Three Ways to Tell If You're Financially Healthy

Your retirement savings, your debt and your emergency fund. Here's why

by Anna Williams •
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Photograph: Mmaxer/

But you should have a rough estimate to guide your savings. To predict how much you should aim to save in total, you can start by using a free retirement calculator.

All you need to provide is your birthday, the age you plan to retire (67 is standard), your annual pay and how often you receive a paycheck to see how much money you’ll need each month during retirement. Multiply that figure by 12 to see how much you’ll need for a year, then by about 23 to get an idea of how much you’ll need in the long term.

Now that you have that number with all the zeroes … don’t panic! We have you covered, and there are a few things to keep in mind:

First, the calculator assumes a “replacement ratio” of 85%—the estimated amount of your current income that you’ll need to have available during retirement. For most people, Kirkpatrick recommends replacing 85% of your current household pre-tax income at a minimum, but not everyone will need 85% exactly—check out our guide to estimating how much you’ll need to live the retired lifestyle you want.

Second, remember the secret of investing: $500 in your retirement account today could equal as much as $21,000 in 20 years. And the earlier you start, the more time your money has to grow. Even if you can only sock away $100 a month, you can make it count by starting today.

Read the rest on

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Next: 40 Financial Things You Should Know by Age 40

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