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

by Ibolya Balog, CPA | Aug 07, 2019

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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. 

Disclaimer
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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