How Much Should You Invest?

The earlier you start, the easier this will be. Over half of your final portfolio value is determined by what you saved in the first decade. I recommend using your monthly spending plus a buffer as a guidepost for how much to invest.

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Retirement is a new concept in human history, but the way we fund retirement is even newer. After all, the 401(k) and IRA were legislated into existence less than fifty years ago. To assume a millennial or Gen Z retirement will look anything like a boomer retirement might be wishful thinking—so this week, we’re exploring what might be a better way to structure our financial (and life!) plans.

Learn more about our sponsor, TaxAct: https://www.taxact.com/moneywithkatie

Transcripts can be found at podcast.moneywithkatie.com.

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Mentioned in the Episode

The Money with Katie 2023 Wealth Planner: https://moneywithkatie.com/new-2023-wealth-planner
The history of retirement: https://www.theatlantic.com/business/archive/2014/10/how-retirement-was-invented/381802/
1978 legislation on the 401(k): https://www.gpo.gov/fdsys/pkg/STATUTE-92/pdf/STATUTE-92-Pg2763.pdf
Nat Eliason article on Type 1 and Type 2 fun: https://blog.nateliason.com/p/de-atomization-is-the-secret-to-happiness
Replacement rate for retirement income: https://www.troweprice.com/personal-investing/resources/insights/how-to-determine-amount-of-income-you-will-need-at-retirement.html
Bloomberg study on retirement: https://www.bloomberg.com/news/articles/2022-05-24/most-americans-say-1-1-million-they-need-to-retire-comfortably-is-out-of-reach?srnd=wealth-savings-and-retirement
The 4% rule for retirement: https://podcast.moneywithkatie.com/the-most-dangerous-misconceptions-about-the-4-safe-withdrawal-rate/
Average social security check: https://www.bankrate.com/retirement/average-monthly-social-security-check/
The earlier you start investing, the easier it will be: https://ofdollarsanddata.com/go-big-then-stop/
Study on having higher debt when earning more: https://www.washingtonpost.com/business/personal-finance/you-may-be-surprised-by-who-carries-the-most-credit-card-debt/2019/12/20/3ea084e8-20f7-11ea-86f3-3b5019d451db_story.html
Study from American Advisors Group on working in retirement: https://www.forbes.com/sites/palashghosh/2021/05/06/a-third-of-seniors-seek-to-work-well-past-retirement-age-or-wont-retire-at-all-poll-finds/?sh=5bda7b916b95
Compounding interest calculator: https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator