What does it mean to save a percentage of gross income toward retirement?

When people talk about saving 10% to 15% of gross income toward retirement, would that include a pension, Social Security, and a 403(b)?

Gross income means income before any deduction. For example, if a person earns $1,000 per week, the 10% to 15% works out to $100 to $150 per week going into savings. These savings may be part of the employee contribution toward a 403(b) plan. The savings should be over and above any amount paid into Social Security or the pension contribution provided by the employer.

For more tips on saving for retirement, check out www.picpa.org/retirement.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Ibolya Balog, CPA, is a consultant with Asterion Inc. in Allentown, Pa.