Tank #5: Save 20% of Gross Income to Retirement
Never run out of money. Never be dependent on your kids. That’s how you build wealth that gets passed down for generations. That’s true love. It’s the best gift you can ever give your family. Welcome to Tank #5. Filling this tank sets you free and lets you leave a little something when you go.
To fill Tank #5, put 20% of your gross income into retirement every month. Yes, the number is 20%. It includes any match you get from your employer. If your employer gives you 5%, you need to contribute 15%. If they give you 2%, you need 18%. If there is no match, you’re on your own for the entire 20%.
Before thinking about Roth vs. traditional, 401(k) vs. IRA or specific investments, make sure you are on a path to putting 20% of your gross income into retirement. With no debt payments and a full emergency fund, this should be easier. If necessary, build up to it. The goal is to get to 20%.