, you will need to set aside 39,120 rubles a month. This is almost 10,000 rubles. less than in the previous version.
  2. Slightly increase the time to reach the goal. For example, to retire not in ten years, but in twelve (the cost of the goal, taking into account inflation, is 10,775,138 rubles). Then it will be enough to save 40,180 rubles. monthly.
  3. You can combine both options. That is, retire two years later and agree to a passive income of 40,000 rubles. per month. The cost of the goal is 8,620,110 rubles. In this case, it is necessary to invest monthly 32,144 rubles.


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