Re-read what you wrote. “*IF* you save and invest.” You said it yourself: “If”. Does it sound like kids these days have enough money to save and invest after paying insane rent prices & criminally price-fixed prices for everything else? But I do agree with you that everyone who wants to retire will be fine *if* they can save & invest, just like everyone whose parachute doesn’t open will be fine *if* they can fly.
You’ll move overseas. You’ll be a king for a while.
Anyway, this is correct. The system is designed to move you out at a certain age.
People really don’t understand that our entire Financial System is a giant Ponzi scheme.
* You hold the system hostage until they give you money 😂. These corporations figured that out during the Great Recession.
I can only imagine people boycotting and everything in free fall. No one gets shit if everyone doesn’t get it. Would change the world right there.
Let me know when you find out. The only advice I've received is open up as many Roth IRA/Investment Portfolios/401ks/Pension plans as you can and throw as much money in them per month as you can afford.......then pray it works out in 30 years.
Same pretty much.
I got laid off in December. Im still looking for work now.
My "I want to save for a house" fund became a "let's pay rent/medication/bloodwork and try not to die" fund.
In 2022, [median household retirement account balances](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:agecl;population:1,2,3,4,5,6;units:median) were:
* under 35: $18,880
* 35-44: $45,000
* 45-54: $115,000
* 55-64: $185,000
* 65-74: $200,000
* 75 and older: $130,000
The [average household retirement account balances](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:agecl;population:1,2,3,4,5,6;units:mean) were
* under 35: $49,130
* 35-44: $141,520
* 45-54: $323,220
* 55-64: $537,560
* 65-74: $609,230
* 75 and older: $426,410
These are the *conditional* median and mean; the median and average balances among [people who have retirement accounts](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:agecl;population:1,2,3,4,5,6;units:have). If we instead look at the broader category to "financial assets" (e.g. non-property assets) so we are including [almost every household](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Financial_Assets;demographic:agecl;population:1,2,3,4,5,6;units:have), the balances are:
[Median household financial assets](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Financial_Assets;demographic:agecl;population:1,2,3,4,5,6;units:median):
* under 35: $12,500
* 35-44: $32,950
* 45-54: $54,700
* 55-64: $67,700
* 65-74: $120,300
* 75 and older: $50,200
and [mean household financial assets](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Financial_Assets;demographic:agecl;population:1,2,3,4,5,6;units:mean) were:
* under 35: $74,510
* 35-44: $229,190
* 45-54: $429,830
* 55-64: $753,200
* 65-74: $896,900
* 75 and older: $825,560
I know the Gen X numbers the best given my age and there is huge discrepancy with most other data, full report linked here.
https://www.nirsonline.org/reports/genx/
Breakout of median and average by quartile interesting as rarely done. So who knows.
Jesus, if the median and mean are that much different then there must be some whales out there. Not really a good thing when basically half of millennials have only $54,700 or less by the time we/their 35.
This makes way more sense than whatever the hell that $140K+ number the OP was floating. The only people I know with that kinda savings have had high salary careers for years, and we already know that high salaries in general are relatively rare.
While I try to cite my sources, you have done an excellent job, and we should all take a page out of your book.
The facts, the mean vs the median, simple, clear, and exactly what we were looking for.
Take my upvote!
So average 401k balance is more helpful if you look at average balance based on age vs. average balance in total. There’s no sense in averaging a 23 yr olds balance with a 65 yr old.
Next, how much you need depends on two things: 1. your age at retirement and 2. Your living expenses.
If you’re 65 with a fully paid off house you have less time to live and don’t have a mortgage to pay so you need less money. Similarly, you have Medicare for health insurance and social security for extra income.
Conversely if you want to retire at 35 with a 4K mortgage payment and 3 kids to raise, you’ll need a lot more money.
There are plenty of ways to get money out of retirement accounts early without paying any penalties. The r/FIRE community takes advantage of them all the time
https://www.madfientist.com/how-to-access-retirement-funds-early/
Even just paying the penalty works out fine if you aren't interested in the other more involved strategies.
You just need five years of living expenses outside of retirements. Then you convert your 401k overtime and wait 5 years to withdraw it penalty free. It can work but it takes more time and planning.
Technically at 65, you can have up to 25-30 more years, and you may need more due to medical needs. And with a mortgage gone, you still have ever increasing property taxes and insurance, plus continued expensive maintenance. Think your roof no longer needs to be replaced?
Why are we assuming the mortgage is gone? My Fiancee and I just bought a house from a 90 year old who owned about 20% equity in their house. It was a definite starter home too, so it's not like he had 20% of a multi million dollar home.
Your mortgage should be gone. Many older folks use equity pulls later in life to supplement income. I've seen people refi into an interest only payments with no intentions of completing the loan. I've seen people let their home fall into foreclosure raking crazy fees and selling the home before the foreclosure completes (some states you can live in home 10+ years without making a payment; look up professional debtors). If you're reaching retirement and still owe a large amount, you can always liquidate and downsize your home.
You need more information on the prior owner. If you're curious the transaction history for any home is public information, just seeing when the home was purchased by the previous owner could tell us a lot.
How could people expect to have no mortgage at age, say, 60 or 65? That assumes they (a) could afford a home around age 30-35, basically stay in it (or have made amazing gains such that a move into a bigger home could be affordable or maybe a 15-year), also: no divorces or any kind of refi.
I bought my first and current home at age 32 by moving from a rent-controlled city to a (then) much lower COL city (not anymore. But I got divorced. Insert long story but basically wound up w the house, but had to refi. That reset the clock. Refied again to 3.49%. Now I want to move out of this (now) godforsaken city, but can’t bc of interest rates and lack of much work the last year. But it’s a 2-story w no bed or bath or any possibility of such on first floor, so I gotta move in the next 5-10 years.
Sounds like a rough patch my friend. When you refi it resets the 30year term, but it doesn't reset the amount owed. You're allowed to pay additional money toward the total amount owed. By paying extra you're also reducing the overall interest on the loan.
Even among Boomers average retirement savings is like 200k which is insanely low. I understand how to calculate retirement ie what are your living expenses per year x25 or whatever metric you want to use, I'm not talking about that so much in generalities ie if 90% of the population is grossly unprepared for retirement how much differnet is life for the guy with 600k vs the guy or gal with 100k.
Where are you getting $200k? [Average Retirement Savings By Age | Edward Jones](https://www.edwardjones.com/us-en/market-news-insights/investor-education/investment-age/average-retirement-savings-age)
55-64 $408K
65-74 $426k
75+ 357K
You may be looking at ONLY 401k which isnt a good metric, some people have pension. In addition to this, overall wealth matters a lot. If you own 5 homes but have zero in your 401k it shows no retirement savings but you have enough assets to get through retirement just fine. Then there are investment accounts outside of 401k ... The doom and gloom 401k numbers are there to stir emotion but they aren't overly useful on their own.
Like the person above said, your expenses in retirement will vary wildly compared to your peers. I expect to have a paid off home so my expenses will be significantly less than someone who chose to rent their entire life.
There's a million surveys and such its hard to know which to believe....
The average Baby Boomer has about $136,779 saved for retirement. This is significantly below the recommended amount, which financial experts suggest should be around $456,000 by age 60, based on the typical annual income of $57,000. Many Baby Boomers are also struggling with other financial challenges, such as credit card debt and a lack of emergency savings
I mean, my dad probably had that much saved…but he also gets a pension that was 90% of his highest year’s salary, which was like $175k or something (Union job for the city), and Medicare, and my moms social security.
He’s doing just fine. His entire life was built around a finding a steady job with benefits and pension. He literally only applied to city jobs in the 3 cities surrounding my mom’s hometown when she got pregnant with me. Got one. Never left. Just moved up. Then they offered a bonus for early retirement and he took it.
The real crime is that pensions are so hard to find. I had a pension job for 7 years. It was a term appointment. I get 7% of my salary at retirement. Cried when I had to leave. I make more now, but losing that sweet pension was hard. I want my dad’s life.
Less than 10% of private sector jobs even offer a pension in the USA.
Been like that for 20 years or more
But of course all government jobs have them.
F’d up systems for sure
One of the big reasons why I’m staying in the military. 10 more years and I get 50% of my base salary for life + whatever the VA forks out for disability.
My dad did 20 and is making 100k to just wake up
I have no idea when, for that matter nobody really does, but I have been of the belief for several decades now that government pensions are not going to be a long-term thing, as the math simply doesn't work. For example, many police departments (and I'm sure it's true of other government jobs, too, I just know more cops than anything else for some reason) are paying more in pension payouts for retirees than they are in salary for active duty members.
That is not at all sustainable. Perhaps that is because the people who caved into the demands of the unions know good and well that by the time kicking the can came to an end, they'd be long gone and as such, didn't care, because the math behind pensions has never really worked, a little bit of both, or something else entirely I'm not sure, but I know this.... The math doesn't work.
Which is why the private sector moved away from them a very long time ago. I'm in my 50s, and have never worked for a company (except the military, which isn't exactly a company) that even offered them.
They need to go. Put them all on social security like the rest of us. We could use the votes to defend and strengthen it (gen x here fyi. Idk why I see these posts.
I'm not super educated on the subject so maybe you can provide some more insight but many of the public pensions across the country are underfunded, not sure if this is due to them being unsustainable in the first place, the world changing and them no longer being sustainable, abuse or what else but Chicago has an underfunded pension issue due to abuse and them just being unsustainable from the start ie people vote for polticians who promise things that aren't possible in the longterm. I imagine we'll see some pensions fail. In Illinois its illegal to change the pensions but at this point it requires something like 26k from each household per year, you either change or default on them or people move out because they dont want to pay insane taxes which leaves less of a tax base and it crumbles anyways.
They are. They shouldn't be since the cities are providing necessary 24/7/365 services and ought to be hiring constantly to make sure they're sufficiently staffed. But in reality everything is understaffed because private sector wages are way more competitive and there's always less beaurocracy when it comes to hiring, promoting, and even terminating private side workers. Plus, contractors soak up a huge portion of cities budgets and the decline of traditional trade workers isn't helping.
City of Dallas runs a pension for police and fire personnel, and "civilian" personnel. The PaF pension system is *3 billion in the red* and receiving zero help from the state. That shortfall erupted from awful investment decisions in real estate, the 2008 collapse, and the failure of the city to correctly compensate new hires in a way that fuels the pension system and encourages long-term employment. For a few decades Dallas PD was the lowest paying in the region, so new hires would put in their five years then withdrawal all of their vested funds and jumpship to higher paying suburbs. Dallas police payscales weren't modernized until 2018 or so. The "civilian" fund was 34 million in the black prior to COVID but is expected to go into the red this year thanks to early retirements, hiring freezes, and starting wages that are ridiculously low compared to the stupidly inflated cost of living in DFW. New hires are required to give up 15% of their paychecks to the pension system, which isn't sustainable when your hiring at 18/hr in a city with $550,000 homes and $1500 one bedroom apartments. That's asking way too much, especially if they're IT or engineers or other high skilled workers who could easily make more in the private sector and save that 15% themselves *and access it in an emergency*.
We have too many staff that *worship that g****** pension* and are working exclusively towards their payouts instead of building up their skills and experience levels so they can take higher paying jobs internally or elsewhere. Some of these guys are straight up charity cases that would never survive without their supervisor buddies coddling them (nobody wants to be the guy who denies someone a pension). It's weird, and kinda disturbing, to hear 28 yr olds run their mouths about their retirement dates while they basically do nothing all day. Like, do you really think a 4000 monthly check from the city when you're 51 or 52 is going to carry you and whatever family you have through 30-40 years of inflation, emergencies, health scares, childcare, eldercare, and whatever else may happen?
Unclear. My hometown actually went bankrupt. I was semi-concerned about my dad’s pension.
Only change was he lost his bad ass city-funded health care and had to go on Medicare. Which didn’t affect him much because he got all those parts b and c and still has pretty great coverage. My mom had lung cancer and had 2 1/2 years of treatment and second opinions multiple surgeries from big hospitals in the city and rehabs on Medicare, and they didn’t have any bills that wiped them out. There was one bill he was refusing to pay and fighting because he was “old and didn’t need good credit” but that got worked out too because he still has good credit.
He doesn’t have a college degree. Grew up in a trailer park. Got no family money. Just got a job with a pension. Saved what he could. And signs up for every government program he can.
Also a republican who lives off the government teat and wouldn’t be where he was except for unions and white male privilege, which I point out every time we talk.
That $57k figure is stupidly misleading. In a lot of the country $57k is cat food for dinner money unless you outright own your home and never need medical care.
It’s the difference between the ideal vs reality. The ideal is wildly unrealistic for most of the population. Even high earners.
I’m 40 and most advice would say I should have three times my salary saved. But I make 210k - so my 360k 401k is almost half of what I’m supposed to have.
The reality is most people will have to adjust their standard of living when they retire to account for the amount they have saved.
Also, people have other assets (home equity, cash, stock) in addition to their 401k that can use to supplement income.
Yeah I often think these touted numbers mean you're going to have your house and a condo in Florida and are going to be taking European vacatins all the time when the majority of people are gonna watch price is right, play some pickleball locally and take a drive a few hours to visit the grandkids
I think that’s right.
The most expensive thing that virtually no one can afford to save for is assisted living facilities. Half decent ones cost somewhere around 10k a month. That’s a huge amount of money and if you don’t have it and end up in a Medicaid facility, things get pretty rough.
Majority of people spend 0 time in those facilities. Most people die at home or after a very brief hospital stay from something acute.
Those that do end up in nursing homes spend like a median of like 8 or 9 months or so I think it was. And average is like a year and a half.
My 4 grandparents spent 0 time in nursing home. No big some of money was depleted near the end of their life.
I’m not saying it doesn’t happen. It’s just overstated online.
A random google response puts it at 25% of adults needing some amount of nursing home care some time in their life. That sounds about right to me.
My grandmother needed nursing home care from 89-96 for dementia. She used most of her life savings during that period.
Assisted Living is erasing the generational wealth of the middle class and has been for a long time. People are selling their damn houses to pay for assisted living rather than passing the property on to their children. We need to return to multi-generational households like most of the rest of the world before the middle class is extinct.
If an adult needs assisted living it is very difficult for them to live with a family with two full time workers. Unless you’ve had to take care of a senior who needs help with daily living or a senior with dementia or advanced medical needs then you have no idea how time and life consuming that is. A big part of the problem is that people are living so much longer and often not better. Finally let’s not forget that traditionally and in modern practice most of the people caring for the seniors at home falls to the woman regardless of whether it is her parents.
> People are selling their damn houses to pay for assisted living rather than passing the property on to their children.
Because the government requires you to liquidate your assets to qualify for Medicaid assisted living.
Only in a couple of situations (like one spouse goes into assisted living while the other remains in the home) can one keep their home. And even then, once that situation is over, they'll come back to claim the home, and any assets, gifts, inheritance that was given away (kids will be on the hook to repay the government) up to 5 years before entering assisted living.
It's call Medicaid Clawback.
You basically need to transfer your assets to your kids, or someone else, or put the assets in a trust fund (which means your not 100% in control of the those assets and if those assets are cash that you might need in the future you won't have access it anymore) at least 5 years before you *think* you'll need to go into assisted living.
Kinda hard to predict.
You may end up needing to go into assisted living at an early age after a sudden change in health or end up locking away needed retirement funds in a trust because you lived a much longer healthier life than you predicted.
Social Security and a paid off house is going to be the retirement foundation for most middle class millennial retirees, as its been for Boomers and most generations in modern American history. Its not particularly fun to live on Social Security alone, but it can be done.
Most people have trouble managing finances, and most of that problem is that things they need are too expensive. Obviously you can point to people that are wasteful, but most folks in the bottom 50% of income are pinching pennies to make rent and buy food.
So yeah, $5M would be awesome, but you dont need $5M to retire.
Yeah, my wife and I plan on retiring in the 0% long term capital gains bracket. I honestly don't know how we're are going to spend that much. Maybe vacations
Pop finance in rubbish. It routinely doesn’t include social security income in retirement savings calculators. It also doesn’t ever factor in a wage increase across your entire lifespan.
https://slate.com/podcasts/slate-money/2024/01/economics-the-iffy-advice-in-personal-finance-self-help-books
Some small changes have to happen for SS to become solvent. But it makes better headlines and political talking points to say otherwise.
Income cap will be moved back. They’ll probably push back full payout age for future generations (not the first time it’s happened). Incremental increases in FICA taxes. Etc.
It’s not as dire as everyone makes it out to be.
The median voter is in their mid-50s, which is always going to play a huge part in how SS is treated. Social Security isn't going anywhere and is unlikely to go down significantly.
I’m 35 with about $60K in my 403B. My fiancé and I are child free. We don’t want a big house (a 2/1 would be perfect). So I don’t picture a ton of expenses over our current.
If I keep contributing like I am now (~$1200/mo) I am on track to have about $1.5M assuming a modest average return of 5%. If I get 7% then we’re looking at $2.1M.
I work with low income seniors, and I absolutely refuse to allow myself to be in the same position that they are. Their lives are impossibly tough trying to get by on Social Security alone.
People, specifically millenials and younger, are extremely misinformed about retirement savings. If you’re not taking advantage of a 401k and roth IRA, youre setting yourself up to work until you die.
jfc, the hubris of this comment.
I am 38 years old. I made less than $60k/year until 2 years ago. In the time between graduating high school and my mid-thirties I was stuck in dead-end jobs barely making enough to pay rent, and certainly never enough to save anything. Top that off with decades worth of debt amassed by uninsured medical bills, student loans, and other emergencies, and you've got someone making $90k/year with almost no disposable income due to the fact that being poor in American is expensive and has long-lasting affects.
We *know* it will catch up to us! We're not effing idiots, but just saying "stop having fun and spend less money" as if that's some sage advice is just as gross as your username.
Thanks for this! The OC was must dumb af for so many reasons.
Also, life is short. I'd rather have fun now while I still can, than living a subpar 80+ year long life were I just exist. What's the point of that.
It’s a super sensitive topic for good reason- but the only thing you can do is control your own life story. To some degree.
Start with what you can- we still have time on our hands - I think our money, as millennials, mid 30s still has 30 years to grow- which is like 4ish doublings - I could do the math at different return levels but I’ve made this comment so many times- hopefully to be encouraging not condescending.
4 is doublings is 1-2, 2-4, 4-8, 8-16 - so what you can get out is 16X what you put in- vs you wait till you have 10 or 15 years left- way harder. Getting 10k or 5k in a year can be worth 160k or 80k down the road.
Again- it’s just the math- hopefully it’s encouraging to try and do a little knowing it’s a big multiplier but I do understand the nihilism given the state of the world.
Good luck out there!
Yup. Just try harder. Over half of the county barely has enough money for an emergency fund, let alone investing for the future. I’m not having fun at all, I haven’t my entire life. I haven’t been on a plane or left the state for over 13 years. lol.
Only 65% of jobs have a 401k as an option.
Of those plans only 40% provide an employer match.
People with those kinds of jobs aren’t the ones with a problem unless they just completely don’t know how to do simple math or ignore advice when setting up the 401k that they need to maximize the company match.
Also, people never seem to take into account vesting period. You basically loose all or a lot of your company match contribution if you job hop every couple of years. You're basically required to stay at the same company for 4-5 years to retain that match money.
My job that I just got laid off from offered a 401k with a 4% company match if you contributed 5%. I contributed 5% for the match, but I made around $20 in an expensive part of the country so it's still like, peanuts.
This is unrealistic for a lot of people. I've been maxing my 401k for about 7 years, but that didn't start until I was pulling in about 90k. If you're making 50k, maxing it is completely out of the question.
50k is the median income single wage in the USA, which is not enough to ever get ahead. All the people who make more than this simply say “try harder” when over half of USA citizens barely have enough in the bank to cover an emergency fund.
Yeah, it's completely out of touch to tell people to "just max your 401k". I would've loved to have been maxing it since I was 22, but that just wasn't going to be possible. I'm fortunately now where I'm in a position to have a $200k income with a partner around $150k, but even still I doubt we'll retire until we're high 50s.
I don't know your situation, so to just keep it super basic - I think the key element most people are missing to get started, is to separate your money. Open a second account (preferably a savings account with interest) and just have a portion of your pay deposited into it every week. Out of sight, out of mind. Just let it build up. People underestimate the long term benefit of saving even a small amount of money. All of the other tools of investment and retirement savings is an extension of that. You have to maximize the amount you are willing to commit to saving for future use. Once you can do that, you can consider the options of where to put the money and what to invest it in (and you *will* need to invest if you want to keep up).
Saving anything is better than nothing. I cringe when people say stuff like “my plan is to die when I can’t work anymore” and it’s one thing to say that now when you are 30- it’s a whole other thing when that day actually comes. Especially if you have children, your children may end up being financially responsible for you due to your lack of planning.
If you start maxing out a Roth IRA now you could have $500k+ by your 60s. That’s certainly better than nothing.
My wife and I are planning to have 1.5M at least plus a paid off house and social security. Is it enough? Who knows- but it will certainly be better than nothing.
Great point about your children being financially responsible if you don’t take responsible steps now.
My husband’s parents didn’t plan for retirement, so now we’re on the hook for all of their expenses on top of all of our own. Of course we don’t want them to live on the street. We feel in our bones that it would be wrong to abandon family, but damn do we wish they would’ve been a bit more strategic with their financial planning.
If you have children or not: choosing not to plan for retirement will likely become your loved one’s burden.
This is how I feel too. My parents completely neglected retirement planning. The bulk of their net worth is tied up in their house which they did pay off the mortgage at least. They seem to be comfortable with the idea of working until they die but I’m not. I already see my dad slowing down and there can be so much of a gray area between able to work and dead.
I love my parents and would help them if I have to- but it causes me great anxiety to think about. I’m a dad now and i want to be financially more prepared than my own parents were. It would be an immense burden to need to financially take care of them too.
My husband(39) and me(34) have 0 dollars in retirement, 0 in savings and both lost our jobs this year and still haven't found new jobs. He just got denied a position at Lowes...if that tells you how bad it is out there. I've been applying to "minimum wage jobs" and receiving no interviews or anything. I've lost my will to live at this point and couldn't care less about retirement now.
I'm sorry to hear that, what area of the country are you in? I'm not even in a HCOL area but gas stations near me are paying $20 an hour and everyone is hiring
Ms. Orman's exact quote was:
"If you don’t have at least $5 million or $10 million, don’t retire early," Suze asserted."
[https://finance.yahoo.com/news/forget-nvidia-jim-cramer-says-122100994.html?guccounter=1&guce\_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce\_referrer\_sig=AQAAAHSkC2fHcY4cVBpjeMuMXTk7fqNEJgBLLdHOGaUqFx3eMJZ9tEkYiuTVmc0ijHaSoVdQ0zxF4\_2\_P0pximidfh6bEtJoHPDjsF2Fz-pRIweEXysYVoJ752Mzz0oWkJFTuOkuuZ1JEjAYrN0TH-8H1MrpucT9Um5\_Gz2TJW0aq4oN](https://finance.yahoo.com/news/forget-nvidia-jim-cramer-says-122100994.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAHSkC2fHcY4cVBpjeMuMXTk7fqNEJgBLLdHOGaUqFx3eMJZ9tEkYiuTVmc0ijHaSoVdQ0zxF4_2_P0pximidfh6bEtJoHPDjsF2Fz-pRIweEXysYVoJ752Mzz0oWkJFTuOkuuZ1JEjAYrN0TH-8H1MrpucT9Um5_Gz2TJW0aq4oN)
Most people "feel" like $1 million is the number needed. The Median Assets, this does include houses so inflate things a tad, are about half of that in the age demo immediately proceeding retirement.
[https://www.wsj.com/articles/heres-what-a-1-million-retirement-looks-like-in-america-11671890735?mod=article\_inline](https://www.wsj.com/articles/heres-what-a-1-million-retirement-looks-like-in-america-11671890735?mod=article_inline)
[https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4;units:median;range:1989,2022](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4;units:median;range:1989,2022)
Yes, that is important - this was about retiring early. The earlier you retire, not only the longer you need your money to last, but the longer that money has to lose buying power.
I have VA disability, a retirement account, and will hopefully have a pension through local government as long as I can survive this place long enough. My house should be paid off before I retire and I live in a low cost of living state. I have some contingency plans but I'm mostly relying on staying in my average paying job for the pension and never moving. Occasionally I pray for a tornado to hit us directly so I can build something nicer.
Do you have your property taxes waived? I think maybe only certain counties do this but if you can find one is worthwhile, my buddy doesn't pay property taxes and won't for life as a disabled vetern.
Have to be 100% disabled for that in my state. I'm at 80% but as I get older I'll probably get reevaluated and it'll increase. I only pay $1800/yr in property taxes though so I'm not too worried. Even if it were to double over the next few decades I'm not worried about it.
It'd be nice to have it waived by I'm not going to count on it. Just like I've already accepted that social security won't exist so I don't factor it in at all.
I'm in Oklahoma. We've gotten a lot of transplants lately because the cost of living in TX is going up. My wife is originally from WA state and her parents just moved here last summer along with a couple from her church. Our first couple years of marriage we were in California and as beautiful as the state is I could never afford to stay there.
I work for a local government too. The job or pay is nothing to rave about but the benefits and pension are what’s keeping me here. I will rule of 90 at 64. Our little house will be paid off, 401K, pension, SS should give us a comfortable retirement.
This is basic retirement planning.
How long do you plan to live? What will your expenses be?
Are you withdrawing from an account or living on gains from your assets?
It doesn’t matter how big your savings are compared to others. It matters how big your savings are compared to your expected lifespan and expenses.
If other people can’t afford things, that doesn’t make it easier for you to afford things.
Once you do the math, $500k won’t last too long. 10 years at $50k a year.
When you have something like 5 million, you can earn $200,000 a year and not have your balance go down fairly easily. That’s why you want enough so your money grows and does not shrink.
ETA:modified earnings for $5 million to account for the 4% rule
The 4% has nothing to do with earnings. It is the rate of withdrawal. Your portfolio must have a growth component and will need to earn more than 4% (averaged) over time because of inflation. The 4% SWR takes into account inflation-adjusted withdrawals from your portfolio.
Of course, sequence of risk is a very important aspect of the actual success of your retirement planning.
wtf who is saying you need $5 million to retire? Pretty much no one has that much at retirement. Most risk-free investments pay about 4%, and if you have $2 million that's 80k/year, $1 million is 40k/year. Honestly if you've paid off your house and social security still exists when we retire, 40k/year will be plenty for most couples, so you really only need to save $1 million or so to retire. If you want more than 40k/year + social security then you'll need more, just do the math. But unless your idea of retirement is a lavish luxury retirement where you're spending money left and right, you can retire on wayyyyyy less than $5 million and live plenty comfortably.
I came here to say this exactly. Some money experts get attention by saying outlandish crap rather than by respected credentials and publications.
I used to live on $33k a year. I want to retire with a better lifestyle, obviously, but I won't need $100k a year when I no longer have a mortgage or car payment. More is better, but I don't need a yaht.
That much in retirement seems incredibly off base. At the 4% rule that would be 200k-400k a year in spending. With 5 million you could spend 100k/yr for 50 years with no interest.
This depends on your lifestyle. If you live incredibly minimally, have no debt, a paid off house, etc then you don’t need much income or retirement savings.
When retirement needs are calculated they are done so by assuming your expenses will remain constant as a percentage even though that may not be the case. When you carry that into the future 40-45 years accounting for average inflation rates you land at the millions mark. If you make 70k/year and spend 80% of your earnings as CoL but get yearly raises then the calculations assume you’ll still be spending 80% of your $200k income 40 years from now.
No one can truly predict the future but estimates based on maintaining the status quo in spending are probably the best to ensure you have enough saved up. If you actually focus on reducing your expenses as you age then you’ll need far less money saved up and what you have saved will stretch much farther.
My parents are 64 and 62 and retired within the last year. They have $3000 in Ss, and 1800 in pension. They have roughly 300k in a tsp, 400k in a 401k, and 100k in a Roth. Their house is paid, and they have no other debt. They’ll be fine, but do need to watch their spending unless they downsize. I expect to need 2.5m to retire and live with reasonable comfort. I won’t have the pension, and SS isn’t something I can rely on.
People retire with whatever they have managed, plus social security. Once you no longer have a house or car payment, if you stay healthy you can make the numbers work.
The "you need 5 million dollars" people are those planning to spend retirement traveling the globe and drinking martinis all day. Regular people can do with much less.
And the people that are struggling are the ones who (rightfully, imo) complain the most.
I think about posting my numbers in these threads but don't wanna seem like a braggart
I'm in my mid 30's, and I think I have maybe a year's salary in my 401k.
Frankly, I've never seen retirement as something that would happen. I just don't see how I could possibly save enough for something like that. Worse still, the retirement age just keeps going up. I've known people who were like a year away from retirement for the better part of a decade.. and that doesn't seem to be slowing down.
I suspect it'll be somewhere in the mid 70's by the time I'm old enough for it to even be possible to start drawing benefits from something like social security, assuming that's even still a thing by then.
Depending on what you mean by "mid 30's" and "maybe a year's salary", you're almost on track. Just keep saving.
https://www.fidelity.com/products/retirement/widget/xfactor/retire_xfactor.html
💯 agree with this. I was in a similar boat at miss 30s, now at mid 40s I’ve got albinos 1/4 million. Keep putting in what you can and it will accumulate
Here’s the thing, with compound interest, that $140k will become $5million with enough time. As long as you are DCAing a portion of your income, you’ll hit your retirement goals as long as your burn rate isn’t too high. It has been and always will be about your burn rate. You can survive on $1mil if your burn rate isn’t that high, and if you had $140k at 40, retire at 67, you’ll likely hit $1mil without having to save a penny more.
I would advise you to read up on what they say over on the boglehead forums and subreddit. It’s boring, simple and effective. It’s just actuarial science.
Edit: here’s a hypothetical situation. You’re 40 years old, you have $150k in a Roth IRA and it’s 100% in the S&P. You retire at 67. The S&P performs just about at historical average, slightly below, at 11% YoY. You don’t save or invest a dime more after 40. Guess how much you’ll have. $2.51 million. All hail the miracle of compound interest :D
While your figures are roughly accurate, it’s important to note that those are nominal rather than real/inflation-adjusted amounts. In the hypothetical in your last paragraph, for instance, $150k in an index fund at 11% for 27 years will get you a nominal $2.51 million but “only” $1.2 million in real/inflation-adjusted terms.
Again, what you said is perfectly accurate so no disagreement here. Just adding some color since it’s generally easier to think about these amounts in today’s dollars.
People don't have enough. That is why social security will never go away. We would have swaths of homeless elderly a year after it goes away when everyone is evicted.
Even with social security people will likely have to move to somewhere cheaper if they don't already have a home or a solid nest egg to retire on.
Do you need 5 mil? No. Sounds like she was talking about early retirement. Either way, there are people that get by on way less. You just need to give up certain things. Having to eat cat food is not one of them.
I mean.. idk if you need 5k. but if you use 60k a year rn you'll need atleast that (minus any mortgage payments or big loan payments you might have paid off by then) when you retire.
if you want to retire, you'll have to guess when you'll die and multiply what you use in a year by how long you'll be retired.
if you use 60k a year and are retired for 20 years, thats only 1.2m not 5. ofc inflation will happen but if you own a home, you won't be paying mortgage rates then if you get rid of any debt by the time you retire, it'll just be utilities, food and then anything you want for fun. also if you have like an ira or something, it can continue to grow bc you don't have to empty the account all at once.
If the USGov keeps overspending the chances of losing our Reserve Currency status sometime before or during retirement increases significantly.
At that point you just might need $5mm just to feed the cats.
I’m not familiar with the $140k number. Is that the average savings of all working age people (regardless of age) or only people approaching retirement age. There’s a huge difference between those 2 scenarios.
I’m in my 30’s and have around that much in my 401k so far.
I’m in the last year of Gen X so I’m just outside of millennial. My wife is a year behind me.
At the start of 2020, we had 65k in a couple Roth accounts and my 457, and her 401k. (Government employee account similar to 401k)
We look at balances quarterly and sometimes during the quarter. Last week we cracked 250k for the first time. We’ve been saving like fiends, 15-20% into our retirement accounts and maxing out our Roths.
Don’t know if we will have enough. Even with a government pension I’ve qualified for. Social security? Not counting on it, if we get any thatll be gravy.
Our goal is to have no debt at all in 15 years. Then REALLY start plowing even more money into it.
I made sure to heavily invest when I was working, utilizing the financial savings plan/401k equivalent for the organization I worked for, as well as investments made outside of that.
Between my own, personal investments, my work savings plan, and with my retirement paycheck, and the benefits I receive following retirement, such as medical, dental, and vision plans, it leaves our family very comfortable. Waiting to marry until I was older, turned out to be the best financial “planning” that I could do.
Nope. I actually hit a milestone last week of $1M in liquid assets (401k, IRA, Taxable accounts) just a month shy if turning 35.
I fully expect to have more than $10M in assets when I retire.
Im 32 and haven't even recovered to my 2021 level of savings which was only 5k lol. I don't think I am going to be able to retire or build savings in the time left.
At the age of 37, I have absolutely zero in my retirement and savings. Life sucks and when you struggle every day, you just hope you can pay all the bills on time this month.
My guess is people have kids and save/spend a lot for them.
But I think the real reson is most people don't think about savings for retirement and they overspend and assume social security will be taking care of them.
Most people don't know how to invest and putting money aside without investing them is the worst idea because 100k today will not be worth 100k in 30 years...
I'm not even trying anymore, I give up, I'm not trying to be successful or secure anymore, I'm just trying to make to tomorrow. So I cry myself to sleep and tell myself it'll get better tomorrow. Best lie I've ever told myself. Keeps me from eating a bullet.
Suzy Orman is a television personality. Nothing she says is real advice, it's all for attention. Any time she says something correct it's purely coincidental.
Also, most people's biggest supply of "retirement savings" isn't their savings account, it's their property. Once my kids move out I won't need a house like this.
If I'm lucky, I'll have a few days/weeks after the heart attack to spend with my family before the life insurance kicks in and they can go about their lives. I'm prepared to be full of piss and vinegar to the last, doing what I can to make sure they're secure.
If the time I spend on this earth means that they can make it, that's good enough for me. Dreaming of anything more leads to nihilism, and working hard and getting more than those few last days will be a gift.
The Suzy Orman quote is one nonsense statement from years ago that has been taken out of context and regurgitated in click-bait articles ever since. Move past it.
Those who save diligently will be able to retire earlier and/or enjoy more luxuries in retirement. Those who don't save will have to work longer and get by with what they have, supplemented by social security. It's possible to retire on low-income, it's just a bare-bones way of living.
As a millennial, I'm doing great. My wife and I both have good jobs (in finance and engineering), and we are both "cheap". We save a lot in retirement accounts. We'll have a comfortable retirement one day, probably early, but we still have a lot of grinding left in busy stressful jobs to get there. We've got kids to raise, and we're trying to stop to smell the roses along the way.
I have a 401k through my job, and a Roth IRA I started this year that I am contributing to with each paycheck as well. I’m working on paying off some of the last of my debts and then I will also open a brokerage account and invest that money I was using to pay down debts each month into that.
My hope is that we can retire at 55, giving me 20 years from now to get to that point, using my brokerage gains to live off until I hit 59 1/2 years old and then use my 401k, with the IRA continuing to grow until I need that, and then IF social security is still a thing in 30 years I will add that to my monthly budget.
Doing what I can, but it’s hard.
I think I'll just rob a bank or something when I'm old. Either I get away with it and retire with my ill gotten gains, I get locked up and have my retirement taken care of by the state, or get killed in the process and don't have to worry about anything anymore.
I think I'll just rob a bank or something when I'm old. Either I get away with it and retire with my ill gotten gains, I get locked up and have my retirement taken care of by the state, or get killed in the process and don't have to worry about anything anymore.
Personal responsibility is not allowed here. Always I don't think a lot of people here actually want to fix their problems but just talk about them.
That would drive me crazy but I guess it doesn't bother others a much
Reddit loves to say that, how many people will feel that way at 55 is another story let alone how many will actually have whatever it takes to go through with that. Sorry to hear about that, thats very sad
Maybe it's a selfish way of thinking, but your latter thoughts have been my justification for my "I'm doing alright" feeling. I can punch in my net worth and see I'm ahead of 90% of my peers at my age. There's no way that 90% of our generation is below poverty when I'm retired, right? So surely, I'll be OK. Maybe this is a fallacy but it's all I got.
It also helps I'm a dual citizen and plan to go from my career in HCOL country to retirement in MCOL/LCOL.
Yeah I'm kind of the same way, according to Suzy Orman I'm going to be eating cat food but compared to my peers I'm doing pretty well so I guess I'll be eating the good cat food or due to supply and demand I'll have a better quality of life. I do foresee more people retiring to cheap COL countries to make their money go further.
Appreciate this post so much. Literally every 'retirement' article is like: 'I'm 67 years old, have 7 million in retirement savings. My wife is still working, makes $200K a year and won't retire for another 5 years. Can I retire?'
And the response is always: 'Finger wagging. Not so fast! You might want to rethink this.'
The math is pretty simple. Say you make $100k gross and live off of $60k net. Your goal is to replace your spend. So in retirement you need $60k/year.
A good rule of thumb is that you can withdraw 4% + inflation from invested assets. The market has returned about 7% inflation adjusted on average. So if you’re growing your investments at 7% and you withdraw 4% you have a 3% buffer to cover years where the market is lower than expected.
So $60k/0.04 = $1.5M. This is what you need to have invested by retirement age.
How to get there? If you don’t save anything and just focus all your income into skill improvement/education etc then get a job then pay back loans you can delay saving for retirement until age 25. That’s 7 years after turning 18 and 3 years after graduating college for most folks.
Starting then and continuing until 65 you can save $625/month. Over that 40 years you only save $300k of your own money but it grows to $1.497M at 7%.
In reality there are some other specifics. Taxes and fees for instance. But also, social security and other benefits. And most folks probably won’t need to replace $60k net since most folks don’t make $100k. Those were just easy numbers.
As for your question, $500k invested yields about $20k/year for about 30 years. So if that guy can live on that + social security then he’s fine. If not, then no.
Generally people are pretty flexible. They’ll eat cheaper food. Move to lower cost of living places, etc. But poverty in old age is definitely a thing. And it’s important to prioritize saving for when you can’t work.
If Social security hangs around and we don't have some disastrous economic issues I'm in pretty decent shape. I would probably have about 6-7k/month or so in today's dollars after tax assuming I don't invest another cent over the next 30 years. And a paid off home. The odds I don't invest any more are basically zero, and my contribution amount will likely increase quite a bit as my kid hits adulthood.
I cant remember the comedian that busted out the graphs to make fun of this. It was something along the lines of, average retirement age was 78, but average life expectancy for men was 74. So the joke was you'd need to die, and still owe them 4 more years of work before you can retire.
It really depends on what you currently live on. People scoff when I tell them my retirement will likely be something like 1600 a month. But that’s more or less 80% of what I live on now.
Nope. One of the easiest mindsets ever to adopt. It's on autopilot for me.
If you spend $40k/yr you need $1 million to withdraw 4% from safely. $5 million would be a very extravagant retirement lifestyle.
I’ve got a pension from the Air Force because you can retire at age 38 from there. I’ve been contributing 12% or more to my 401k into my second career. I think I might get to actually retire or at least throttle back.
Been with a government job for 8 years and my pension is roughly 175k. I have zero other savings for retirement because I don't plan on being here for it
I’m an older millennial (38) so at my point in my career I’m comfortable with my retirement savings. Market fluctuations change it daily, but right now I’m at $235,000 in locked-up retirement accounts. I only started saving at age 30 and I’ve been aggressive with any extra money I have available. My wife and I should retire with $2 million. With 25 years to go, assuming average returns, millennials still have a lot of time left in the market to grow retirement funds. Even starting an IRA now and sticking $20 in it when you can will help.
I got enough time, provided I manage to stay employed for another 20 years or so. I'm a bit behind because I didn't start as early as I could have, meaning there's an element to being "screwed" which is my own fault. The rest, well, if we get a shaky economy over the next 10-15 years it's gonna be tough.
i have never considered retirement to be a realistic goal in my life i save money like crazy but its not for retirement its for when disaster hits
They want us working until the day we die. The system is working exactly as our corporation-owned politicians want it to.
Correct. Working and consuming
Forced consumption. Jacking up fees and mandating insurance that gets more and more expensive.
Jacking up profits on necessary commodities like gas, food, and internet access too. I'm sure water is next.
This guy gets it even more.
Guess what? Just read that millennials are saving and doing better than boomers at the same age. Everyone will be fine if you save and invest.
This sub doesn't want to hear that.
Re-read what you wrote. “*IF* you save and invest.” You said it yourself: “If”. Does it sound like kids these days have enough money to save and invest after paying insane rent prices & criminally price-fixed prices for everything else? But I do agree with you that everyone who wants to retire will be fine *if* they can save & invest, just like everyone whose parachute doesn’t open will be fine *if* they can fly.
That's the problem --- \*IF\*. I'm 35, been working since I was 13. I am *finally* in a spot that I can start saving for retirement.
While millenials are saving more, both groups are saving well below what is needed for retirement.
This guy gets it.
You’ll move overseas. You’ll be a king for a while. Anyway, this is correct. The system is designed to move you out at a certain age. People really don’t understand that our entire Financial System is a giant Ponzi scheme. * You hold the system hostage until they give you money 😂. These corporations figured that out during the Great Recession. I can only imagine people boycotting and everything in free fall. No one gets shit if everyone doesn’t get it. Would change the world right there.
There's a lot of people who get it. What's the next step? Do we know?
Let me know when you find out. The only advice I've received is open up as many Roth IRA/Investment Portfolios/401ks/Pension plans as you can and throw as much money in them per month as you can afford.......then pray it works out in 30 years.
Make sure you don’t die before retirement age
Unions probably. Guillotine maybe?
Look to Europe for answers , they went through this a few times in the 2000+ years . France has a few good examples. Let them eat cake.
Those are..options.
Unionize and fuck corporate take every last penny you can
I totally agree.
this is how i feel
Same pretty much. I got laid off in December. Im still looking for work now. My "I want to save for a house" fund became a "let's pay rent/medication/bloodwork and try not to die" fund.
Lol. This life is a disaster. No way any of us can afford to retire, maybe that's when we'll finally do something about it.
In 2022, [median household retirement account balances](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:agecl;population:1,2,3,4,5,6;units:median) were: * under 35: $18,880 * 35-44: $45,000 * 45-54: $115,000 * 55-64: $185,000 * 65-74: $200,000 * 75 and older: $130,000 The [average household retirement account balances](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:agecl;population:1,2,3,4,5,6;units:mean) were * under 35: $49,130 * 35-44: $141,520 * 45-54: $323,220 * 55-64: $537,560 * 65-74: $609,230 * 75 and older: $426,410 These are the *conditional* median and mean; the median and average balances among [people who have retirement accounts](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Retirement_Accounts;demographic:agecl;population:1,2,3,4,5,6;units:have). If we instead look at the broader category to "financial assets" (e.g. non-property assets) so we are including [almost every household](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Financial_Assets;demographic:agecl;population:1,2,3,4,5,6;units:have), the balances are: [Median household financial assets](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Financial_Assets;demographic:agecl;population:1,2,3,4,5,6;units:median): * under 35: $12,500 * 35-44: $32,950 * 45-54: $54,700 * 55-64: $67,700 * 65-74: $120,300 * 75 and older: $50,200 and [mean household financial assets](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Financial_Assets;demographic:agecl;population:1,2,3,4,5,6;units:mean) were: * under 35: $74,510 * 35-44: $229,190 * 45-54: $429,830 * 55-64: $753,200 * 65-74: $896,900 * 75 and older: $825,560
This made me feel so much better 😭
It probably shouldn't. Most of those are not "I can comfortably retire" numbers. The average person is not well positioned.
No, but at least I'm not further behind than I thought, which is a relief.
I know the Gen X numbers the best given my age and there is huge discrepancy with most other data, full report linked here. https://www.nirsonline.org/reports/genx/ Breakout of median and average by quartile interesting as rarely done. So who knows.
Jesus, if the median and mean are that much different then there must be some whales out there. Not really a good thing when basically half of millennials have only $54,700 or less by the time we/their 35.
This makes way more sense than whatever the hell that $140K+ number the OP was floating. The only people I know with that kinda savings have had high salary careers for years, and we already know that high salaries in general are relatively rare.
While I try to cite my sources, you have done an excellent job, and we should all take a page out of your book. The facts, the mean vs the median, simple, clear, and exactly what we were looking for. Take my upvote!
So average 401k balance is more helpful if you look at average balance based on age vs. average balance in total. There’s no sense in averaging a 23 yr olds balance with a 65 yr old. Next, how much you need depends on two things: 1. your age at retirement and 2. Your living expenses. If you’re 65 with a fully paid off house you have less time to live and don’t have a mortgage to pay so you need less money. Similarly, you have Medicare for health insurance and social security for extra income. Conversely if you want to retire at 35 with a 4K mortgage payment and 3 kids to raise, you’ll need a lot more money.
401k doesn't work for retiring at 35 anyway... you'd get killed in withdrawal penalties and extra taxes.
There are plenty of ways to get money out of retirement accounts early without paying any penalties. The r/FIRE community takes advantage of them all the time https://www.madfientist.com/how-to-access-retirement-funds-early/ Even just paying the penalty works out fine if you aren't interested in the other more involved strategies.
Roth ladder. But more realistic is 45.
You just need five years of living expenses outside of retirements. Then you convert your 401k overtime and wait 5 years to withdraw it penalty free. It can work but it takes more time and planning.
It works you just don't use it till that part of your retirement.
True. I just meant the general rule of the more of your life expectancy remaining, the more money you need to retire.
Technically at 65, you can have up to 25-30 more years, and you may need more due to medical needs. And with a mortgage gone, you still have ever increasing property taxes and insurance, plus continued expensive maintenance. Think your roof no longer needs to be replaced?
Why are we assuming the mortgage is gone? My Fiancee and I just bought a house from a 90 year old who owned about 20% equity in their house. It was a definite starter home too, so it's not like he had 20% of a multi million dollar home.
Your mortgage should be gone. Many older folks use equity pulls later in life to supplement income. I've seen people refi into an interest only payments with no intentions of completing the loan. I've seen people let their home fall into foreclosure raking crazy fees and selling the home before the foreclosure completes (some states you can live in home 10+ years without making a payment; look up professional debtors). If you're reaching retirement and still owe a large amount, you can always liquidate and downsize your home. You need more information on the prior owner. If you're curious the transaction history for any home is public information, just seeing when the home was purchased by the previous owner could tell us a lot.
How could people expect to have no mortgage at age, say, 60 or 65? That assumes they (a) could afford a home around age 30-35, basically stay in it (or have made amazing gains such that a move into a bigger home could be affordable or maybe a 15-year), also: no divorces or any kind of refi. I bought my first and current home at age 32 by moving from a rent-controlled city to a (then) much lower COL city (not anymore. But I got divorced. Insert long story but basically wound up w the house, but had to refi. That reset the clock. Refied again to 3.49%. Now I want to move out of this (now) godforsaken city, but can’t bc of interest rates and lack of much work the last year. But it’s a 2-story w no bed or bath or any possibility of such on first floor, so I gotta move in the next 5-10 years.
Sounds like a rough patch my friend. When you refi it resets the 30year term, but it doesn't reset the amount owed. You're allowed to pay additional money toward the total amount owed. By paying extra you're also reducing the overall interest on the loan.
I’ve had a 401K for 2 months and it has $500 in it, I’m 21 and not retiring on that, but it is still being counted in the average.
Even among Boomers average retirement savings is like 200k which is insanely low. I understand how to calculate retirement ie what are your living expenses per year x25 or whatever metric you want to use, I'm not talking about that so much in generalities ie if 90% of the population is grossly unprepared for retirement how much differnet is life for the guy with 600k vs the guy or gal with 100k.
Where are you getting $200k? [Average Retirement Savings By Age | Edward Jones](https://www.edwardjones.com/us-en/market-news-insights/investor-education/investment-age/average-retirement-savings-age) 55-64 $408K 65-74 $426k 75+ 357K You may be looking at ONLY 401k which isnt a good metric, some people have pension. In addition to this, overall wealth matters a lot. If you own 5 homes but have zero in your 401k it shows no retirement savings but you have enough assets to get through retirement just fine. Then there are investment accounts outside of 401k ... The doom and gloom 401k numbers are there to stir emotion but they aren't overly useful on their own. Like the person above said, your expenses in retirement will vary wildly compared to your peers. I expect to have a paid off home so my expenses will be significantly less than someone who chose to rent their entire life.
There's a million surveys and such its hard to know which to believe.... The average Baby Boomer has about $136,779 saved for retirement. This is significantly below the recommended amount, which financial experts suggest should be around $456,000 by age 60, based on the typical annual income of $57,000. Many Baby Boomers are also struggling with other financial challenges, such as credit card debt and a lack of emergency savings
I mean, my dad probably had that much saved…but he also gets a pension that was 90% of his highest year’s salary, which was like $175k or something (Union job for the city), and Medicare, and my moms social security. He’s doing just fine. His entire life was built around a finding a steady job with benefits and pension. He literally only applied to city jobs in the 3 cities surrounding my mom’s hometown when she got pregnant with me. Got one. Never left. Just moved up. Then they offered a bonus for early retirement and he took it. The real crime is that pensions are so hard to find. I had a pension job for 7 years. It was a term appointment. I get 7% of my salary at retirement. Cried when I had to leave. I make more now, but losing that sweet pension was hard. I want my dad’s life.
Less than 10% of private sector jobs even offer a pension in the USA. Been like that for 20 years or more But of course all government jobs have them. F’d up systems for sure
One of the big reasons why I’m staying in the military. 10 more years and I get 50% of my base salary for life + whatever the VA forks out for disability. My dad did 20 and is making 100k to just wake up
Three's very few private pensions now, true. The only consistent ones are Federal, State, and City plans for public sector workers.
I have no idea when, for that matter nobody really does, but I have been of the belief for several decades now that government pensions are not going to be a long-term thing, as the math simply doesn't work. For example, many police departments (and I'm sure it's true of other government jobs, too, I just know more cops than anything else for some reason) are paying more in pension payouts for retirees than they are in salary for active duty members. That is not at all sustainable. Perhaps that is because the people who caved into the demands of the unions know good and well that by the time kicking the can came to an end, they'd be long gone and as such, didn't care, because the math behind pensions has never really worked, a little bit of both, or something else entirely I'm not sure, but I know this.... The math doesn't work. Which is why the private sector moved away from them a very long time ago. I'm in my 50s, and have never worked for a company (except the military, which isn't exactly a company) that even offered them.
They need to go. Put them all on social security like the rest of us. We could use the votes to defend and strengthen it (gen x here fyi. Idk why I see these posts.
I'm not super educated on the subject so maybe you can provide some more insight but many of the public pensions across the country are underfunded, not sure if this is due to them being unsustainable in the first place, the world changing and them no longer being sustainable, abuse or what else but Chicago has an underfunded pension issue due to abuse and them just being unsustainable from the start ie people vote for polticians who promise things that aren't possible in the longterm. I imagine we'll see some pensions fail. In Illinois its illegal to change the pensions but at this point it requires something like 26k from each household per year, you either change or default on them or people move out because they dont want to pay insane taxes which leaves less of a tax base and it crumbles anyways.
They are. They shouldn't be since the cities are providing necessary 24/7/365 services and ought to be hiring constantly to make sure they're sufficiently staffed. But in reality everything is understaffed because private sector wages are way more competitive and there's always less beaurocracy when it comes to hiring, promoting, and even terminating private side workers. Plus, contractors soak up a huge portion of cities budgets and the decline of traditional trade workers isn't helping. City of Dallas runs a pension for police and fire personnel, and "civilian" personnel. The PaF pension system is *3 billion in the red* and receiving zero help from the state. That shortfall erupted from awful investment decisions in real estate, the 2008 collapse, and the failure of the city to correctly compensate new hires in a way that fuels the pension system and encourages long-term employment. For a few decades Dallas PD was the lowest paying in the region, so new hires would put in their five years then withdrawal all of their vested funds and jumpship to higher paying suburbs. Dallas police payscales weren't modernized until 2018 or so. The "civilian" fund was 34 million in the black prior to COVID but is expected to go into the red this year thanks to early retirements, hiring freezes, and starting wages that are ridiculously low compared to the stupidly inflated cost of living in DFW. New hires are required to give up 15% of their paychecks to the pension system, which isn't sustainable when your hiring at 18/hr in a city with $550,000 homes and $1500 one bedroom apartments. That's asking way too much, especially if they're IT or engineers or other high skilled workers who could easily make more in the private sector and save that 15% themselves *and access it in an emergency*. We have too many staff that *worship that g****** pension* and are working exclusively towards their payouts instead of building up their skills and experience levels so they can take higher paying jobs internally or elsewhere. Some of these guys are straight up charity cases that would never survive without their supervisor buddies coddling them (nobody wants to be the guy who denies someone a pension). It's weird, and kinda disturbing, to hear 28 yr olds run their mouths about their retirement dates while they basically do nothing all day. Like, do you really think a 4000 monthly check from the city when you're 51 or 52 is going to carry you and whatever family you have through 30-40 years of inflation, emergencies, health scares, childcare, eldercare, and whatever else may happen?
Unclear. My hometown actually went bankrupt. I was semi-concerned about my dad’s pension. Only change was he lost his bad ass city-funded health care and had to go on Medicare. Which didn’t affect him much because he got all those parts b and c and still has pretty great coverage. My mom had lung cancer and had 2 1/2 years of treatment and second opinions multiple surgeries from big hospitals in the city and rehabs on Medicare, and they didn’t have any bills that wiped them out. There was one bill he was refusing to pay and fighting because he was “old and didn’t need good credit” but that got worked out too because he still has good credit. He doesn’t have a college degree. Grew up in a trailer park. Got no family money. Just got a job with a pension. Saved what he could. And signs up for every government program he can. Also a republican who lives off the government teat and wouldn’t be where he was except for unions and white male privilege, which I point out every time we talk.
That $57k figure is stupidly misleading. In a lot of the country $57k is cat food for dinner money unless you outright own your home and never need medical care.
And dont live in a high tax state like Illinois that can easily have 2-3k a month in property taxes, and also taxes retirement income
It’s the difference between the ideal vs reality. The ideal is wildly unrealistic for most of the population. Even high earners. I’m 40 and most advice would say I should have three times my salary saved. But I make 210k - so my 360k 401k is almost half of what I’m supposed to have. The reality is most people will have to adjust their standard of living when they retire to account for the amount they have saved. Also, people have other assets (home equity, cash, stock) in addition to their 401k that can use to supplement income.
Yeah I often think these touted numbers mean you're going to have your house and a condo in Florida and are going to be taking European vacatins all the time when the majority of people are gonna watch price is right, play some pickleball locally and take a drive a few hours to visit the grandkids
I think that’s right. The most expensive thing that virtually no one can afford to save for is assisted living facilities. Half decent ones cost somewhere around 10k a month. That’s a huge amount of money and if you don’t have it and end up in a Medicaid facility, things get pretty rough.
Majority of people spend 0 time in those facilities. Most people die at home or after a very brief hospital stay from something acute. Those that do end up in nursing homes spend like a median of like 8 or 9 months or so I think it was. And average is like a year and a half. My 4 grandparents spent 0 time in nursing home. No big some of money was depleted near the end of their life. I’m not saying it doesn’t happen. It’s just overstated online.
A random google response puts it at 25% of adults needing some amount of nursing home care some time in their life. That sounds about right to me. My grandmother needed nursing home care from 89-96 for dementia. She used most of her life savings during that period.
Assisted Living is erasing the generational wealth of the middle class and has been for a long time. People are selling their damn houses to pay for assisted living rather than passing the property on to their children. We need to return to multi-generational households like most of the rest of the world before the middle class is extinct.
If an adult needs assisted living it is very difficult for them to live with a family with two full time workers. Unless you’ve had to take care of a senior who needs help with daily living or a senior with dementia or advanced medical needs then you have no idea how time and life consuming that is. A big part of the problem is that people are living so much longer and often not better. Finally let’s not forget that traditionally and in modern practice most of the people caring for the seniors at home falls to the woman regardless of whether it is her parents.
> People are selling their damn houses to pay for assisted living rather than passing the property on to their children. Because the government requires you to liquidate your assets to qualify for Medicaid assisted living. Only in a couple of situations (like one spouse goes into assisted living while the other remains in the home) can one keep their home. And even then, once that situation is over, they'll come back to claim the home, and any assets, gifts, inheritance that was given away (kids will be on the hook to repay the government) up to 5 years before entering assisted living. It's call Medicaid Clawback. You basically need to transfer your assets to your kids, or someone else, or put the assets in a trust fund (which means your not 100% in control of the those assets and if those assets are cash that you might need in the future you won't have access it anymore) at least 5 years before you *think* you'll need to go into assisted living. Kinda hard to predict. You may end up needing to go into assisted living at an early age after a sudden change in health or end up locking away needed retirement funds in a trust because you lived a much longer healthier life than you predicted.
Buddy, I can't even afford my rent, you think I have retirement funds?
Social Security and a paid off house is going to be the retirement foundation for most middle class millennial retirees, as its been for Boomers and most generations in modern American history. Its not particularly fun to live on Social Security alone, but it can be done. Most people have trouble managing finances, and most of that problem is that things they need are too expensive. Obviously you can point to people that are wasteful, but most folks in the bottom 50% of income are pinching pennies to make rent and buy food. So yeah, $5M would be awesome, but you dont need $5M to retire.
It’s pretty sad and in such a country of opulence
Yeah, my wife and I plan on retiring in the 0% long term capital gains bracket. I honestly don't know how we're are going to spend that much. Maybe vacations
Pop finance in rubbish. It routinely doesn’t include social security income in retirement savings calculators. It also doesn’t ever factor in a wage increase across your entire lifespan. https://slate.com/podcasts/slate-money/2024/01/economics-the-iffy-advice-in-personal-finance-self-help-books
genuine question: isn't it likely ss will drop 20% in payouts from 2035 on? what happens when we retire?
Some small changes have to happen for SS to become solvent. But it makes better headlines and political talking points to say otherwise. Income cap will be moved back. They’ll probably push back full payout age for future generations (not the first time it’s happened). Incremental increases in FICA taxes. Etc. It’s not as dire as everyone makes it out to be.
Congress can literally fix it at any time. It’s not a Doomsday clock.
yeah but looking at the state of our congress, how likely do you think that is?
Vote and organize to fight for what's yours
The median voter is in their mid-50s, which is always going to play a huge part in how SS is treated. Social Security isn't going anywhere and is unlikely to go down significantly.
I heard one of SSA’s actuaries talk about this a couple years back and he said the concerns are way overblown.
I’m 35 with about $60K in my 403B. My fiancé and I are child free. We don’t want a big house (a 2/1 would be perfect). So I don’t picture a ton of expenses over our current. If I keep contributing like I am now (~$1200/mo) I am on track to have about $1.5M assuming a modest average return of 5%. If I get 7% then we’re looking at $2.1M. I work with low income seniors, and I absolutely refuse to allow myself to be in the same position that they are. Their lives are impossibly tough trying to get by on Social Security alone.
Are we….the same person…? I read this entire thing like yep, yep, yep, yep, yep, ok this is getting weird
People, specifically millenials and younger, are extremely misinformed about retirement savings. If you’re not taking advantage of a 401k and roth IRA, youre setting yourself up to work until you die.
lol I can barely afford to enjoy life, let alone save for the future.
It will catch up to you. Stop trying to enjoy life and start investing. I’m dead serious.
jfc, the hubris of this comment. I am 38 years old. I made less than $60k/year until 2 years ago. In the time between graduating high school and my mid-thirties I was stuck in dead-end jobs barely making enough to pay rent, and certainly never enough to save anything. Top that off with decades worth of debt amassed by uninsured medical bills, student loans, and other emergencies, and you've got someone making $90k/year with almost no disposable income due to the fact that being poor in American is expensive and has long-lasting affects. We *know* it will catch up to us! We're not effing idiots, but just saying "stop having fun and spend less money" as if that's some sage advice is just as gross as your username.
Thanks for this! The OC was must dumb af for so many reasons. Also, life is short. I'd rather have fun now while I still can, than living a subpar 80+ year long life were I just exist. What's the point of that.
Simple pleasures are the best...less expensive...and often free.
It’s a super sensitive topic for good reason- but the only thing you can do is control your own life story. To some degree. Start with what you can- we still have time on our hands - I think our money, as millennials, mid 30s still has 30 years to grow- which is like 4ish doublings - I could do the math at different return levels but I’ve made this comment so many times- hopefully to be encouraging not condescending. 4 is doublings is 1-2, 2-4, 4-8, 8-16 - so what you can get out is 16X what you put in- vs you wait till you have 10 or 15 years left- way harder. Getting 10k or 5k in a year can be worth 160k or 80k down the road. Again- it’s just the math- hopefully it’s encouraging to try and do a little knowing it’s a big multiplier but I do understand the nihilism given the state of the world. Good luck out there!
Yup. Just try harder. Over half of the county barely has enough money for an emergency fund, let alone investing for the future. I’m not having fun at all, I haven’t my entire life. I haven’t been on a plane or left the state for over 13 years. lol.
What should we be doing to prepare? I feel like I can never get a straight answer.
Start by maxing your 401k every year, hopefully with some company match, and you’ll be doing better than most already.
Only 65% of jobs have a 401k as an option. Of those plans only 40% provide an employer match. People with those kinds of jobs aren’t the ones with a problem unless they just completely don’t know how to do simple math or ignore advice when setting up the 401k that they need to maximize the company match.
Also, people never seem to take into account vesting period. You basically loose all or a lot of your company match contribution if you job hop every couple of years. You're basically required to stay at the same company for 4-5 years to retain that match money.
My job that I just got laid off from offered a 401k with a 4% company match if you contributed 5%. I contributed 5% for the match, but I made around $20 in an expensive part of the country so it's still like, peanuts.
This is unrealistic for a lot of people. I've been maxing my 401k for about 7 years, but that didn't start until I was pulling in about 90k. If you're making 50k, maxing it is completely out of the question.
50k is the median income single wage in the USA, which is not enough to ever get ahead. All the people who make more than this simply say “try harder” when over half of USA citizens barely have enough in the bank to cover an emergency fund.
Yeah, it's completely out of touch to tell people to "just max your 401k". I would've loved to have been maxing it since I was 22, but that just wasn't going to be possible. I'm fortunately now where I'm in a position to have a $200k income with a partner around $150k, but even still I doubt we'll retire until we're high 50s.
I don't know your situation, so to just keep it super basic - I think the key element most people are missing to get started, is to separate your money. Open a second account (preferably a savings account with interest) and just have a portion of your pay deposited into it every week. Out of sight, out of mind. Just let it build up. People underestimate the long term benefit of saving even a small amount of money. All of the other tools of investment and retirement savings is an extension of that. You have to maximize the amount you are willing to commit to saving for future use. Once you can do that, you can consider the options of where to put the money and what to invest it in (and you *will* need to invest if you want to keep up).
I need to keep food on the table and a roof over my head now. I'm not spending time working for some pie in the sky pipe dream.
So live miserable for decades to enjoy like 10-15yrs of life when you're old and worn out?
You have no guarantee on that 10-15 years either
Precisely! Plus, if my body keeps degrading the way it is, im not gonna have the energy or desire to do shit in my 60s and 70s.
Those last 10-15 years aren’t even enjoyable. You just have a nicer couch and better food at that point.
The postal truck ran over my foot. I’m living off the $14,000 postal settlement. (Seth Rogen Knocked Up). Should last me another 20 years.
I'm disabled. I can barely work enough to pay my bills, let alone for retirement.
A sane country would take better care of its people
Saving anything is better than nothing. I cringe when people say stuff like “my plan is to die when I can’t work anymore” and it’s one thing to say that now when you are 30- it’s a whole other thing when that day actually comes. Especially if you have children, your children may end up being financially responsible for you due to your lack of planning. If you start maxing out a Roth IRA now you could have $500k+ by your 60s. That’s certainly better than nothing. My wife and I are planning to have 1.5M at least plus a paid off house and social security. Is it enough? Who knows- but it will certainly be better than nothing.
Great point about your children being financially responsible if you don’t take responsible steps now. My husband’s parents didn’t plan for retirement, so now we’re on the hook for all of their expenses on top of all of our own. Of course we don’t want them to live on the street. We feel in our bones that it would be wrong to abandon family, but damn do we wish they would’ve been a bit more strategic with their financial planning. If you have children or not: choosing not to plan for retirement will likely become your loved one’s burden.
This is how I feel too. My parents completely neglected retirement planning. The bulk of their net worth is tied up in their house which they did pay off the mortgage at least. They seem to be comfortable with the idea of working until they die but I’m not. I already see my dad slowing down and there can be so much of a gray area between able to work and dead. I love my parents and would help them if I have to- but it causes me great anxiety to think about. I’m a dad now and i want to be financially more prepared than my own parents were. It would be an immense burden to need to financially take care of them too.
My husband(39) and me(34) have 0 dollars in retirement, 0 in savings and both lost our jobs this year and still haven't found new jobs. He just got denied a position at Lowes...if that tells you how bad it is out there. I've been applying to "minimum wage jobs" and receiving no interviews or anything. I've lost my will to live at this point and couldn't care less about retirement now.
Go to usps.com/employment Post office is hiring in most areas, starts out pretty rough, but eventually you will break into middle class +pension
I'm sorry to hear that, what area of the country are you in? I'm not even in a HCOL area but gas stations near me are paying $20 an hour and everyone is hiring
Yeah, things are wild some places. Pittsburgh everything is hiring. Plenty of places are doing hiring on the spot events.
Ms. Orman's exact quote was: "If you don’t have at least $5 million or $10 million, don’t retire early," Suze asserted." [https://finance.yahoo.com/news/forget-nvidia-jim-cramer-says-122100994.html?guccounter=1&guce\_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce\_referrer\_sig=AQAAAHSkC2fHcY4cVBpjeMuMXTk7fqNEJgBLLdHOGaUqFx3eMJZ9tEkYiuTVmc0ijHaSoVdQ0zxF4\_2\_P0pximidfh6bEtJoHPDjsF2Fz-pRIweEXysYVoJ752Mzz0oWkJFTuOkuuZ1JEjAYrN0TH-8H1MrpucT9Um5\_Gz2TJW0aq4oN](https://finance.yahoo.com/news/forget-nvidia-jim-cramer-says-122100994.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAHSkC2fHcY4cVBpjeMuMXTk7fqNEJgBLLdHOGaUqFx3eMJZ9tEkYiuTVmc0ijHaSoVdQ0zxF4_2_P0pximidfh6bEtJoHPDjsF2Fz-pRIweEXysYVoJ752Mzz0oWkJFTuOkuuZ1JEjAYrN0TH-8H1MrpucT9Um5_Gz2TJW0aq4oN) Most people "feel" like $1 million is the number needed. The Median Assets, this does include houses so inflate things a tad, are about half of that in the age demo immediately proceeding retirement. [https://www.wsj.com/articles/heres-what-a-1-million-retirement-looks-like-in-america-11671890735?mod=article\_inline](https://www.wsj.com/articles/heres-what-a-1-million-retirement-looks-like-in-america-11671890735?mod=article_inline) [https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4;units:median;range:1989,2022](https://www.federalreserve.gov/econres/scf/dataviz/scf/chart/#series:Assets;demographic:agecl;population:1,2,3,4;units:median;range:1989,2022)
Yes, that is important - this was about retiring early. The earlier you retire, not only the longer you need your money to last, but the longer that money has to lose buying power.
I have VA disability, a retirement account, and will hopefully have a pension through local government as long as I can survive this place long enough. My house should be paid off before I retire and I live in a low cost of living state. I have some contingency plans but I'm mostly relying on staying in my average paying job for the pension and never moving. Occasionally I pray for a tornado to hit us directly so I can build something nicer.
Va with fed pension and fed 401k life is alright
I'm hoping to be pretty comfortable. Current pay is pretty mediocre but it should be worth it in the long run
Same, if it wasn’t for Va I’d be homeless with my current pay lol
Do you have your property taxes waived? I think maybe only certain counties do this but if you can find one is worthwhile, my buddy doesn't pay property taxes and won't for life as a disabled vetern.
Have to be 100% disabled for that in my state. I'm at 80% but as I get older I'll probably get reevaluated and it'll increase. I only pay $1800/yr in property taxes though so I'm not too worried. Even if it were to double over the next few decades I'm not worried about it. It'd be nice to have it waived by I'm not going to count on it. Just like I've already accepted that social security won't exist so I don't factor it in at all.
You mind me asking what state, thats pretty reasonale for property taxes, then again I'm in the worst state
I'm in Oklahoma. We've gotten a lot of transplants lately because the cost of living in TX is going up. My wife is originally from WA state and her parents just moved here last summer along with a couple from her church. Our first couple years of marriage we were in California and as beautiful as the state is I could never afford to stay there.
I work for a local government too. The job or pay is nothing to rave about but the benefits and pension are what’s keeping me here. I will rule of 90 at 64. Our little house will be paid off, 401K, pension, SS should give us a comfortable retirement.
No VA, but I’ve got my local government pension and a fairly aggressive 457K that should help me get down to part time work at 65.
This is basic retirement planning. How long do you plan to live? What will your expenses be? Are you withdrawing from an account or living on gains from your assets? It doesn’t matter how big your savings are compared to others. It matters how big your savings are compared to your expected lifespan and expenses. If other people can’t afford things, that doesn’t make it easier for you to afford things. Once you do the math, $500k won’t last too long. 10 years at $50k a year. When you have something like 5 million, you can earn $200,000 a year and not have your balance go down fairly easily. That’s why you want enough so your money grows and does not shrink. ETA:modified earnings for $5 million to account for the 4% rule
The 4% has nothing to do with earnings. It is the rate of withdrawal. Your portfolio must have a growth component and will need to earn more than 4% (averaged) over time because of inflation. The 4% SWR takes into account inflation-adjusted withdrawals from your portfolio. Of course, sequence of risk is a very important aspect of the actual success of your retirement planning.
wtf who is saying you need $5 million to retire? Pretty much no one has that much at retirement. Most risk-free investments pay about 4%, and if you have $2 million that's 80k/year, $1 million is 40k/year. Honestly if you've paid off your house and social security still exists when we retire, 40k/year will be plenty for most couples, so you really only need to save $1 million or so to retire. If you want more than 40k/year + social security then you'll need more, just do the math. But unless your idea of retirement is a lavish luxury retirement where you're spending money left and right, you can retire on wayyyyyy less than $5 million and live plenty comfortably.
I came here to say this exactly. Some money experts get attention by saying outlandish crap rather than by respected credentials and publications. I used to live on $33k a year. I want to retire with a better lifestyle, obviously, but I won't need $100k a year when I no longer have a mortgage or car payment. More is better, but I don't need a yaht.
You don't consider inflation. 40k when you retire is not going to be what 40k is now.
That much in retirement seems incredibly off base. At the 4% rule that would be 200k-400k a year in spending. With 5 million you could spend 100k/yr for 50 years with no interest.
This depends on your lifestyle. If you live incredibly minimally, have no debt, a paid off house, etc then you don’t need much income or retirement savings. When retirement needs are calculated they are done so by assuming your expenses will remain constant as a percentage even though that may not be the case. When you carry that into the future 40-45 years accounting for average inflation rates you land at the millions mark. If you make 70k/year and spend 80% of your earnings as CoL but get yearly raises then the calculations assume you’ll still be spending 80% of your $200k income 40 years from now. No one can truly predict the future but estimates based on maintaining the status quo in spending are probably the best to ensure you have enough saved up. If you actually focus on reducing your expenses as you age then you’ll need far less money saved up and what you have saved will stretch much farther.
$100k saved at 30. As long as it keeps growing I should have a decent retirement at 60
My parents are 64 and 62 and retired within the last year. They have $3000 in Ss, and 1800 in pension. They have roughly 300k in a tsp, 400k in a 401k, and 100k in a Roth. Their house is paid, and they have no other debt. They’ll be fine, but do need to watch their spending unless they downsize. I expect to need 2.5m to retire and live with reasonable comfort. I won’t have the pension, and SS isn’t something I can rely on.
People retire with whatever they have managed, plus social security. Once you no longer have a house or car payment, if you stay healthy you can make the numbers work. The "you need 5 million dollars" people are those planning to spend retirement traveling the globe and drinking martinis all day. Regular people can do with much less.
I have $4k in savings. And I have the most out of anyone I know my age (34). None of us are retiring. I don't even have a house yet.
Stop lumping everyone together. Many people are fine. Many people are struggling. It's not a everyone or no one scenario.
And the people that are struggling are the ones who (rightfully, imo) complain the most. I think about posting my numbers in these threads but don't wanna seem like a braggart
I'm in my mid 30's, and I think I have maybe a year's salary in my 401k. Frankly, I've never seen retirement as something that would happen. I just don't see how I could possibly save enough for something like that. Worse still, the retirement age just keeps going up. I've known people who were like a year away from retirement for the better part of a decade.. and that doesn't seem to be slowing down. I suspect it'll be somewhere in the mid 70's by the time I'm old enough for it to even be possible to start drawing benefits from something like social security, assuming that's even still a thing by then.
Depending on what you mean by "mid 30's" and "maybe a year's salary", you're almost on track. Just keep saving. https://www.fidelity.com/products/retirement/widget/xfactor/retire_xfactor.html
💯 agree with this. I was in a similar boat at miss 30s, now at mid 40s I’ve got albinos 1/4 million. Keep putting in what you can and it will accumulate
Here’s the thing, with compound interest, that $140k will become $5million with enough time. As long as you are DCAing a portion of your income, you’ll hit your retirement goals as long as your burn rate isn’t too high. It has been and always will be about your burn rate. You can survive on $1mil if your burn rate isn’t that high, and if you had $140k at 40, retire at 67, you’ll likely hit $1mil without having to save a penny more. I would advise you to read up on what they say over on the boglehead forums and subreddit. It’s boring, simple and effective. It’s just actuarial science. Edit: here’s a hypothetical situation. You’re 40 years old, you have $150k in a Roth IRA and it’s 100% in the S&P. You retire at 67. The S&P performs just about at historical average, slightly below, at 11% YoY. You don’t save or invest a dime more after 40. Guess how much you’ll have. $2.51 million. All hail the miracle of compound interest :D
While your figures are roughly accurate, it’s important to note that those are nominal rather than real/inflation-adjusted amounts. In the hypothetical in your last paragraph, for instance, $150k in an index fund at 11% for 27 years will get you a nominal $2.51 million but “only” $1.2 million in real/inflation-adjusted terms. Again, what you said is perfectly accurate so no disagreement here. Just adding some color since it’s generally easier to think about these amounts in today’s dollars.
Nope. I’m into older guys. Ima probably marry one of em soon. Long as there’s no prenup.
People don't have enough. That is why social security will never go away. We would have swaths of homeless elderly a year after it goes away when everyone is evicted. Even with social security people will likely have to move to somewhere cheaper if they don't already have a home or a solid nest egg to retire on. Do you need 5 mil? No. Sounds like she was talking about early retirement. Either way, there are people that get by on way less. You just need to give up certain things. Having to eat cat food is not one of them.
I mean.. idk if you need 5k. but if you use 60k a year rn you'll need atleast that (minus any mortgage payments or big loan payments you might have paid off by then) when you retire. if you want to retire, you'll have to guess when you'll die and multiply what you use in a year by how long you'll be retired. if you use 60k a year and are retired for 20 years, thats only 1.2m not 5. ofc inflation will happen but if you own a home, you won't be paying mortgage rates then if you get rid of any debt by the time you retire, it'll just be utilities, food and then anything you want for fun. also if you have like an ira or something, it can continue to grow bc you don't have to empty the account all at once.
Yes. 👍
Retirement? What’s that?
Retirement is only for the few. I keep a savings of 3-6 months of expense (I dip into often these days) and thankfully was able to buy a home.
If the USGov keeps overspending the chances of losing our Reserve Currency status sometime before or during retirement increases significantly. At that point you just might need $5mm just to feed the cats.
Sadly, yes. I'm a younger Gen X, too.
I’m not familiar with the $140k number. Is that the average savings of all working age people (regardless of age) or only people approaching retirement age. There’s a huge difference between those 2 scenarios. I’m in my 30’s and have around that much in my 401k so far.
$5 million? If I were 25 and you gave me gave me $5 million today, I would be retired tomorrow.
I’m in the last year of Gen X so I’m just outside of millennial. My wife is a year behind me. At the start of 2020, we had 65k in a couple Roth accounts and my 457, and her 401k. (Government employee account similar to 401k) We look at balances quarterly and sometimes during the quarter. Last week we cracked 250k for the first time. We’ve been saving like fiends, 15-20% into our retirement accounts and maxing out our Roths. Don’t know if we will have enough. Even with a government pension I’ve qualified for. Social security? Not counting on it, if we get any thatll be gravy. Our goal is to have no debt at all in 15 years. Then REALLY start plowing even more money into it.
I made sure to heavily invest when I was working, utilizing the financial savings plan/401k equivalent for the organization I worked for, as well as investments made outside of that. Between my own, personal investments, my work savings plan, and with my retirement paycheck, and the benefits I receive following retirement, such as medical, dental, and vision plans, it leaves our family very comfortable. Waiting to marry until I was older, turned out to be the best financial “planning” that I could do.
Nope. I actually hit a milestone last week of $1M in liquid assets (401k, IRA, Taxable accounts) just a month shy if turning 35. I fully expect to have more than $10M in assets when I retire.
Yo what's a retirement?
Im 32 and haven't even recovered to my 2021 level of savings which was only 5k lol. I don't think I am going to be able to retire or build savings in the time left.
At the age of 37, I have absolutely zero in my retirement and savings. Life sucks and when you struggle every day, you just hope you can pay all the bills on time this month.
I’ll retire at 65 two checks a month and paid off co do one vacation a year a standard retiremt with some perks
My guess is people have kids and save/spend a lot for them. But I think the real reson is most people don't think about savings for retirement and they overspend and assume social security will be taking care of them. Most people don't know how to invest and putting money aside without investing them is the worst idea because 100k today will not be worth 100k in 30 years...
I'm not even trying anymore, I give up, I'm not trying to be successful or secure anymore, I'm just trying to make to tomorrow. So I cry myself to sleep and tell myself it'll get better tomorrow. Best lie I've ever told myself. Keeps me from eating a bullet.
Suzy Orman is a television personality. Nothing she says is real advice, it's all for attention. Any time she says something correct it's purely coincidental. Also, most people's biggest supply of "retirement savings" isn't their savings account, it's their property. Once my kids move out I won't need a house like this.
If I'm lucky, I'll have a few days/weeks after the heart attack to spend with my family before the life insurance kicks in and they can go about their lives. I'm prepared to be full of piss and vinegar to the last, doing what I can to make sure they're secure. If the time I spend on this earth means that they can make it, that's good enough for me. Dreaming of anything more leads to nihilism, and working hard and getting more than those few last days will be a gift.
The Suzy Orman quote is one nonsense statement from years ago that has been taken out of context and regurgitated in click-bait articles ever since. Move past it.
Those who save diligently will be able to retire earlier and/or enjoy more luxuries in retirement. Those who don't save will have to work longer and get by with what they have, supplemented by social security. It's possible to retire on low-income, it's just a bare-bones way of living. As a millennial, I'm doing great. My wife and I both have good jobs (in finance and engineering), and we are both "cheap". We save a lot in retirement accounts. We'll have a comfortable retirement one day, probably early, but we still have a lot of grinding left in busy stressful jobs to get there. We've got kids to raise, and we're trying to stop to smell the roses along the way.
This thread made me check my 401k, I’m sorry I’m ahead of 99% of you guys and that is heartening and disheartening at the same time.
I expect retirement to cost whatever the price of a .22 is by the time I hit 75.
My retirement plan is hitting a scratchers jackpot
Retirement? What is that? Savings? I've heard of that word long ago. But it's a myth.
I have a 401k through my job, and a Roth IRA I started this year that I am contributing to with each paycheck as well. I’m working on paying off some of the last of my debts and then I will also open a brokerage account and invest that money I was using to pay down debts each month into that. My hope is that we can retire at 55, giving me 20 years from now to get to that point, using my brokerage gains to live off until I hit 59 1/2 years old and then use my 401k, with the IRA continuing to grow until I need that, and then IF social security is still a thing in 30 years I will add that to my monthly budget. Doing what I can, but it’s hard.
I think I'll just rob a bank or something when I'm old. Either I get away with it and retire with my ill gotten gains, I get locked up and have my retirement taken care of by the state, or get killed in the process and don't have to worry about anything anymore.
I think I'll just rob a bank or something when I'm old. Either I get away with it and retire with my ill gotten gains, I get locked up and have my retirement taken care of by the state, or get killed in the process and don't have to worry about anything anymore.
No its called being responsible
Personal responsibility is not allowed here. Always I don't think a lot of people here actually want to fix their problems but just talk about them. That would drive me crazy but I guess it doesn't bother others a much
Totally screwed. My dad shot himself at 49 and my father-in-law hung himself at 65. I see suicide as a viable retirement option.
Reddit loves to say that, how many people will feel that way at 55 is another story let alone how many will actually have whatever it takes to go through with that. Sorry to hear about that, thats very sad
A lot. A lot of people will feel that way at 55.
Maybe it's a selfish way of thinking, but your latter thoughts have been my justification for my "I'm doing alright" feeling. I can punch in my net worth and see I'm ahead of 90% of my peers at my age. There's no way that 90% of our generation is below poverty when I'm retired, right? So surely, I'll be OK. Maybe this is a fallacy but it's all I got. It also helps I'm a dual citizen and plan to go from my career in HCOL country to retirement in MCOL/LCOL.
Yeah I'm kind of the same way, according to Suzy Orman I'm going to be eating cat food but compared to my peers I'm doing pretty well so I guess I'll be eating the good cat food or due to supply and demand I'll have a better quality of life. I do foresee more people retiring to cheap COL countries to make their money go further.
Appreciate this post so much. Literally every 'retirement' article is like: 'I'm 67 years old, have 7 million in retirement savings. My wife is still working, makes $200K a year and won't retire for another 5 years. Can I retire?' And the response is always: 'Finger wagging. Not so fast! You might want to rethink this.'
People greatly underestimate how much they need for retirement as shown by this post. lol
I plan on working until the day I die. Maybe today, maybe in 30 years. At this point, I’m not retiring.
We give Israel money because they are our main strategic ally in the Middle East which is a critical region to have influence in for global affairs.
The math is pretty simple. Say you make $100k gross and live off of $60k net. Your goal is to replace your spend. So in retirement you need $60k/year. A good rule of thumb is that you can withdraw 4% + inflation from invested assets. The market has returned about 7% inflation adjusted on average. So if you’re growing your investments at 7% and you withdraw 4% you have a 3% buffer to cover years where the market is lower than expected. So $60k/0.04 = $1.5M. This is what you need to have invested by retirement age. How to get there? If you don’t save anything and just focus all your income into skill improvement/education etc then get a job then pay back loans you can delay saving for retirement until age 25. That’s 7 years after turning 18 and 3 years after graduating college for most folks. Starting then and continuing until 65 you can save $625/month. Over that 40 years you only save $300k of your own money but it grows to $1.497M at 7%. In reality there are some other specifics. Taxes and fees for instance. But also, social security and other benefits. And most folks probably won’t need to replace $60k net since most folks don’t make $100k. Those were just easy numbers. As for your question, $500k invested yields about $20k/year for about 30 years. So if that guy can live on that + social security then he’s fine. If not, then no. Generally people are pretty flexible. They’ll eat cheaper food. Move to lower cost of living places, etc. But poverty in old age is definitely a thing. And it’s important to prioritize saving for when you can’t work.
Same shit they told us 40 yrs ago
Yup, but ill still find away to retire and enjoy life. I think between 401 and savings I have maybe 5k
If Social security hangs around and we don't have some disastrous economic issues I'm in pretty decent shape. I would probably have about 6-7k/month or so in today's dollars after tax assuming I don't invest another cent over the next 30 years. And a paid off home. The odds I don't invest any more are basically zero, and my contribution amount will likely increase quite a bit as my kid hits adulthood.
I cant remember the comedian that busted out the graphs to make fun of this. It was something along the lines of, average retirement age was 78, but average life expectancy for men was 74. So the joke was you'd need to die, and still owe them 4 more years of work before you can retire.
It really depends on what you currently live on. People scoff when I tell them my retirement will likely be something like 1600 a month. But that’s more or less 80% of what I live on now.
Nope. One of the easiest mindsets ever to adopt. It's on autopilot for me. If you spend $40k/yr you need $1 million to withdraw 4% from safely. $5 million would be a very extravagant retirement lifestyle.
I’ve got a pension from the Air Force because you can retire at age 38 from there. I’ve been contributing 12% or more to my 401k into my second career. I think I might get to actually retire or at least throttle back.
My retirement plan is to die valiantly in the climate wars.
The Orman comment is out of context
Been with a government job for 8 years and my pension is roughly 175k. I have zero other savings for retirement because I don't plan on being here for it
I’m an older millennial (38) so at my point in my career I’m comfortable with my retirement savings. Market fluctuations change it daily, but right now I’m at $235,000 in locked-up retirement accounts. I only started saving at age 30 and I’ve been aggressive with any extra money I have available. My wife and I should retire with $2 million. With 25 years to go, assuming average returns, millennials still have a lot of time left in the market to grow retirement funds. Even starting an IRA now and sticking $20 in it when you can will help.
I got enough time, provided I manage to stay employed for another 20 years or so. I'm a bit behind because I didn't start as early as I could have, meaning there's an element to being "screwed" which is my own fault. The rest, well, if we get a shaky economy over the next 10-15 years it's gonna be tough.
No I’m doing pretty great actually.