Saving with the rule of ten – a rule of thumb for old-age provision
Created: 01/10/2023, 16:00
By: Anna Heyers
The answer to the question of how much money you need in old age is not easy to answer.
But a rule of thumb is a good guide.
How much do you have to save to make ends meet in old age without financial worries?
The simple, but very imprecise, answer is: "Enough." The slightly more detailed answer comes from experts at
Fidelity Investments.
Her rule of thumb is that you start saving about 15 percent of your income by age 25, invest about 50 percent of your savings in stocks on average over your lifetime, and retire at 67 (not 63).
Then, according to
Fidelity
, the standard of living before retirement can be maintained afterwards.
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Saving with a plan – a rule of thumb for old-age provision
The principle cannot be transferred one-to-one to Germany, but you can definitely learn something from it.
If you break the rule of thumb down a bit, it comes out that when you retire you should have ten times what you earned before retirement.
In numbers, it could look like this, for example: Shortly before retirement, you earn 50,000 euros a year.
After retirement, a total of 500,000 euros should be in the savings account so that the standard of living can be maintained - a high amount.
Save annual income regularly
Accumulating 500,000 euros not only sounds like a lot of money, it is for most people.
But the
Fidelity
experts believe that there is plenty of time for that.
According to
Chip.de
, they suggest saving at least one annual income up to the age of 30.
Then three times until age 40, six times until age 50, and eight times until age 60.
But you also make it clear that this is just a rule of thumb with many open factors.
Retirement age, life expectancy, and what you expect from life after retirement also play a role.
By the time you retire, you should be saving a year's income on a regular basis.
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Rule of ten not ideal: Life cannot be planned
The rule of thumb is all well and good.
But life doesn't always play along the way you might like.
It would be ideal if you could easily set aside one, or even several, annual incomes within ten years.
But unfortunately this only works in theory.
Children, illnesses, crises - these are just a few examples of why a savings plan does not always work.
The economy itself, stock market prices and sometimes quite simply bad luck also have a spark in the plan that was actually thought out so well.
So instead of going crazy and trying to implement the rule of ten - come what may - saving is the most important thing.
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Recommendation: save with the ten percent rule
The earlier you start saving, the more you will get in the end.
Chip
's experts
recommend saving at least a double-digit percentage of net income.
So at least ten percent.
In turn, if they are invested cleverly, they could ensure that you are well positioned in old age.
It is worth taking a look at the wide range of ETFs and funds, for example - some are also convincing in the area of sustainability.