Money for Retirement Account

Reasonable varies for everyone. You should put in as much as you possibly can each month. If you have a company sponsored plan, that's the easiest way to go. Otherwise, put it in a typical IRA account through some kind of brokerage firm.

we had someone at work help us with our 401K. ING has a website that is REALLY helpful (i THINK you can access this part without having a 401k with them). you calculate what you make, what you expect to live off once you are retired, how many years till you retire, etc...and it tells you how much you should put into your 401k. i realize that's not the same as savings, but this stuff is ALL so over my head...their website (and having their rep and our HR team on our side) helped a lot. i would not tackle it alone.

I think you need to talk to a trusted financial consultant so you can figure out how much is right for you to be investing. Everybody is different.

As for us, we've always had the maximum allowed by the government to be taken out for retirement plans, 401K, IRA, Roth, etc and then we also fund on top of that for our retirement and have funded daughter's college.

That said.... we are heavy planners and we tend to save more than we need vs what we forecast.

Whatever amounts you start with is a start and will help you. Just stick with it and be discipliined about it.

One:

You need to find out what you will NEED to retire on, age, etc.

If your employer is matching the funds you put in to a certain percentage I would do the max I could afford.

Talk to a retirement specialist to tell him/her what your plans are - when you want to retire, where you want to retire, how much income you want when you retire...too many factors to tell you a random number.

A 401k can be borrowed against - IF you are currently employed (check with the funds administrator to see the specifics).

An IRA can get early distributions (with a 20% tax and 10% early withdrawal penalty)....

Mutual funds are risky and not necessarily used for retirement - although some do.

I put 10% in my 401k and my husband puts 12% in his.

If you don't have a 401k the next best thing is an IRA.

Oh boy...there are so many variables. How old are you (and your husband or partner, if you have one)? How much do you make? When do you plan on retiring? Do you have other savings or assets? Are you comfortable with risk and can you ride out the market cycles of rise and fall, or will you panic the first time the market drops and make the wrong move? Do you have access to an employer-sponsored 401(k)? If so, what are the fees (they're never free...either the employee or the employer pays the fees either outright or by a % of the investments in the plan)? Does the employer offer a match? How much do you have to contribute to maximize the match? And on...and on...and on. I know that's overwhelming, so here's some practical advice:

1) Start with your employer. If your employer offers a retirement plan, the investments are usually available to you at a lower cost than if you were to open an individual account and those plans usually have more bells and whistles than individual accounts - things like automatic rebalance, automatic savings rate increases, a wide variety of investment choices, a robust web site with lots of educational information tailored to your plan, live phone reps who you can call with questions, the availability to take loans or make emergency withdrawals, and this is all tax-advantaged. Many employers offer a match, which is free money that should never, ever be left on the table. Your employer's plan website should come with an enrollment guide and retirement calculator, which will explain the benefits, walk you through questions like the ones above, and will tell you how much you will need to save to reach your retirement goals. Often the amount needed is prohibitive (most people can't just snap their fingers and set aside 15-20% of their income without feeling some pain) so you start with what you can afford (maybe enough to get the company match, say 6% of your income) and then add a percent or two a year until you're at a higher savings rate. The most you can contribute to a 401(k) in 2012 is $17,000. The most you can contribute to an IRA in 2012 is $5K.

2) If you don't have an employer-sponsored plan, or the plan is really lousy (most 401(k)s are fine...some SIMPLE plans are really limited and not worth the investment, Money Purchase Plans are generally not great), then you would want to open up an IRA. Ask around among your family and friends (stick to asking people who appear to manage their money well, not your broke brother-in-law's cousin) and see who they are using and if they're happy with them. If they use an adviser, find out how the adviser gets paid - some get paid only when you buy funds, so they may push you to trade more often than you need to. Some get paid more to sell certain fund families, so they may push under-performing funds for higher commissions. Some get paid a flat fee, but those are few and far between. All have to, by law, disclose how they get paid. If you don't know anyone with an IRA or using a trusted adviser whose payment structure you are comfortable with, then go with a big name company like Charles Schwab or Fidelity.

I coordinate Dave Ramsey's Financial Peace University classes in Long Beach at Christ Lutheran Church. This is an amazing class as it educates you about retirement, as well as, budgeting, negotiating, insurances (including life insurance), employment and so much more! The 13-week class gives you the tools to understand what options are out there and what works for you. It teaches you how to be set for life!!!

It's been my experience that financial consultants are often salespeople trying to sell you their product. I've made mistakes on purchasing the wrong retirement and insurance products because I've been "sold" what consultants thought was best for me. Really what was "right" was the commission in their pockets. Now that I KNOW what all the products are I have made decisions that fit MY needs and not the commission of a financial salesperson.

With that said, we put 10% of our income in retirement. Following Dave Ramsey's plan, we max our company's match program by putting money into their 401k plan up to what they will match. That match is the best return you can get on retirement! Then we max out our Roth IRA's. Right now you are allowed to put a maximum of $5000 a year into an IRA. That's $5000 for me and $5000 for my husband totaling $10,000 a year. Roth IRA's let you withdraw money at retirement tax free. In other words, you pay income tax now on the money you contribute, but you pay NO taxes on the money you withdraw at retirement including the earnings. In my opinion, it's the best way to go.

If you're interested in learning more about Dave Ramsey, visit www.DaveRamsey.com. I make no money on his programs and volunteer my time to help make a positive contribution to the community. My next class starts January 8th if you're interested. And, good luck with your own decisions. I'm impressed you are looking at retirement and planning for your future!!!

It all depends on how old you are now, how old you want to be when you retire, what your spending habits are, etc. Make an appointment with a financial adviser - the meetings are usually free. You can go online and find retirement calculators too that will ask you pertinent questions and you enter the data and it will spit out a number or percentage for you.

Shannon's advice to check out Dave Ramsey's program is a great idea; Clark Howard also has several books on financial 'smarts'. Like many of the other moms mentioned: start with a 401-K plan if your employer offers one, if not, then go with a Roth IRA (if you qualify), then a regular IRA. As for a brokerage house, go with a large, well-know company such as Fidelity, Charles Schwab, T Rowe Price, E-Trade, etc. For just starting out with investing go with broad-based mutual funds or index funds, not individual stocks. An easy way to diversify is to invest in a "life-time" fund (each company has their own term for them); basically the fund you invest in is based on your retirement date and gradually shifts the fund's investments to be more conservative as the retirement date nears.

I agree with the answers below, especially about needing to personalize your own situation with regard to your current income level, your spending habits, your current investments (income generating?), and your expectations about how you want to live in retirement, whether you own your home, etc. What a "reasonable" amount is depends completely on your personal situation.
But I NEEDED to add that in addition to the maximum allowable contributions to a 401k, Roth IRA or regular IRA, you need to figure out how much $ you'll need in retirement to support yourself. THAT is how much money you need to put into some sort of savings account! That means - if you make $50K per year, and you expect to have the same or similar expenses in retirement (housing, food, utilities, clothes, travel, entertainment, HEALTH CARE!!!!), if you retire at 65 and plan to live an additional 20 years, you need to cover 50K per year for 20 years. That's a million dollars! Granted, you need to figure in interest or gains on those retirement investments, vs. the rate of inflation and/or cost of living, as well as the various tax situations of 401k vs. Roth, but I think it's really shocking for most people when they realize that to cover 20 years of living with no income from a JOB means requiring a HUGE nest egg set aside. For most of us, having a million bucks in a savings account is a joke, meaning we are completely unprepared for supporting ourselves in retirement, let alone meeting the expectation of rising health care costs or long term care!Remember, no job means no health insurance - probably the biggest expected expense for retirees' quality of life! And I think we can likely expect that Social Security will be gone by the time the Baby Boom generation taps into what they've paid in. And Medicare is available, but a very expensive plan for most people!