Step 9: Invest 15% of Gross Income for Retirement
Phase 3: Build a Legacy · Step 9 of 12
Fund retirement without starving everything else.
In short
Raise your retirement contributions to about 15% of gross income, counting what you already put in for the match. Not the maximum: Steps 9 through 12 share your surplus, so balance matters more than any single goal.
Why this comes now
Steps 1 to 8 were a laser: one goal at a time. With consumer debt gone and six months saved, you can spread out across the long-term goals: retirement, college, health care late in life and the mortgage. Retirement gets the first slice because time is its biggest ingredient.
How to do it
- Multiply your household's gross (before-tax) income by 15%. That's your yearly retirement target.
- Subtract what you already contribute for the match, then raise your percentages to close the gap, Roth first.
- If your workplace plans don't cover it all, use Roth IRAs for the rest.
- Don't max out just because you can. Leave room for college, the HSA and the mortgage.
- Redo your Undetailed Budget with the new take-home pay.
Example Family: Alex and Jordan
After about ten years of raises, their gross pay is around $90,000. Fifteen percent is $13,500 a year, about $1,125 a month, counting what they already put in for the match. They raise their Roth percentages to get there and stop, so college, the HSA and the mortgage still get their share.
Examples are hypothetical.
You're done when
Your household puts about 15% of gross income toward retirement, and your budget still shows a surplus.
Your next step
For education only. Not individual financial, tax or legal advice. Talk to a tax pro or attorney about your situation.