Bogleheads

[waitforit]

I am currently in the midst of a milestone year in my life (yeah, that means I'm 29) and have been thinking a lot lately about goal setting and planning. I'm at the point where I've been in the workforce for >5 years and have started executing my career plan. This year has brought both our first child and also the first serious move down the career path into a mid-level position.

Anyway, I'm curious what would be considered good progress on the financial front. I can find data that suggest the medium income of 30-somethings is X, or that the average 30-yr old has Y dollars in retirement accounts... but I am hardly interested in comparing to the 'average' american.

How much in retirement savings should the 'average' Boglehead have accumulated by 30?

[Valuethinker]

[tadamsmar]

[Ron]

[bluto]

All bogleheads are above average

Bad jokes aside, I have no idea, the situations people face are too dissimilar. I would bet that the 30-something Bogleheads are much better off than the average American.

[livesoft]

I was flat broke at age 28. At age 30 I probably had $10K in retirement accounts, but my employer back then matched/contributed 15% of my salary to my 403(b). At age 30 I had no car, no house, no kids. I had to walk to work and rent an apartment.

[TheEternalVortex]

According to my lame internet research, to be 90th percentile in net worth at age 30 you need approximately $220,000. So that's at least a concrete target to compare to.

[tadamsmar]

I don't think I had any retirement savings at 30, and very little net worth.

In general, you can't really be behind in accumulation at 30 (unless you have excessive unsecured debt), but you can be ahead.

[EmergDoc]

[strcmp]

My own opinion.. Take it for what it's worth.

For a Boglehead, I'd say by age 30, you should have $500k net worth.
(Cash in savings, retirement accounts, and equity portion of your house)
And this is assuming you are not married and don't have kids yet, and don't have any unforeseen emergencies.

Since you seem to have both wife and kid.. I don't know how one would extrapolate that value to include wife/kids. And things would also change depending on if your wife was bringing in income or not.
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Learning to invest, one step at a time

[WheatThin]

[bluto]

[Mike Willis]

[DrafterMan_MN]

[Phatphoeater]

As a recent saver/investor in my mid 30s, I also wonder where I am compared to others my age. However, I think as has been mentioned above, each person's unique situation will dictate where one *should* be. Just like asset allocation decisions, progress to retirement goals will vary by individual.

I view my progress in terms of proximity to saving/investing timeline. I have a certain retirement goal and am slightly behind due to a recent home purchase that was probably a bit too much for my current income. I still have a decent chance of making my goal but I'm having to sock away over 20% of my gross and am hoping my pension will be there in 20ish years.

I also agree with EmergDoc regarding getting insured. Getting my disability/life/umbrella insurance set up is my immediate-term goal.

[rrosenkoetter]

[junior]

[GRT2BOUTDOORS]

Here's my two cents: I second "EmergDoc" - be well insured; with a kid and wife, you want to have between 5 and 10 times your income in "term" life - no bells and whistles needed here. Depending on your health, you can buy cheaply at 20 year rates or stretch for 30 year stuff.

Disability insurance - super cheap again depending on health, if you get this earlier in life, it becomes more expensive as you age. If you can get "own occupation" classification, all the better.

An emergency fund - 6 months if you working in a tenured government job, 12 months + if you're not.

Max out 401(k) if you can, grab all the "free" money that employer offers in form of a match.

Don't take on more debt than you can chew - I abhor consumer debt. Try not to borrow too much on the mortgage. No more than 28% of gross, tops. Never mind this "you'll grow into it" nonsense you hear.
Buy a house - make sure you have "umbrella insurance" - cheap piece of mind.

Don't buy a depreciating asset, ie. car, furniture with a loan - buy used, these days they're pretty reliable.

Don't assign a specific dollar figure at your age - you'll be liable to drive yourself nuts if the market doesn't behave the way you thought or some of life gets in the way. Good Luck!

[Bounca]

I'm willing to provide specifics for the 30 somthings and break things down.

Me 37 Wife 36 Two kids, 4 and 7, Three cats

Mortgage = Payoff date 9 years from now at the latest. Loan to value 30/70 %
All 401Ks and IRAs combined = As of approx 11 AM today $141,727
Pension = Me yes Her no
Misc Taxable Savings/Emergency Fund = Around $5K
Life Insurance = yes, 20 yr term, 4X salary, both of us
Job Security = Me very good, Her there's some risk for sure
Other Loans = 3 yr minivan loan, other than that and mortgage, we are debt free
529 Plans for both = $1,700 in each plan deposting $200 a month for each, plus some savings bonds

Am I 'OK'???? I have no flippin idea (someone please say yes).

We can't predict the future.

[arbogast777]

[GRT2BOUTDOORS]

[UKbloke]

100K unlevered net worth @ age 30 would be the minimum for me to feel safe about the future.

[strcmp]

[EmergDoc]

I wasn't out of school/residency at 30. $500K is ridiculous. I do hope to hit my first million by ~42 though. That's 11 years out of residency. We'll see if the markets cooperate. I won't be able to save that much in 11 years, especially since I'll be in the military for the first 4.

I think people's incomes and personal situations are so different you can't really say "this is where a boglehead should be by ....." Too much variation.

I think it is a worthy exercise for an individual to do based on their own income, but useless as an average.

What I meant by be well-insured at 30 is that when you are young you have no portfolio, and need to make up the difference with insurance, disability for you and term life for your family. Mid-way through your career, you have a significant portfolio, and don't need the insurance as much. By the end, you have a big old portfolio and don't need the insurance at all.
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1) Invest you must 2) Time is your friend 3) Impulse is your enemy
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

[nisiprius]

Age 30? Like others I'll tell you where I was, not "where a Boglehead should be." Nothing in investments, maybe about a month's salary in savings, just bought a house, one two-year-old kid and one brand-new kid.

Six times' salary in renewable-five-year-term life insurance.

Of course, not to put too fine a point on it, I also had parents. I don't know how you factor this in, but my parents were still alive, and, while hardly rich, I considered to be a sort of "emergency reserve" if you will. One which I fortunately never had to call on.

Funny, people make all these references to "human capital" (the economic treatment of their prospective earnings). What about "parental capital" (the present net value of the future stuff you might receive from your parents, either as gifts or as an inheritance?) Come to think of it there was a posting a week or so ago, and I guess that might have been what the poster had in mind. It's just too creepy to think about, though.
_________________
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

[Stonebr]

Let's see. Where was I at 30? My 20s were a blackout period, so it's hard to recall.

I had just started saving money -- $10 a week for a year added up to, miraculously, $520 and that was enough for my first investment, a CD earning about 12.5%. It was 1981. My other assets included a worn out French 10 speed bike, the remains of a sixpack of Heineken, and a mountain of books and LPs.

But I had landed my first corporate job with benefits and a five digit salary.

[market timer]

My goals for age 30 are to be well educated, healthy, and with a good job that I enjoy. I'm on track.

[EmergDoc]

[mike_slc]

(deleted, TMI)

[baw703916]

When I turned 30 I had just completed my education some eight months earlier, and had started my first real job--if a post-doc counts as a "real job". A negative net worth, thanks to student loans.

The expectation of having a $100K net worth at 30 is absurd for someone going into science or medicine.

On the other hand, having become accustomed to a grad student lifestyle, within four years I had saved enough money for a down payment on a house, in addition to paying off the student loans.

Best wishes,
Brad
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I don't foresee any Black Swans appearing in the future

[Boglenaut]

Deleted..my response was too stupid.

[eas]

[thedude]

I'm 31 and have a net worth of approx $110K:

Roth: 11.5K <-- 100% equities, VTSMX
403b: 36.5K <-- 100% equities, VTSMX
Taxable: 70K <-- saving for house + emergency fund. ~50% cash, ~25% equities, ~25% bonds.
----------------
Assets: 118K

Debt: 8K student loans @ 3.5%, paying it as slowly as possible.

[goggles]

Data point: by age 30, my lifetime earnings (high school on) were $248k. I feel pretty good about that; it wasn't a ton, but it was enough, and I was happy. Quite a bit of that time was in college or grad school. Net worth of about $100k, due to hardcore saving, some luck, and about $30k in a much-appreciated gift. I also paid off my (not-huge) student loans in this period.

Not seeing where one might get $500k saved out of that.

[Alistair]

At 30, more or less zero I would think. A year into first job (1999 or 2000 ish, starting salary 18,000 GBP). Fortunately the great British taxpayer and a corporate sponsor paid for my education. To the extent I'm better off now, it required various promotions/raises... and was held back by taking a year or so to do 'other things'.

[steelerfan]

Remember the book, the Millionaire Next Door by Stanley and Danko?

Stanley and Danko argue that your total net worth alone does not tell a good enough picture of one's wealth, what matters is how much worth you can accumulate on your income considering your own age. Therefore, a 30 year old making $ 25,000 who has a net worth of $ 80,000 has more relative wealth than a 50 year old doctor making $ 200,000 a year who is only worth $500,000.

Here is a link to the wealth calculator:
http://www.banksite.com/calc/wealth
_________________
"You make most of your money in a bear market, you just don't realize it at the time." - Shelby Cullom Davis

[dc5vt05]

i guess you could reach 500k by age 30 if you work a few contracting jobs in iraq or afghanistan. dont know how many people would be willing to do that.

pretty interesting to see how much some people have saved. im 26, turn 27 this year. definitely feel like i have saved more than the average 26 year old. but it has come at a cost....

[rrosenkoetter]

[Ron]

[steelerfan]

[modal]

Didn't Fidelity or some other place have a tool which you could enter your age, region, savings, income, and mortgage to see where you stand?

[Frobie]

I'm a little surprised by this, but I actually found the Excel spreadsheet containing my account values from around my 30th birthday. It looks like my net worth was near my annual income at the time.

I managed to delay getting my first "real" job until I was 26. I graduated with debt equal to around 1/3-1/2 my annual income. So in retrospect I'm pretty happy to have gone in 4 years from negative net worth to 1x my annual salary, even if it wasn't quite Bogleheads Territory(TM).

Of course, you didn't have to be a genius to make money in the stock market back in the mid-to-late 90s, and there were no kiddos in the picture.

[NYCPete]

[waitforit]

I feel like I didn't give good information in my original post.

At age 22 I was married, owned a home, barely getting by attending professional school full time while my wife worked in a lower-income profession. We never took on debt besides a mortgage and low-interest federal student loans.

At 25 I graduated, got my first job, and began maxing my 403b and roths for myself and my wife. The difficult thing is it seems as though I've been putting a ton of resources into funding those accounts and I believe the account is worth more or less every dollar I've put in with the market runup and subsequent crash - a bit disheartening.

Now that we have a little one, it doesn't seem as worth it to put every effort into funding retirement at the cost of keeping monthly expenses low, etc. Probably a sign that I'm oversaving. Don't feel sorry for me though, we make a good combined income. Perhaps it is a reflection of getting older and realizing what matters - experiences vs. accumulating money.

[tetractys]

[FrugalInvestor]

[3CT_Paddler]

[ipod_keith]

waitforit,

Back in April of 2005, Money Magazine featured an article that covered some of what you're looking for. I cannot read the whole title because I did not scan the title page, but it's something '.... Are you About Money' by Cybele Weisser.

I'm not sure it's entirely accurate, especially since most people's assests have declined since 2005, but it at least gives you some things to think about.

If you cannot find it, PM me and I'll send you the copy I scanned.

-keith

[bmb]

I wouldn't worry about retirement at age 30. You may never want to retire, and life expectancy may increase dramatically in the next two decades.
At age 30 if you are supporting yourself and have no debt with the possible exception of a college loan and a mortgage, you are doing fine. Consider any investments gravy.

[raddle]

I'd say hitting a net worth of $0 at 30 is a good benchmark, assuming no gifts and no help from parents for college/grad school.