I recently read the "Total Money Makeover" by Dave Ramsay. In all honesty, it was my first time reading any of his books. I knew most of his philosophies and pretty much agreed with them all, but had never taken the time to read his written work. I closed the book feeling as though he and I were on the same page. But there was one area of the book that left me a little unsettled. This was the area of retirement savings. My husband and I only recently really began to start saving (except for the amount our companies had been putting aside for us autmatically) for retirement. It seemed so far away, and we seemed to have more immediate financial needs and goals, so we just dis-regarded this part of our budget. However, about 3 years ago my husband changed jobs, we started a family, and we began to re-think how we saved for retirement. We started small and began putting just a few dollars per month aside in a 401K for retirement. Then, over the past 2 years we have upped that amount several times. Today, we are putting aside about $400/month into a 401K. But, according to Dave this still isn't enough. (Not if we want to live pretty comfortably in another 30 years or so.) According to Dave the average American should be putting aside about 12-15% of their annual pre-tax income for retirement. He recomends putting the first $5000 into a 401K tax free, then putting any additional into mutual funds with a good return. (A fund with over 12% return investment would be considered a "good" return that can keep ahead of inflation.)

So, where do I stand on this recommednation? Well, I again, have to agree with the rest of Dave's philosophies here.IF you have an emergency fund of $1000 or more, 6 months of savings stashed away, and no debt except a mortgage (I still have a little bit of a mortgage),  then this number makes sense. 15% of your income with no debt and the rest of the above taken care of is an attainable goal. If, however, you are like 90% of Americans and have a mortgage and other debt then you will want to take care of the list above before investing this percentage into retirement. I still urge you to put aside money each month into retirement though. A few dollars, put aside into a high yielding  mutual fund or 401k is better than nothing. Up the percentage you are putting aside as you pay down other debt. Aim for 15% to be your goal.

My husband and I are not quite yet ready to invest this large percentage of our budget to retirement. We are currently working very hard to put each month's extra money into paying off our mortgage. We are happy to be putting aside the money that we are into retirement at this point. However, after crunching some numbers we plan to have our home paid off in 5 years or less. And at that point putting aside 15% will definately become a reality!

I would love to know what you are putting aside into retirement each month. Are you on the same page as Dave? As me? Or do you have another plan or goal in mind?