Money matters: Retirement, housing & taxes

Saving for retirement, and the U.S. tax code

(CBS News) There are few things more settling than a setting sun -- unless it comes to your retirement. That horizon can be most unsettling.

Studies show many of us are nowhere close to saving enough for our "golden years." In fact, 66 percent of us say they aren't even saving for retirement.

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So how much IS enough?

Most analysts agree there is no magic number, but there is a ballpark figure: you should try to put away 15 percent of your annual salary.

Here's why:

Financial planners suggest working folks will need somewhere between 8 and 12 times your annual pay if you want to retire at 65. That means a household earning, say, $75,000 a year needs around $800,000 to retire comfortably.

It's a luxury, though, some can't afford, meaning many American workers may still find themselves working well into their seventies.

Retirement calculators:


With all the debate over taxes and spending of late, we wondered, where does the U.S. rank in terms of its tax burden?

It's a bit tricky, and somewhat subjective, but by the simplest measure, compared with other developed countries, the U.S. income tax rate isn't even in the top 50.

Based on $100,000 income, Belgium tops the tax pile at nearly 34 percent. Go down the scale -- past Italy, past Denmark, even Uganda -- and there we are, the United States, at nearly 27 percent -- making us a distant 55th out of 114 countries.

And consider this: unlike most advanced economies on that scale, like Great Britain, we don't have a national sales tax (or VAT) on top of our income tax. If you take that into account, we'd rank even further down the list.

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We learned this past week that the demand for homes is on the rise and prices are going up.

Nationwide, home sales prices rose 7.3 percent last year.

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But the decision to buy versus rent is still a head-scratcher. How do you know when the time is right?

Well, on that, there's no easy answer. One admittedly over-simplified calculation is something called the price-to-rent ratio.

Take the price of a home you'd like to buy, and divide it by the yearly cost to RENT a similar home. If the answer is above 20, it's better to keep renting. If it's below 20, it might be time to buy, especially if you plan on staying put for at least five years.

Whatever your decide, the U.S. Department of Housing and Urban Development says housing and utilities should take up NO MORE than 30 percent of your annual income.

Rent-or-buy calculators: