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Savings needed at retirement
$1,025,408
Value of current savings at retirement
$21,353
Additional retirement savings needed
$1,004,055
Current annual salary
$50,000
Projected saving rate factor
x 210.3277
Maximum possible savings based on salary until retirement $10,516,385
Target saving rate
9.5%
U.S. Department of Labor Employee Benefits Security Administration 39
SAVINGS FITNESS A GUIDE TO YOUR MONEY AND YOUR FINANCIAL FUTURE
5 . Cash Flow Spending Plan
Date
Use the first two columns of Worksheet 5 to create a budget, sometimes called a cash flow spending plan or a guide for how you expect to spend your money. Don’t worry if you don’t have all of the information.
You can make a guess now and fill in more specific information later.
Start with your monthly income. If you know your annual gross income, divide it by 12 to get the monthly amount. Most pay statements or pay stubs list your total (or gross) income and your deductions, along with your net take-home pay. You can find your net take-home pay by subtracting your deductions from your gross income. List all taxes, including federal, state, and local income taxes, plus Social Security and Medicare taxes.
Next, enter all of your monthly expenses. You can find an average for expenses that are different or don’t occur each month, such as heating or car insurance, by adding up the bills for the year and dividing by 12. Once you know your monthly income and expenses, multiply it times 12 to get an annual cash flow spending plan or budget. If you are spending more than you earn, page 10 of the booklet has ideas on how to cut expenses, increase income, or both.
Return to this worksheet at the end of the year to see how you did in following your budget. Use the last two columns to track your actual spending and see how it is different from what you planned to spend. If what you spent is more than you planned, enter it with a plus sign and if it was less, enter it with a minus sign. This will make it easier for you to add up the differences for the year and find ways to spend less, if you need to. Each year you can review your cash flow plan and make changes for the next year’s budget to help you reach your financial goals.
Add up your total retirement savings, both at work and on your own. If your employer also contributes money to your retirement savings plan, in a 401(k) plan for example, enter that amount in the row labeled employer match and add it to your retirement savings to get the total retirement savings. Divide the total retirement savings by gross income (the first line in the worksheet) to get your current retirement savings rate. You can compare it to the results from worksheet 4, which is your target saving rate.
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1 – Your current