The timing of this post is perfect, I was just wondering what percent I should be doing. I'm at like 5% but I will up it closer to 8% now.
It should be at least 10% to 15%. Does your company offer matching? If so you have to do what you need to get that - no excuse.
When I started at my company, I did 13% (would have done more but you know, student loans). I think a few years later, I started getting the company match which got me an a additional amount to get me to at least 15% which what I was targeting at the very least.
A year ago I refianced student loans to a low rate so I've focused on just maxing out my retirement accounts since which doesn't leave me with much left over.
Why am I doing this?
Because contributing as much as possible as early as possible will literally save you hundreds of thousands of dollars in the long run and get you to retirement earlier.
To do what I did for the first few years did take a lot of sacrafice. No vacations and controlling spending like I was still a college student. But doing this means that I can contribute a lot less in the future and still be OK due to the forces of compound interest and understanding my annual spending. This is how people basically generate wealth who didn't start with anything.
I do understand that my starting salary was relatively good for someone at 23, but it's not like I was making engineer or software developer money. Had 70K+ of student loan debt I had to get started on eliminating.
Through this whole process I tracked spending and now understand that disregarding student loans, my annual spending is like 30K to 35K a year while living comfortably. I could push this down further down too if I really tried, at the expense how maybe not living as comfortably. I think I have a few advantages here though (in Chicago - slightly expensive, but also don't need a car).
Doing the math, if I was locked to 50K a year, I would be able to save at least 10% and more once student loans were paid off. There are people in the US who have become millionaires on 50K salaries just by living within their means contributing at an early age. I can't stress enough how important this is.
I know someone here is going to reply and tell me that 50K is a lot of money and I'm not being reasonable here. One thing to note is that this is 50K in Chicago, which might 40K elsewhere in the US where the cost of living is cheaper.