Question: I am a public employee in my early 40s and mandated to contribute 5% of my gross salary to a pension plan. I have contributed the max to a Roth IRA ever since they came into existence (and converted my then existing regular-IRA to a Roth & paid the taxes owed on it). I also make small contributions to a deferred comp plan. Question: when “rules of thumb” talk about 15% being enough for a comfortable retirement, does this mean gross salary or take home after taxes? What about the $ I have pulled out for my health plan and optional life insurance payments?

Issue: to free up some cash to pay off a small credit card and build up emergency cash, I’m considering ceasing contributions to my deferred comp plan and take the extra after-tax cash and pay off the credit card, save up some cash, etc. Your thoughts would be most welcome. Thanks, Patrick, St. Paul, MN

Answer: The rule of thumb when it comes to savings is that people should strive for saving between 10% and 20% of gross income. The percentage of your income includes both retirement money and other savings, such as an emergency fund.

Now, rules of thumb are just that: A guideline, a suggestion, rather than a hard and fast rule. A lot more goes into the saving for retirement calculation. For instance, a tenured university professor with a good pension can reasonably set aside less money on a monthly basis compared to a salesman on commission with an income that fluctuates a lot. Other things to consider is what will you end up doing later in life (and it’s usually a variation of what you have done over the years). I know some retired folks that spend relatively little since they enjoy hiking, biking, canoeing and hanging out with the grandchildren while other couples spend a lot more because they can’t wait to travel to another overseas destination.

Still, you can get a rough sense of how you stand by running the numbers at a website such as choosetosave.org. The website has a lot of good calculators to help you think through savings, debt reduction, and other critical personal finance issues.

Now to your specific question: I would definitely suspend putting extra payments into the deferred compensation plan. I would get rid of the credit card debt and build up savings. You’ll be in much better financial shape if you do this. I’m a big believer in adding to savings outside of tax-sheltered retirement plans.