Q: I can’t get a definite answer on how much money I need to save for retirement. Can you at least offer an opinion that maybe verifies any of the other answers I’ve gotten? – Sue

A: Sue, I hear your frustration. There are a lot of variables at play in a question like this, so when you read articles, talk to people, or even discuss it with a financial advisor, getting a dollars-and-cents answer is going to be nearly impossible. And the more concrete the answer is, the more likely it is to be wrong.

That said, I recently saw an answer to this question that I particularly liked, and to which I now subscribe. It is that you should plan to have 10x your annual salary in savings by the time you retire. The reason I like it is that it does a couple things. First, it accommodates the differences in your income and standard of living vs. your neighbor. If your household income and expenses are based on a combined salary of $150k, but someone else’s is based on $70k, you clearly will need to save more than them. No matter what, this strategy gives everyone their own reasonable and appropriate goals. The other thing I like is that it gives you benchmarks along the way. For instance, at the age of 30, aim for about half your annual salary in savings. At 40, aim for twice your annual salary. At 50, four times your salary. And then by the age of 60, aim for 8x your salary.

On a household income of $60k, it may sound daunting to try to set aside $600,000 in savings in the number of years you have left before retirement, but remember that it doesn’t all have to come from your salary. From the age of 30 to 31 for example, investment returns can provide nearly 25% of what you need to set aside that year. And that proportion only increases as the years and decades go by. So start early and track often. You’ll get there!


Q: I recently secured a new account at work that is going to substantially increase my income. How much do I need to give to charity to offset that increase? - Stan

Stan, unfortunately this question become a bit more difficult with the passage of the most recent tax bill, although the fundamentals remain the same. To get a rough idea of how your charitable contributions impact your income taxes, you need to know your marginal tax rate. For the sake of discussion, and since over 3/4th of American households fall into it, we’ll use the 15% bracket.

First, bear in mind that the standard deduction recently nearly doubled. So if you’re married and filing jointly with your spouse, your itemized deductions and charitable gifts need to exceed $24,000 for the year before those deductions and gifts have any impact on your income taxes at all. Assuming that is the case for you, additional charitable gifts beyond that amount will essentially affect your income taxes by the gift amount multiplied by your income tax rate. In other words, if you give an additional $1,000 above and beyond the standard deduction, then that $1,000 will lower your income taxes by approximately $150. ($1,000 x 15%)

Let’s say that your itemized deductions come out to $15,000. If you give another $5,000 to charity, your total deductions still come out to only $20,000, or $4,000 less than the standard. Therefore, those charitable gifts will not impact your taxes at all. Even giving $9,000 to charity for the year will only allow you to meet the threshold for the standard deduction. In this scenario, your charitable giving would need to exceed $9,000 to impact your income taxes, and only the amount above $9,000 would affect your tax burden. So giving $10,000 to charity for the year will lower your taxes by $150; giving $11,000 will offset about $300; $12,000 will reduce them by $450, etc.

Hopefully this helps explain to anyone wondering why the new tax bill was less than helpful for charitable organizations who rely on your gifts to continue operating. Thank you for your interest in supporting non-profits!!


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— Eric Litwiller has spent the last seven years of his professional career helping people achieve their financial goals through the use of budgets, retirement vehicles, and estate planning options.  He is a firm believer in the importance of using Earthly riches to fulfill a mission of Christian stewardship.  Eric is not a licensed financial planner.