Every successful investing journey starts with a set of clear goals.

When it comes to planning for your financial future, it’s essential to have clear, concise and measurable financial goals — and a good comprehensive financial plan and strategies for reaching them.  Sometimes the hardest part is just knowing where to start and what is the destination.

Mass Mutual advises clients to set four basic financial goals; two short term goals (Income & Savings) and two long term goals (Retirement & Debt) — using their simple 5-10-15-20 guidelines:

• 5: Increase your annual income from all sources by at least 5% each year.
• 10: Save at least 10% (preferably 15%) of your net annual income each year.
• 15: Target a retirement “nest egg” of about 15 times your annual income.
• 20: Plan to have your debt (excluding your mortgage) paid down within 20 years at most.

Goal: 5% Income Increase

While many Americans see their salaries increase about 2% to 3% each year, setting the bar higher will help you maximize your biggest asset: your income. Setting a goal to increase in your total income 5% every year, whether it’s through your salary or other sources of income, can make a big difference over the long run. your personal financial situation.

10% Yearly Savings

A good rule of thumb is to save 10% to 20% of your net income each year. This could help you to take advantage of opportunities that may arise, like finding your dream home or investing in a new business venture. It also can provide a cushion in case of emergencies. You can increase the amount you save by setting aside a little more of your salary each month and cutting back on unnecessary expenses.

15x Salary Retirement Nest Egg

As you get older, you’ll have a better sense of your true retirement needs. For now, we suggest trying to accumulate a total of 15 times your current gross annual income for
retirement. The goal is to end up with a nest egg that could generate about 75% of your current annual income each year in retirement.

20-Year Debt Pay-Down

Many of us are burdened with debt, including student, credit card, auto and other loans. By understanding how long it will take to pay down your debt and working towards a debt elimination plan with set timelines, you’ll be better able to manage not only your debt, but your savings and retirement, too.

https://www.massmutual.com/financial-wellness/calculators/establishing-financial-goals