T. Rowe Price has a brochure The Benefit of Saving Regularly For Retirement [pdf] which has the common advice that you target saving at least 15% of your gross income each year to prepare for retirement. Of course, the earlier you start, the better. The added wrinkle here is that they offer an alternative route if you find 15% a stretch when you are young.

In their simulation, if you start saving at age 25 at a 6% rate and increase it 1% each year until you reach 15% (and then stay at 15%), you’ll actually come out ahead of someone who starts saving at age 30 at a 15% rate. You’ll even do okay if you start at age 30 at a 6% savings rate and increase it 2% a year until your reach 15% (and then stay at 15%). The two big takeaways are (1} start, even if small and (2) bump up your savings even if just a little by banking some of your raises each year.

The assumptions made seemed largely reasonable:

Examples beginning at age 25 assume a beginning salary of $40,000 escalated 5% a year to age 45 then 3% a year to age 65. Examples beginning at age 30 assume a beginning salary of $50,000 escalated 5% a year to age 45 then 3% a year to age 65. Example beginning at age 40 assumes a beginning salary of $80,000 escalated 5% a year to age 45 then 3% a year to age 65. Annual rate of return is 7%. All savings are assumed tax-deferred. Multiple of ending salary saved divides final ending portfolio balance by ending salary at age 65.

Bottom line. Start saving regularly, no matter the amount. Even if you feel like you can’t save 10% or 20% or whatever you read somewhere, just should start as soon as possible with a smaller number. After a year, try to increase your savings rate by 1% or 2%. Repeat each year. This can help minimize how much you “feel” the savings, while still ending up with a healthy nest egg. Build the habit.

Every time a large corporation stumbles, you will see something along these lines: Having Too Much Employer Stock in Your 401(k) Is Dangerous. That doesn’t prevent it from being solid advice. The best advice bears repeating.

Why? If your retirement savings are heavily concentrated in your employer stock, you human capital and your investment capital are directly linked. If your company falters, then you can lose both your job and your retirement security. Past examples include Enron, MCI Worldcom, and Tyco. Remember that any individual stock can go to zero.

In a large, multinational corporation, even a mid-level executive simply won’t affect the bottom line that much. You could be doing a great job, but what if the top brass commits fraud, takes on too much debt, or otherwise mismanages the company.

This time around, it is General Electric (GE). Per Morningstar data, $100,000 invested in GE stock on January 1st, 2017 would be about $47,000 today. Over the same period, $100,000 invested in a S&P 500 index fund would be about $124,000. That’s a gap of over $75,000 on a starting balance of $100,000. GE may recover eventually, but even that won’t help a retiree who needs the money now.

The Fortune article provides a list of other large company 401(k) plans that have heavy allocations to their own stock. Some of these are highly-respected companies, but then again so was GE.

• Sherwin Williams (62%)
• Colgate Palmolive (56%)
• Exxon Mobil (54%)
• Lowe’s Home Improvement (50%)
• PACCAR (50%)
• Dillard’s Department Stores (48%)
• Chevron (44%)
• McDonalds (39%)
• Costco (38%)
• Cerner (37%)

In my opinion, things are different if you are a majority owner of a small, private business. Yes, you also have a lot of eggs in one basket, but you directly control that basket! In addition, your upside could be much, much greater.

Consider that Vanguard charges money for financial advice through their Vanguard Managed Account Program (VMAP). When they analyzed the before-and-after results from actual participants, they found that their biggest impact was simply helping people reduce their exposure to company stock. They found that 12% of participants initially had a concentrated position of 20% or more in employer stock.

If you’re reading this, you can implement this advice for free! Do not invest more than 10% of your 401(k) plan in company stock. Consider reallocating funds into a low-cost, diversified index fund or other similar alternative. (Companies themselves are not allowed to exceed 10% in company stock for pension plans.)

Should a person who retires at age 70 withdraw the same amount of money from their portfolio as someone who is age 40? You’re talking about a retirement period that is likely twice as long as the other. In an article titled The “Feel Free” Retirement Spending Strategy [pdf], Evan Inglis of Nuveen Asset Management and a fellow of the Society of Actuaries proposed a safe withdrawal strategy that adjusts for age.

To determine a safe percentage of savings to spend, just divide your age by 20 (for couples, use the younger spouse’s age). For someone who is 70 years old, it’s safe to spend 3.5 percent (70/20 = 3.5) of their savings. That is the amount one can spend over and above the amount of Social Security, pension, employment or other annuity-type income. I call this the “feel free” spending level because one can feel free to spend at this level with little worry about significantly depleting one’s savings.

You can think of this is as a lower bound. He also proposes an upper bound:

At the other end of the spectrum, divide your age by 10 to get what I call the “no more” level of spending. If one regularly spends a percentage of their savings that is close to their age divided by 10 (e.g., at age 70, 70/10 = 7.0 percent) then their available spending will almost certainly drop significantly over the years, especially after inflation is considered.

Therefore, the lower and upper bounds for a person retiring at 70 would be 3.5% and 7%. The lower and upper bounds for a person retiring at 40 would be 2% and 4%.

Note that he also admits that spending 3% of your assets each year is an even simpler rule of thumb:

Even though there are lots of things to think about, for the vast majority of people, very simple guidelines will be most useful. My simple answer to the questions “How much can I spend?” or “Do we have money enough saved?” is that if someone plans to spend less than 3 percent of their assets in a year (over and above any Social Security or other pension, annuity or employment income), then they have enough money saved and they aren’t spending too much. This is a fairly conservative estimate, but people tell me they want to be conservative with their retirement spending. They would rather feel safe than spend a lot of money, and I think that is very appropriate in our current economic environment.

Another idea to add to your knowledge banks. Basically, if you are young you have to be sensitive about permanently damaging your portfolio early on with the double-whammy of negative returns and high spending.

Others will say that you should spend more when you’re young, as you’ll be able to enjoy it more. That may be true if you have long-term care insurance. I know lots of people who are still quite active and traveling at 70. I’m also at that age where I have checked out some of those “nice” assisted-living facilities for my parents, and they cost serious bucks.

Here’s a reader question regarding my most recent portfolio asset allocation update. It has been edited for clarity and to remove personal details by request:

Thank you for posting the quarterly finance updates. I would like to do something similar to track the returns by asset class but unfortunately, I have my funds across multiple accounts. Some of my funds are in Roth, Rollover IRA and a 401k from current employer. My wife has her funds in similar retirement accounts. How do I consolidate all my investment funds to get a holistic view and correct asset allocation? Also, how do I get Vanguard funds when my 401k options are limited?

First of all, everything may look neater in my updates, but I also have my funds spread across multiple accounts. My wife and I have funds spread across Roth IRA, Traditional IRA (at least temporarily), 401k/403b, Self-Employed 401(k), taxable brokerage accounts, savings bonds, and bank CDs.

Here are the details on how I do my quarterly update.

1. I pull up my custom Google Spreadsheet and make a fresh duplicate of the most recent worksheet. I change the label to a brief datestamp so the labels aren’t too wide. “17.12” indicates December 2017, “1803” indicates March 2018, and so on. I keep all my old snapshots as tabs. This is handy because I can go back and remember what my portfolio looked like back in March 2009, for example.
2. I log into each individual account one-by-one directly at the provider website. I could use an aggregator, but I do this just to make sure my addresses/passwords are correct in my trusty password manager and everything looks right. No new sub-accounts, no errors, new secure messages, etc. I pull up my holdings and type in the balances manually into the proper asset class cell. The spreadsheet adds them up.
3. For most of my funds, the asset class is readily available. For example, I know that the Vanguard Emerging Markets Stock Index fund is going under “Emerging Markets”. If you aren’t sure or if the fund includes multiple asset classes (Target Retirement fund, LifeCycle fund, etc), you can either use a service like Personal Capital (free registration required) for a quick-and-easy analysis or Morningstar X-Ray (free TRP registration required) for a manual-but-deeper analysis.
4. For the most part, the spreadsheet does the rest. The pie charts automatically update to show me my overall holistic breakdown. It shows me how far off I am from my target values, both in terms of percentage and dollar amounts.

When your 401k options are limited, here’s how I would pick the best choice available. I would start by narrowing it down to the cheapest index funds available. Look at all the expense ratios. These days, at least one should be under 0.30%. You can verify using the ticker symbol on Morningstar. For example, for a while my best 401k option was a proprietary S&P 500 index fund. So I bought that, and adjusted my holdings elsewhere. Later on, they added Vanguard Total International Stock index fund and a Schwab brokerage window. There are probably 10-15 other funds on the menu that I have no interest in owning. A Target fund might be the most reasonable choice. Remember to roll your 401k over to an IRA when you switch employers.