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Get that nest egg started
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November 9, 2000: 10:26 a.m. ET
Tailor your savings strategy to your financial situation, lifestyle and time span
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NEW YORK (CNNfn) - You're 30-something and you haven't saved a thing, but you've finally decided it's time to start building the nest egg. But planning for retirement means more than saving. You need a plan to reach your goals.
In response to a reader's question, Timothy Watters, a certified financial Planner from Ramsey, N.J., suggested some possible scenarios and what to do to get started.
Ask the experts a question
I am 33 years old and I never put away any money for retirement before this year. I currently have about $4,000 in my 401(K) and I'm contributing the legal maximum allowed by law, $10,500 per year. My company matches 5 percent. I make $70,000 a year and I will probably get 3 percent to 4 percent raises the rest of my career. I'd like to retire at 50 with over $2 million set aside in retirement. Is this possible?
Everyone can retire. The questions are when to retire and at what lifestyle.
From what you wrote, I assumed your matching contribution would be $3,500, or 5 percent of 70,000, and that you would contribute $10,500 per year.
I further assumed that you would earn 7 percent per year on your portfolio and that inflation and salary increases would be 3 perecnt. Based upon what you are saving, you could amass over $970,000 by age 55.
If you receive Social Security payments at age 62, an estimated Social Security benefit could provide over $570,000 during your retirement period. Thus, you would need to accumulate $460,000 more by age 55. If we use the same assumptions, you would need to save $8,772.57 more per year to reach your goal.
However, please keep in mind that $2 million at age 55 is the same as $1,043,785 in today's dollars.
To do the same thing at age 50 would require saving an added $27,475.55 per year. At your salary, this seems a bit far reaching.
Given that we know nothing about your tax picture, marital status, cash flow or other goals, it is impossible to say if this is a reasonable goal to shoot for. It is good to start saving regularly as early as possible. I usually counsel my clients to save 10 percent to 15 percent of their gross income each year. The 401(k) plan is an excellent way to save. Good luck. 
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