At age 27, how much should I have saved up for retirement?

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INTRESIS
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At age 27, how much should I have saved up for retirement?

Post by INTRESIS »

At age 27, how much should I have saved up for retirement?
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LAlearning
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Re: At age 27, how much should I have saved up for retiremen

Post by LAlearning »

Something.

Which is preferable to nothing.
I know nothing!
dependapotamus
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Re: At age 27, how much should I have saved up for retiremen

Post by dependapotamus »

At 27 I had about $3k split between Roth IRA's belonging to my wife and I.

I'm 28, and the only difference is the gains made from investing that money in a Vanguard target date fund.

Of course, my family lives off my VA disability and and my wife's med school scholarship. Next year we anticipate putting 15% of our income, or about $11,000 a year toward the Roths once she starts her OB/GYN internship.
mhalley
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Re: At age 27, how much should I have saved up for retiremen

Post by mhalley »

From a ny times article about fidelity recs:
Fidelity suggests workers should aim to save about one times their salary at age 35, three times at age 45 and five times at age 55.
The table from the article suggests .5x salary at 30. The article talks about how they came up with the numbers.
http://bucks.blogs.nytimes.com/2012/09/ ... -age/?_r=0
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Re: At age 27, how much should I have saved up for retiremen

Post by madbrain »

INTRESIS wrote:At age 27, how much should I have saved up for retirement?
Depends when you plan on retiring, and with what sort of lifestyle.
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Toons
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Re: At age 27, how much should I have saved up for retiremen

Post by Toons »

8 thousand :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Topic Author
INTRESIS
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Re: At age 27, how much should I have saved up for retiremen

Post by INTRESIS »

Toons wrote:8 thousand :happy
Thats like exactly what I currently have.
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Watty
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Re: At age 27, how much should I have saved up for retiremen

Post by Watty »

With about 40 years until the traditional retirement age a better question is to look at your net worth.

At that age I was saving up for a down payment for a house, getting to the point where I could pay cash for inexpensive cars and building up some emergency money so that I was not living from paycheck to paycheck. Many people your age are still dealing with a lot of student debt too. I had next to no retirement savings, but I had built up my net worth to a respectable level.

One thing that I do is that every year that I update a very simple spread sheet that calculates my net worth as of January 1st each year so that I can measure my progress that way.

I don't track it closely but another good thing to consider is your lifetime earnings compared to your net worth. For example if you have been working for four years earning $50K then you have had $200K in income over those years. If your net worth has only grown by a small amount then that is a sign that you may need to cut back on your spending since not enough of the money is "sticking".
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mbk734
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Re: At age 27, how much should I have saved up for retiremen

Post by mbk734 »

I think it is smart to set goals while you're young.
For the average person, it might look something like this:

Age 25 Pay off college debt, focus on advancing in career, start maxing 401k/Roth IRA
Age 35 100k
Age 45 200k
Age 55 500k
Age 65 1 million (Retirement Target)
Age 75 700k
Age 85 400k
Age 95 100k (Conservative Life Expectancy)

It all depends on your lifestyle and income of course. It is also better to save too much than too little. The rule of 72 is helpful in determining how your money will grow. Don't forget inflation! :beer
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Jerry55
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Re: At age 27, how much should I have saved up for retiremen

Post by Jerry55 »

Lots of good advice, but I totally agree with LA.....Something is better than nothing.

You have the idea and you're aware. That's the first step. Congratulations !!! The longest journey always begins with the very first step. !!!
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!
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Re: At age 27, how much should I have saved up for retiremen

Post by JDDS »

Lots of good answers. It depends where you're at in life. Perhaps you average the last few years salary. If you have less than 5-10% saved then this area of life may need attention. But for all I know, you've got $25k of credit card debt at 28.99%. At 27 you may not be able to save 15% into retirement; the key is to know why that is the case and work towards reaching that goal.
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Peter Foley
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Re: At age 27, how much should I have saved up for retiremen

Post by Peter Foley »

mbk734wrote:
Age 25 Pay off college debt, focus on advancing in career, start maxing 401k/Roth IRA
Age 35 100k
Age 45 200k
Age 55 500k
Age 65 1 million (Retirement Target)
Age 75 700k
Age 85 400k
Age 95 100k (Conservative Life Expectancy)
Starting at the age 45 number I would aim a little higher. In the 10 years between 35 and 45, $10k a year + average growth should get you to 300K. So perhaps . . .
Age 45 300K (Moderatly agressive AA)
Age 55 700k
Age 65 1.5M (Prime saving years - many become empty nesters so expenses drop.)
Age 75 1.2M ??? (I haven't though this part out. Still a bit aggressive in stocks - maybe 50/50?)
Age 85 1.0M (Higher health care cost but less expensive entertainment? Investing more conservatively - 25% stocks?)
Age 95 500K (Higher heal care cost and gifting/legacy?)
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iceport
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Re: At age 27, how much should I have saved up for retiremen

Post by iceport »

By Charles J. Farrell's proposed benchmarks, maybe 10% of your annual salary, and saving between 12% and 19% of your annual salary going forward.

Analyzing Your Financial Health Using Personal Financial Ratios

Three basic ratios are considered:

— Savings/Income
— Debt/Income
— Savings Rate/Income
"Discipline matters more than allocation.” ─William Bernstein
jimkinny
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Re: At age 27, how much should I have saved up for retiremen

Post by jimkinny »

2 thoughts and I will leave it up to you to find the information on the Boglehead Wiki

1- locate the retirement calculators. These are tools in which you input various parameters and the output is the income in retirement. This will lead you to thinking a lot of about rate of returns, inflation, pension etc because these are some of the inputs. How much you save depends upon your needs which depends upon rate of returns, when you save, inflation....These are educational tools to lead you into what are the probabilities of achieving your goals

2- recently there was a thread on what is most important in investing: the stock/bond allocation or is that just important, not most important. I think as an out growth of that thread a Wiki article was composed dealing with the effect of saving and investing early in life vs later in life. It has a huge impact if you save early vs later in life. Find the article because it is a real eye opener. You will likely be able to find the same stuff with google.

Jim
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Re: At age 27, how much should I have saved up for retiremen

Post by Caduceus »

It depends on what your goals are. You might spend an afternoon playing around with various retirement calculators on the internet. Vary the different variables - amounts saved, time to retirement, assumed rate of return ... things like that, and see what would get you to your goal.

At 27, I imagine a good place to be would be if you were debt-free (apart from a mortgage) unless you just graduated from medical school or an MBA program or some other professional degree, with a solid emergency fund (five figures), lots of human capital (invest in yourself, always), and with a solid investment plan (low-cost, diversified index-fund investments).

Most of your savings are ahead of you.
knowsnothing
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Re: At age 27, how much should I have saved up for retiremen

Post by knowsnothing »

I'd say at 27 if you were contributing to 401k up to match for a year or two and had forgotten to look at it since then you'd be doing pretty well.

Anything beyond that and you're doing great.
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Re: At age 27, how much should I have saved up for retiremen

Post by IPer »

INTRESIS wrote:At age 27, how much should I have saved up for retirement?
Depends how long you have been working, how much you have made, and whether you know enough about your personal finances to
make it that way. But I like the one answer of $8K, you must understand it as a joke of sorts (unless they did a calculation of some max
IRA and 401K and market projection, but I doubt it).
Read the Wiki Wiki !
vm27
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Re: At age 27, how much should I have saved up for retiremen

Post by vm27 »

I wish I found this forum sooner :(

I started working about a year ago, found this forum in November, then started my first roth IRA with Vanguard immediately. So, between '14 and '15 max rIRA contributions + 401k (started in Jan) + EF, I've saved ~$17k in 8 months or so. Wish I can save more but I've got ~60k of student loans I want to get rid of in the next 5 years, if not sooner.
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ram
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Re: At age 27, how much should I have saved up for retiremen

Post by ram »

$0 should be fine. Especially if you spent a long time in getting advanced degrees. In my line of work (medicine) people are typically digging the hole deeper at this stage and are about -250,000 by age 29 or 30.
Building human capital or having completing building it is most important at that age.
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Re: At age 27, how much should I have saved up for retiremen

Post by terran »

Pretty much what everyone already said, but I'll add that at your age (I'm only a few years older) it matters much more what you do starting now, so what's your plan? That's a rhetorical question, you don't have to answer it here, but do some reading and figure out what you need to start saving (and how) to get where you want to go. You/we are at the perfect age to get started on the fast-track with time on our side.
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Re: At age 27, how much should I have saved up for retiremen

Post by evilityb »

It's impossible to answer this question with a concrete dollar amount. Rest assure that if you're saving by age 27, you'll do fine if you keep up your good habits.

The real calculation, is you need roughly 25 times your annual expenses to retire. How did I get to this figure? I used the 4% withdrawl rate as a rule of thumb for how much you can withdraw from your portfolio upon retirement. The less you spend, the less you need to have saved, the more you CAN save, and the earlier you can retire. Figure out how much you want to spend annually in retirement (ok, at 27 you don't know this unless you're retiring in your 30s), multiply that by 25 and then figure out if it's possible to get there in the timeframe you want to. If it is, then you're on the right track; well done! If not, cut your expenses, increase your saving/investment rate and be strategic.

I had a negative networth at 27 (not even out of the Peace Corps yet!), started working just shy of my 29th birthday and now here I am after 2.5 years of working with $60k in retirement and $10k in a more liquid pile building up for a property purchase. How'd I do it? By being frugal and investing very strategically. I plan on retiring at 47. Good luck!
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DougS
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Re: At age 27, how much should I have saved up for retiremen

Post by DougS »

How much should you? I don't know, but I had less than $10K at 27. Now worth over $1M by early 40s. The point is to develop the habits of saving and investing early. Make mistakes early. The dollars grow over time, but nothing happens over night. It all builds on itself over time.
dbltrbl
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Re: At age 27, how much should I have saved up for retiremen

Post by dbltrbl »

ZERO. I had ZERO even at age 33 due to school and family needs. Today I am fine. If you are studying to be a physician or Pharmacist etc. In other words savings should be in a certain context.
acejacksingh
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Re: At age 27, how much should I have saved up for retiremen

Post by acejacksingh »

I'll be 27 next year....should be around $100,000 if things go well in the market :)
2Birds1Stone
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Re: At age 27, how much should I have saved up for retiremen

Post by 2Birds1Stone »

I still have 2 months left of being 27 years old.

I have 1 years gross salary in my Roth IRA/Traditional IRA as well as 3/4 of a years salary split into 401k, Cash, and some Precious Metals.
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Re: At age 27, how much should I have saved up for retiremen

Post by younggun1307 »

I will be 28 this year. With company match I put in about 12%.

I use lots of resources for retirement planning. Instead of focusing on how much you have now I would suggest looking at how much you want to have by the age you want to retire. Vanguard, schwab, and I believe a government resource are available to predict ( you enter in a predicted return, length of time, etc.). Then from there decide if you want to stay in the market and have some growth, move to everything to income funds, move everything into savings and live off of the interest, or a mix of these. This should give you a good base to see if your current allocation works for you.
I am new to the fund, etf, and bond trade, but I am eager to learn.
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Re: At age 27, how much should I have saved up for retiremen

Post by john94549 »

It was a different era, but back in 1974, I was just in my first year of Law School, we'd just bought a house, my wife was working from home, and we were just scraping by. That said, as I recall, we fully-funded the first year of the IRA. For both of us. I think it was $1500/year/person*. Doesn't seem like a whole lot these days, but our mortgage was only $232/mo. Bottom line: save as much as you can, as early as you can. Max-out every possible tax-deferred vehicle, every year, without fail.

*I made the cut-off since I had four (count 'em, four) part-time jobs while in Law School. I actually had to take a pay-cut when I graduated and went to work full-time. Even back then, free-lancing was lucrative.
Last edited by john94549 on Sun Mar 08, 2015 9:06 pm, edited 1 time in total.
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Re: At age 27, how much should I have saved up for retiremen

Post by LadyGeek »

Whatever you can handle, the sooner the better: Importance of saving early
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john94549
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Re: At age 27, how much should I have saved up for retiremen

Post by john94549 »

Further to Lady Geek's post, it's not just the amount, it's the discipline. Saving is a habit. As I can attest, folks who learned to save at a (relatively) early age, just keep on going, and going, and going (the energizer bunny). Then, surprise, you're 65 years old and you have this retirement fund.
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Re: At age 27, how much should I have saved up for retiremen

Post by younggun1307 »

john94549 wrote:Further to Lady Geek's post, it's not just the amount, it's the discipline. Saving is a habit. As I can attest, folks who learned to save at a (relatively) early age, just keep on going, and going, and going (the energizer bunny). Then, surprise, you're 65 years old and you have this retirement fund.
I agree. I think it would be much harder for me now to switch to saving more, but since I started from the beginning saving around 10-12% I don't miss that money.
I am new to the fund, etf, and bond trade, but I am eager to learn.
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Re: At age 27, how much should I have saved up for retiremen

Post by BrandonBogle »

Yes, the habit of saving is the game-changer. I maxed out my IRAs from teenage jobs, contributed at least as much to get a full match from the first job offering it, and increased contributions with every age until the last 8 years I've maxed my contributions. It is much easier to get in this habit early as it is to suddenly become a saver - even a small one. We continue to have arguments in this household about the importance of "paying yourself first", but so far, I've not been successful in making this a two Boglehead household. Op, you are well on your way to getting to a successful, comfortable retirement as simply asking this question already puts you ahead of the pack of yor peers!
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