As younger workers enter the workforce and the baby boomers make their exit, the importance of savings has reached a new generation. A common rule of thumb for those just entering the workforce is to contribute approximately 15 percent of their income to their retirement. Unfortunately, this percentage is often not met by many, especially for fresh college graduates paying down student loans.
Compounding returns can be a powerful force, but you have to start saving early and often to truly take advantage of it. For every 10 years you delay funding your retirement, it’s possible you will have to roughly double the amount you save. It’s important to make sure you’re saving enough to reach your goals.
Colorado Saving Rates
The Bureau of Economic Analysis rated Colorado at 106.41 on the Nest Egg Index, indicating that Coloradans are more capable of saving money for retirement than Americans are as a whole. However, it does not necessarily mean that they’re saving enough.
As of November 2018, the national average savings rate is 6 percent of household income. This is significantly lower than the recommended 15 percent recommended by financial planners, but the rate is still trending up since its low point of just over 2 percent in 2005.
Colorado vs. Other States
How does Colorado stand in the rankings? Nationwide, Colorado is ranked 10th on the Nest Egg Index, indicating that Coloradans have a better opportunity to save for retirement and financial success than the residents of 40 other states. New Jersey tops the list with a rating of 114.35, Oregon represents the average with a score of 100.04, and Mississippi comes in last at 85.48.
If you’d like to review your own personal saving rate, whether you’re saving for retirement or more immediate goals, get in touch with us today for a complimentary consultation with a CERTIFIED FINANCIAL PLANNER™.
