Amount saved by age

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Esq123
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Amount saved by age

Post by Esq123 » Sat Mar 10, 2018 9:35 am

I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?

I am a young investor fyi (29).

Thanks all.

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snackdog
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Re: Amount saved by age

Post by snackdog » Sat Mar 10, 2018 9:38 am

Salary x years worked usually is about right after ten years or so.


crake
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Re: Amount saved by age

Post by crake » Sat Mar 10, 2018 9:45 am

snackdog wrote:
Sat Mar 10, 2018 9:38 am
Salary x years worked usually is about right after ten years or so.
Wouldn't this imply you are either investing 100% of your salary or obtained extraordinary investment returns?

If you make 100k per year and invest 50% of that you would need a 13% compound annual growth rate to achieve your metric.

magicrat
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Re: Amount saved by age

Post by magicrat » Sat Mar 10, 2018 9:52 am

My rule of thumb is to have enough saved to be on track to meet my goals

Longdog
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Re: Amount saved by age

Post by Longdog » Sat Mar 10, 2018 9:58 am

One of my favorite pieces of advice early in my career was to save $1,000 by the time you're 20; $10,000 by the time you're 30; $100,000 by the time you're 40, $1,000,000 by the time you're 50; and $10,000,000 by the time you're 60. The person who gave me the advise is now just over 70, and when I reminded him of it recently he laughed and indicated that the period between 50 and 60 was not quite achieved. But he still lives a comfortable and happy life.
Last edited by Longdog on Sat Mar 10, 2018 10:05 am, edited 2 times in total.
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stan1
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Re: Amount saved by age

Post by stan1 » Sat Mar 10, 2018 10:01 am

Esq123 wrote:
Sat Mar 10, 2018 9:35 am
I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?

I am a young investor fyi (29).

Thanks all.
I would try to save at least 20% of income. More is good and its easier if you have higher income because other than taxes someone who makes $500K/year can live the same lifestyle as someone who makes $50K/year.

Then make sure you choose an age-appropriate asset allocation (80-90% equities and 10-20% bonds for someone aged 29).

I know I'm recasting your question not answering it directly but I think above is more actionable advice rather than trying to benchmark against people who are very different than you are.

Traveller
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Re: Amount saved by age

Post by Traveller » Sat Mar 10, 2018 10:09 am

Sam over at the site Financial Samurai has a few interesting articles tied to this topic, such as this one: https://www.financialsamurai.com/how-mu ... ed-by-age/

2pedals
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Re: Amount saved by age

Post by 2pedals » Sat Mar 10, 2018 10:15 am

Esq123 wrote:
Sat Mar 10, 2018 9:35 am
I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?

I am a young investor fyi (29).

Thanks all.
Take a look at the bogleheads wiki. Investment Philosopy Great information. The most important thing is to get a workable plan that works for you, not someone else. And yes in order to invest for retirement you need to save a "significant" portion of income every month to have enough money for a comfortable retirement.

Tal-
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Re: Amount saved by age

Post by Tal- » Sat Mar 10, 2018 10:20 am

The most common numbers you'll see are 15% - 20%, meaning you should be saving this much per year. To your point, there is huge variability in this, but that's a common range that is probably relevant for a 29 year olds. Note that I feel that 20% - 25% is far far far better, but I'm also conservative in this way. This is also talking about retirement only - and not saving for things like a house or college or whatever.

If you're asking how big your nest egg should be, that number isn't as widely discussed. The Fidelity article linked above (https://www.fidelity.com/viewpoints/ret ... -to-retire ) is one of the few articles I've seen on this topic. I'm not a real big fan of that article, but it at least provides some framework.

The real "how big should your nest egg be" answer depends on your target income in retirement (not your income today), and your target retirement date (not your age) - with some type of withdrawal assumption built in (4% is most common) and some type of 'additional contributions' factor. Factor in inflation and returns, and its get complicated. For example, if you want to retire with 80K in income, you need to save $2M with a 4% withdrawal rate. Assuming that you're 10 years away from your retirement and saving 15K a year, you'd need something like 900K to be on track.
Debt is to personal finance as a knife is to cooking.

PFInterest
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Re: Amount saved by age

Post by PFInterest » Sat Mar 10, 2018 10:26 am

Esq123 wrote:
Sat Mar 10, 2018 9:35 am
I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?

I am a young investor fyi (29).

Thanks all.
No this is kind of worthless.

msk
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Re: Amount saved by age

Post by msk » Sat Mar 10, 2018 10:26 am

This worked very well for me, currently age 73, retired at age 55, current NW in 8 figures, started at pauper level with engineer-type jobs:

Save and invest 30% of after tax income, religiously. Payment of principal in a home mortgage counts in but not the interest payments, nor payments for any consumables like cars, etc.

What you invest in is also important. Safety in bonds? I never went there. I started off with highly leveraged Real Estate at around age 29. When excess income started flowing from that it went into 100% stocks. Soon after retirement I sold off all my rental RE and I am still 100% in stocks and plan to remain there right into the graveyard. NB if you start before age 30 it's very probable that your investment income outshines your job income by your early 40s. Start early and you can splurge on silly toys like a Porsche or a Maserati before age 45.

stan1
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Re: Amount saved by age

Post by stan1 » Sat Mar 10, 2018 10:36 am

msk wrote:
Sat Mar 10, 2018 10:26 am
Start early and you can splurge on silly toys like a Porsche or a Maserati before age 45.
Agree with this, also. I got past the car phase early but international business class flights sure are nice in your 50s.

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Sandtrap
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Re: Amount saved by age

Post by Sandtrap » Sat Mar 10, 2018 10:37 am

Here's a comprehensive suggestion:

*Accumulation of "Wealth" doesn't only happen by saving money.
Many folks earn and save tons of money and are not wealthy, or have nothing at an older age.

There are more components involved. Think of a puzzle with moving parts and you want things to be as efficient as possible.
Okay?
**Let's put the puzzle together, together.

0 - 8-) FINANCIAL KNOWLEDGE + MATURITY (approaching things with maturity and good sense, investing in one's financial education)

1 - 8-) INCOME AND EARNING POWER
Make as much money (income) as possible through education, choice of profession (engineer, doctor, etc), career, job moves, etc.

2 - 8-) LIFESTYLE CHOICES - AVOIDING PERSONAL AND FINANCIAL "BLACK SWANS"
Optimize and choose (yes, your choice every step) your lifestyle so that it gives the greatest personal and financial reward. IE: have a lifestyle that is gratifying, makes you happy, but without stepping into financial and personal quicksand that will "nuke" your savings, income, and sanity.
So: avoiding financial and personal (lifestyle choices) "black swans" is one of the biggest priorities along with #1.
(you can have a great boat but it can have a big hole in the bottom of it) :shock:
*Buy and Read This book until it gets worn out:
Life Code by Dr. Phil
https://www.amazon.com/Life-Code-Rules- ... s=lifecode

3 - 8-) Combine #1 and #2 with FRUGALITY (this does not mean cheap. . it means not wasting one's time and money 24/7) It is a way of life and mind.

4 - 8-) KNOWING WHAT TO DO WITH MONEY WHEN YOU GET IT (This is huge!)
This is where the "Bogle" forum excels.
*Buy this book and read it until the pages are worn out and dog eared.
Little Book on Common Sense Investing by Jack Bogle
https://www.amazon.com/Little-Book-Comm ... +investing
*Buy this book and read it until you know all the stories by heart. Consider them "mentors", heroes.
Millionaire Next Door
https://www.amazon.com/Millionaire-Next ... +next+door
*Read this free book:
Free Reading: "If You Can" by Bernstein
https://www.google.com/url?sa=t&rct=j& ... -SB3S580I5

5 - And, the next "puzzle piece is the first stepping stone on a journey":
**** 8-) GETTING STARTED
https://www.bogleheads.org/wiki/Getting_started

I hope this is helpful to you.

Focus on the unpredictable and unlimited possibilities ahead. :D
Aloha, :D
jim
Last edited by Sandtrap on Sun Mar 11, 2018 11:43 am, edited 1 time in total.

z3r0c00l
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Re: Amount saved by age

Post by z3r0c00l » Sat Mar 10, 2018 10:46 am

crake wrote:
Sat Mar 10, 2018 9:45 am
snackdog wrote:
Sat Mar 10, 2018 9:38 am
Salary x years worked usually is about right after ten years or so.
Wouldn't this imply you are either investing 100% of your salary or obtained extraordinary investment returns?

If you make 100k per year and invest 50% of that you would need a 13% compound annual growth rate to achieve your metric.
That is mostly impossible. Maybe after 30 years investing in a good stock market you can get to salary x years, but even that is pretty impressive. I wouldn't mind having $3 million in current dollars at retirement though :shock: I like to add a year of annual expenses, on average, for each year worked. With pension and SS, this should give you 30 years in retirement after 30 years of work. Of course, a person who earns much more than they spend would be in better shape than us precariat.
Last edited by z3r0c00l on Sat Mar 10, 2018 11:04 am, edited 1 time in total.

holycow007
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Re: Amount saved by age

Post by holycow007 » Sat Mar 10, 2018 10:55 am

It is difficult to maintain ratios unless your income is consistent and grows in a predictable manner
If people progress in their careers during middle-age usually ratios go haywire since a small jump in income does not translate the same in savings and the ratios change (+vely for some such as mortgage assuming you don't move into a bigger house and -vely for retirement savings)
Last edited by holycow007 on Sat Mar 10, 2018 11:42 am, edited 1 time in total.

mmmodem
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Re: Amount saved by age

Post by mmmodem » Sat Mar 10, 2018 11:07 am

Rules of thumb are heavily criticized on this forum because they are not specific but isn't that what a rule of thumb is: not specific? Anyway, my rule of thumb is based on taxes. If you've maxed out your tax advantaged accounts (HSA, 401k, Roth IRA, etc.) then you've saved enough. If you can't save that much, then you might have to work longer than someone who does.

mortfree
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Re: Amount saved by age

Post by mortfree » Sat Mar 10, 2018 11:35 am

Age 40: 3X your income.

I believe fidelity came up with one scale like this by age. Look around for that

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CyclingDuo
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Re: Amount saved by age

Post by CyclingDuo » Sat Mar 10, 2018 11:45 am

Esq123 wrote:
Sat Mar 10, 2018 9:35 am
I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?

I am a young investor fyi (29).

Thanks all.
Roadmaps and guides help, but there are a myriad of factors involved. Your salary will gradually increase throughout most of your career, so it self adjusts as you age for the first picture. It's difficult to nail down - at age 29 - how much annual retirement income you will need 30-40 years from now, so the second picture is a wild axx guess for you at this point, but nevertheless does provide some guidance. The third picture illustrates the power of time and compounding you have at age 29 showing what you are saving now each month compared to how much you would have to save each month as you age to match what you can do in your 20's (provided you have enough income to save after you meet all of your expenses/needs/taxes).

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iceport
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Re: Amount saved by age

Post by iceport » Sat Mar 10, 2018 11:49 am

Esq123 wrote:
Sat Mar 10, 2018 9:35 am
I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?

I am a young investor fyi (29).

Thanks all.
I always found this article interesting and useful: Personal Financial Ratios: An Elegant Road Map to Financial Health and Retirement by Charles J. Farrell

See Table 3. 8-)

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"Discipline matters more than allocation.” ─William Bernstein

Dottie57
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Re: Amount saved by age

Post by Dottie57 » Sat Mar 10, 2018 11:54 am

It is only in this forum that I feel like I didn't save enough.

It wasn't until my 50's that I started contributing more than 15%. I made more money, my home was paid off and not a lot of lifestyle creep.

Set your saving goal percent and make it your priority. Every time you have a raise in salary, save/invest 1/2. Bonuses too. I started at age 31 and am now retired at 61. I won't have fabulous travels, but will have a very comfortable life.

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topper1296
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Re: Amount saved by age

Post by topper1296 » Sat Mar 10, 2018 12:11 pm

Anybody else on here in a position where they are ahead of schedule based on many "rules of thumb" however you still think you don't have enough?

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Re: Amount saved by age

Post by tennisplyr » Sat Mar 10, 2018 6:52 pm

Dottie57 wrote:
Sat Mar 10, 2018 11:54 am
It is only in this forum that I feel like I didn't save enough.

It wasn't until my 50's that I started contributing more than 15%. I made more money, my home was paid off and not a lot of lifestyle creep.

Set your saving goal percent and make it your priority. Every time you have a raise in salary, save/invest 1/2. Bonuses too. I started at age 31 and am now retired at 61. I won't have fabulous travels, but will have a very comfortable life.
Also retired @61...7 years ago and life is good. Rules of thumb are made to be broken. I had essentially $0 at age 40 with house and small child. Now retired and living well in sunny FL. Two things: never give up and don't worry if you don't have as much as the guy next door.
Those who move forward with a happy spirit will find that things always work out.

bling
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Re: Amount saved by age

Post by bling » Sat Mar 10, 2018 7:32 pm

the rules of thumb are good for most people, but i think they're wildly inaccurate for folks who live in HCOL areas.

if i'm going by multiplier of salary as a rule of thumb, i'm falling behind my peers at my age, but in dollar amounts i'm saving more each year and my portfolio value is bigger. am i doing better or worse?

a much better and realistic thing to do, is to figure out how much money you want at retirement, at age you want to retire, and work backwards.

here is what i think should be the minimum target for everyone:
starting at age 30, if you max out your 401k (currently $18,500) every year, you'll have over $2 million at age 65 assuming 6% RoR. that amounts to a $80k salary (in future dollars).

that should be enough for a very conservative retirement. if you want more during retirement, then you need to calculate how much more you need to save to meet that goal.

Johnsson
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Re: Amount saved by age

Post by Johnsson » Sat Mar 10, 2018 8:04 pm

topper1296 wrote:
Sat Mar 10, 2018 12:11 pm
Anybody else on here in a position where they are ahead of schedule based on many "rules of thumb" however you still think you don't have enough?
Me. :?

At 56 we could probably do it now. Have enough bonds and taxable to get most of the way to SS at 70. However, 4 more years of savings will put us in a safer spot.

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CyclingDuo
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Re: Amount saved by age

Post by CyclingDuo » Sat Mar 10, 2018 11:43 pm

bling wrote:
Sat Mar 10, 2018 7:32 pm
here is what i think should be the minimum target for everyone:
starting at age 30, if you max out your 401k (currently $18,500) every year, you'll have over $2 million at age 65 assuming 6% RoR. that amounts to a $80k salary (in future dollars).
Most 30 year olds may not be in a financial situation to save $18.5K. That's 18.5% of a $100K salary, 25% of a $75K salary, and 37% of a $50K salary. Reality is, the average salary of a 30 year old is much less than that according to this link https://smartasset.com/retirement/the-a ... ary-by-age. Many at age 30 are still servicing a hefty load of student loan debt and may have taken on other debt such as auto or first home - so saving $18.5K is not a given or an option for more than a select few with higher salaries, or perhaps no children, minimal debt, low housing costs, etc... . I know we were in no position to save that much at age 30 even though we were a dual income household.

So suggesting that the minimum target for a 30 year old be $18.5K is bordering on exclusivity.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

ny_knicks
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Re: Amount saved by age

Post by ny_knicks » Sun Mar 11, 2018 12:02 am

CyclingDuo wrote:
Sat Mar 10, 2018 11:43 pm
Most 30 year olds may not be in a financial situation to save $18.5K. That's 18.5% of a $100K salary, 25% of a $75K salary, and 37% of a $50K salary. Reality is, the average salary of a 30 year old is much less than that according to this link https://smartasset.com/retirement/the-a ... ary-by-age. Many at age 30 are still servicing a hefty load of student loan debt and may have taken on other debt such as auto or first home - so saving $18.5K is not a given or an option for more than a select few with higher salaries, or perhaps no children, minimal debt, low housing costs, etc... . I know we were in no position to save that much at age 30 even though we were a dual income household.

So suggesting that the minimum target for a 30 year old be $18.5K is bordering on exclusivity.
Gets to the fact that rules of thumb really don't work. Everyone has a different financial situation and goals.

There are 30 year olds maxing 401k, backdoor roth and putting significant $ into taxables and still feel behind. And there are 30 year olds who are happy to make their student loan payment on time. Very different situations and likely should have very different rules for amounts they should be saving.

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CyclingDuo
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Re: Amount saved by age

Post by CyclingDuo » Sun Mar 11, 2018 1:04 am

ny_knicks wrote:
Sun Mar 11, 2018 12:02 am
CyclingDuo wrote:
Sat Mar 10, 2018 11:43 pm
Most 30 year olds may not be in a financial situation to save $18.5K. That's 18.5% of a $100K salary, 25% of a $75K salary, and 37% of a $50K salary. Reality is, the average salary of a 30 year old is much less than that according to this link https://smartasset.com/retirement/the-a ... ary-by-age. Many at age 30 are still servicing a hefty load of student loan debt and may have taken on other debt such as auto or first home - so saving $18.5K is not a given or an option for more than a select few with higher salaries, or perhaps no children, minimal debt, low housing costs, etc... . I know we were in no position to save that much at age 30 even though we were a dual income household.

So suggesting that the minimum target for a 30 year old be $18.5K is bordering on exclusivity.
Gets to the fact that rules of thumb really don't work. Everyone has a different financial situation and goals.

There are 30 year olds maxing 401k, backdoor roth and putting significant $ into taxables and still feel behind. And there are 30 year olds who are happy to make their student loan payment on time. Very different situations and likely should have very different rules for amounts they should be saving.
Agree.

Robert Farrington has a nice article covering some data on the Millennials (age 18-35) with regard to salary, savings rate, debt, and net worth here:

https://thecollegeinvestor.com/14611/av ... llennials/
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Calli114
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Re: Amount saved by age

Post by Calli114 » Sun Mar 11, 2018 3:55 am

Sandtrap wrote:
Sat Mar 10, 2018 10:37 am

*Buy and Read This book until it gets worn out:
Life Code by Dr. Phil
https://www.amazon.com/Life-Code-Rules- ... s=lifecode

I have never read a Dr. Phil book - is it helpful for retirees or more for those still in the workforce?

Zedon
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Re: Amount saved by age

Post by Zedon » Sun Mar 11, 2018 6:03 am

Maybe I'll take a minimum wage job after I finish my career and before I retire so I can say I have 40x my salary instead of 8x.
I think that metric is silly. 100k in salary is not the same as 100k in retirement income.
We should really be looking at what we will need in retirement per year. Expenses in retirement are what you need to worry about.
Save as much as you can until you feel comfortable you will be able to reach those goals.
I was only intermittently able to save in my roth IRA until I was 39. I have a pension coming so that lessened any urgency I had.
I got a good raise/promotion and now I always max my roth/401k/457b and pension. I will be behind for a bit but I think I can catch up by the time I am somewhere between 55 and 63.
I figure I need about $50k in today's dollars in retirement. That might be around $80k in 20 years. Half pension and half retirement income is how I see that happening. SS will be icing if it still exists.

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Re: Amount saved by age

Post by bling » Sun Mar 11, 2018 7:24 am

CyclingDuo wrote:
Sat Mar 10, 2018 11:43 pm
bling wrote:
Sat Mar 10, 2018 7:32 pm
here is what i think should be the minimum target for everyone:
starting at age 30, if you max out your 401k (currently $18,500) every year, you'll have over $2 million at age 65 assuming 6% RoR. that amounts to a $80k salary (in future dollars).
Most 30 year olds may not be in a financial situation to save $18.5K. That's 18.5% of a $100K salary, 25% of a $75K salary, and 37% of a $50K salary. Reality is, the average salary of a 30 year old is much less than that according to this link https://smartasset.com/retirement/the-a ... ary-by-age. Many at age 30 are still servicing a hefty load of student loan debt and may have taken on other debt such as auto or first home - so saving $18.5K is not a given or an option for more than a select few with higher salaries, or perhaps no children, minimal debt, low housing costs, etc... . I know we were in no position to save that much at age 30 even though we were a dual income household.

So suggesting that the minimum target for a 30 year old be $18.5K is bordering on exclusivity.
it's a target, or goal. there are many roads to $2 million. if you can't save $18k at 30 it means you need to ramp up your savings rate later in life. if you started saving earlier, say in your 20's, then that also affords you some wiggle room.

and while saving 37% of 50k salary seems crazy, there are many people who are happy living the extreme frugal/minimal lifestyle (e.g. MMM).

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Re: Amount saved by age

Post by KyleAAA » Sun Mar 11, 2018 7:37 am

X times salary never made sense to me. I’m mid 30s and looking back, my income has grown about 16% per year compounded since I started working. Any rule of thumb that compares my savings to my salary is going to make it seem like I’m not saving enough at that growth rate, but the truth is I’ve never saved less than 35% of my income in a year and usually north of 40%-45%. A better metric is X times expenses.Or keep it simple and say you should save 25% of your income every year at a minimum.

JoeRetire
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Re: Amount saved by age

Post by JoeRetire » Sun Mar 11, 2018 7:48 am

Esq123 wrote:
Sat Mar 10, 2018 9:35 am
I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?
My general rule of thumb is this:
By the time you reach retirement age, have enough saved to retire on.

Grt2bOutdoors
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Re: Amount saved by age

Post by Grt2bOutdoors » Sun Mar 11, 2018 8:11 am

General rule: save and invest as much as you can. Why? The future is uncertain - you can lose your employment, become disabled, experience an unexpected event that insurance does not fully cover or is chronic, an immediate family member may need assistance, etc. No one I know ever lamented “they had too much money in savings and investments”. “Live your life like no one else, so you can live your life like no one else” - Dave Ramsey; makes a lot of sense to me.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Joe_R95
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Re: Amount saved by age

Post by Joe_R95 » Sun Mar 11, 2018 9:48 am

topper1296 wrote:
Sat Mar 10, 2018 12:11 pm
Anybody else on here in a position where they are ahead of schedule based on many "rules of thumb" however you still think you don't have enough?
+1 I think its this place that does it to us. I know I'm vastly ahead of anyone I actually know in my age range(and most older), but coming on and seeing 26 year olds ask what to do with $2 million is kind of daunting. I suppose its the price we pay for being able to ask a room full of very wealthy people how to get there and how to manage the pitfalls on the way.

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Re: Amount saved by age

Post by Daryl » Sun Mar 11, 2018 11:02 am

I'm 35. The metric that I watch the most closely is (net income / annual expenses). Achieving 10x before 35 feels good!

mountain-lion
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Re: Amount saved by age

Post by mountain-lion » Sun Mar 11, 2018 11:13 am

Grt2bOutdoors wrote:
Sun Mar 11, 2018 8:11 am
No one I know ever lamented “they had too much money in savings and investments”.
Many people lament they didn't spend the money do things or to splurge when they were young and able to enjoy them. Traveling particularly, but many other things like fun cars, nicer food and whatnot.

You only live once. The key is to enjoy the now while planning for the future, and not short-changing either one.

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Re: Amount saved by age

Post by Sandtrap » Sun Mar 11, 2018 11:26 am

Calli114 wrote:
Sun Mar 11, 2018 3:55 am
Sandtrap wrote:
Sat Mar 10, 2018 10:37 am

*Buy and Read This book until it gets worn out:
Life Code by Dr. Phil
https://www.amazon.com/Life-Code-Rules- ... s=lifecode

I have never read a Dr. Phil book - is it helpful for retirees or more for those still in the workforce?
It's very helpful to avoid personal and financial "black swans". No one is immune at any age. Though perhaps those younger than seniors are more vulnerable to irrecoverable setbacks due to inexperience, lifestyle decisions and choices, etc.
Though it is an investment finance forum, personal "black swans" play a huge role in financial health or financial tragedy.
Of so many books on the market in this category, this one is succinct, memorable, easy to read, and on target.

For those that are older and perhaps already made "their number", it's a good book to be aware of personal behavior or others who would take it.
j :D

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Sandtrap
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Re: Amount saved by age

Post by Sandtrap » Sun Mar 11, 2018 11:42 am

Grt2bOutdoors wrote:
Sun Mar 11, 2018 8:11 am
General rule: save and invest as much as you can. Why? The future is uncertain - you can lose your employment, become disabled, experience an unexpected event that insurance does not fully cover or is chronic, an immediate family member may need assistance, etc. No one I know ever lamented “they had too much money in savings and investments”. “Live your life like no one else, so you can live your life like no one else” - Dave Ramsey; makes a lot of sense to me.
So true.
These types of "rules of thumb"/metrics apply to a certain niche of wage earners, salaried workers, and established professionals, and others, whereby income is predictable and financial life has a greater chance of following a variety of paths, graphs, and spreadsheets, within a relatively safe comfort zone or risk and reward.
But, life doesn't follow a spreadsheet and most of the things that effect the "larger" outcome are not quantifiable.
IE: There are those that may safe a certain % a year in a secure job for 40 years then retire with a predictable range of savings.
And, then, there are others who my be dead broke until 40 or 50 and make millions in the next 10-20 years.

Focus on the unlimited and unpredictable possibilities ahead.
aloha
j :D

ny_knicks
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Re: Amount saved by age

Post by ny_knicks » Sun Mar 11, 2018 11:45 am

mountain-lion wrote:
Sun Mar 11, 2018 11:13 am
You only live once. The key is to enjoy the now while planning for the future, and not short-changing either one.
I struggle with this everyday. Healthy balance is important.

While I say this in mind I know I am sacrificing experiences now working 16 hour days and saving a considerable amount in the hopes of a better future. Unfortunately that future is not guaranteed.

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Cycle
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Re: Amount saved by age

Post by Cycle » Sun Mar 11, 2018 11:49 am

I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.

DC3509
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Re: Amount saved by age

Post by DC3509 » Mon Mar 12, 2018 9:37 am

Cycle wrote:
Sun Mar 11, 2018 11:49 am
I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.
Just curious how this works with taxes at that income level. We essentially lose 40% off the bat with taxes and have been told there is very little we can legally do about that line item.

DC3509
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Re: Amount saved by age

Post by DC3509 » Mon Mar 12, 2018 9:49 am

mountain-lion wrote:
Sun Mar 11, 2018 11:13 am
Grt2bOutdoors wrote:
Sun Mar 11, 2018 8:11 am
No one I know ever lamented “they had too much money in savings and investments”.
Many people lament they didn't spend the money do things or to splurge when they were young and able to enjoy them. Traveling particularly, but many other things like fun cars, nicer food and whatnot.

You only live once. The key is to enjoy the now while planning for the future, and not short-changing either one.
I don't think we hear people "lament" about this because it would be perceived as an arrogant thing to admit -- especially when the normal news narrative is that everyone is broke headed into retirement. Talk about a first world problem. But I agree with this poster -- I have heard many older people lament not doing things when they were younger and in better health.

It's also hard to do a survey about this because some of the people who might say they had too much money in savings and investments and missed out on life are the people who save obsessively and die young or youngish (50s/60s). I have often wondered how some of our outlooks might be different if we could talk to the ghosts of these boards.

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bligh
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Re: Amount saved by age

Post by bligh » Mon Mar 12, 2018 9:55 am

DC3509 wrote:
Mon Mar 12, 2018 9:49 am
mountain-lion wrote:
Sun Mar 11, 2018 11:13 am
Grt2bOutdoors wrote:
Sun Mar 11, 2018 8:11 am
No one I know ever lamented “they had too much money in savings and investments”.
Many people lament they didn't spend the money do things or to splurge when they were young and able to enjoy them. Traveling particularly, but many other things like fun cars, nicer food and whatnot.

You only live once. The key is to enjoy the now while planning for the future, and not short-changing either one.
I don't think we hear people "lament" about this because it would be perceived as an arrogant thing to admit -- especially when the normal news narrative is that everyone is broke headed into retirement. Talk about a first world problem. But I agree with this poster -- I have heard many older people lament not doing things when they were younger and in better health.

It's also hard to do a survey about this because some of the people who might say they had too much money in savings and investments and missed out on life are the people who save obsessively and die young or youngish (50s/60s). I have often wondered how some of our outlooks might be different if we could talk to the ghosts of these boards.
I lament I didn't spend more money on the things that matter to me now, but when I was younger and I am not even all that old.

At the same time I am really glad that I saved the money I did too.

You have got to maintain a balance, and if you go too far in either direction you might end up regretting it. But then again, you might not. It is impossible to know exactly how our lives will unfold, you are always just taking your best guess and correcting course as you go.

smitcat
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Re: Amount saved by age

Post by smitcat » Mon Mar 12, 2018 10:02 am

DC3509 wrote:
Mon Mar 12, 2018 9:37 am
Cycle wrote:
Sun Mar 11, 2018 11:49 am
I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.
Just curious how this works with taxes at that income level. We essentially lose 40% off the bat with taxes and have been told there is very little we can legally do about that line item.
I am not the OP but consider this please.....
- If you are MFJ the 1st $24K is 0%
- The next 19K is at 10% or about $1900 tax on up to 43K
- Similarly you can get to the top of the 22% rate at up to $190K buy paying $28,200 or about a 15% effective rate

Add in about 7.5% tax for SS, Medicare etc and then maybe or maybe not state tax.

Pigeye Brewster
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Re: Amount saved by age

Post by Pigeye Brewster » Mon Mar 12, 2018 10:25 am

Grt2bOutdoors wrote:
Sun Mar 11, 2018 8:11 am
General rule: save and invest as much as you can. Why? The future is uncertain - you can lose your employment, become disabled, experience an unexpected event that insurance does not fully cover or is chronic, an immediate family member may need assistance, etc.
Exhibit A = KlangFool. He has been there and done that...

DC3509
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Re: Amount saved by age

Post by DC3509 » Mon Mar 12, 2018 10:31 am

smitcat wrote:
Mon Mar 12, 2018 10:02 am
DC3509 wrote:
Mon Mar 12, 2018 9:37 am
Cycle wrote:
Sun Mar 11, 2018 11:49 am
I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.
Just curious how this works with taxes at that income level. We essentially lose 40% off the bat with taxes and have been told there is very little we can legally do about that line item.
I am not the OP but consider this please.....
- If you are MFJ the 1st $24K is 0%
- The next 19K is at 10% or about $1900 tax on up to 43K
- Similarly you can get to the top of the 22% rate at up to $190K buy paying $28,200 or about a 15% effective rate

Add in about 7.5% tax for SS, Medicare etc and then maybe or maybe not state tax.
My 40% number isn't a hypothetical. I am self employed so I get to pay both ends of the SS tax, and I live in a HCOL area so I get to pay 10% in state income taxes. My accountant strongly recommends putting aside 40% from every distribution. He was pretty spot-on last year with his estimate as we do the actual taxes now. I wasn't asking to be a wise aleck -- I am seriously interested in how people in higher income ranges save as much as they do when taxes take such a huge bite out of things for me.

smitcat
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Re: Amount saved by age

Post by smitcat » Mon Mar 12, 2018 10:46 am

DC3509 wrote:
Mon Mar 12, 2018 10:31 am
smitcat wrote:
Mon Mar 12, 2018 10:02 am
DC3509 wrote:
Mon Mar 12, 2018 9:37 am
Cycle wrote:
Sun Mar 11, 2018 11:49 am
I really like the madfientist podcasts. There is a good one from kitces http://pca.st/hfNT.

Minimize your major recurring costs to maximize your savings. Before making big purchases calculate cost, time saved, cost per hour of gained/lost free time, increased salary, cost per use. Houses, apartments, cars, insurance, grad school are some of the major ones.

Prioritize time / health / relationships over net worth. Counterintuitive, working hard and getting more income may buy you more time if you avoid lifestyle inflation... Via FIRE

FWIW, we now save 177k per year on 300k income at age 34/35, net worth 1.2M. DW just got a 37% raise which is going straight to more VTIAX. FIRE target is 4M in today's dollars. Everyone's target will be different depending on their risk tolerance and annual spending.
Just curious how this works with taxes at that income level. We essentially lose 40% off the bat with taxes and have been told there is very little we can legally do about that line item.
I am not the OP but consider this please.....
- If you are MFJ the 1st $24K is 0%
- The next 19K is at 10% or about $1900 tax on up to 43K
- Similarly you can get to the top of the 22% rate at up to $190K buy paying $28,200 or about a 15% effective rate

Add in about 7.5% tax for SS, Medicare etc and then maybe or maybe not state tax.
My 40% number isn't a hypothetical. I am self employed so I get to pay both ends of the SS tax, and I live in a HCOL area so I get to pay 10% in state income taxes. My accountant strongly recommends putting aside 40% from every distribution. He was pretty spot-on last year with his estimate as we do the actual taxes now. I wasn't asking to be a wise aleck -- I am seriously interested in how people in higher income ranges save as much as they do when taxes take such a huge bite out of things for me.

My wife and I are self employed as well... we get to pay both sides of SS etc but there are caps on them as you know so total paid is limited....then we put near $85K into tax deferred accounts which lessen the Fed and State taxes. State tax is progressive like Fed.so there is a bunch at the 'bottom' rungs which is low taxed.
And now that we have no kids at home the requirement for spending has dropped....many folks on the board have no morgage, kids gone, and no or low State taxes.

chicagoan23
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Re: Amount saved by age

Post by chicagoan23 » Mon Mar 12, 2018 10:47 am

Esq123 wrote:
Sat Mar 10, 2018 9:35 am
I know everyone’s circumstances are different; however, is there a general rule of thumb as to how much you should aim to save by age group?

I am a young investor fyi (29).

Thanks all.
So much is dependent on salary that there isn't a rule of thumb that applies to everyone from a dollar value basis.

I would build a spreadsheet. Take 25% of your salary each year you've been working and then assume a 6% return on that amount each year until the present. Add it all up and if you're ahead of that pace, you're doing fine.

LiterallyIronic
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Re: Amount saved by age

Post by LiterallyIronic » Mon Mar 12, 2018 11:02 am

magicrat wrote:
Sat Mar 10, 2018 9:52 am
My rule of thumb is to have enough saved to be on track to meet my goals
Hear, hear! Work backwards from how much you want to have at a specific age to calculate how much you should be saving every month.
Articles like this one are worthless to people who don't fit their assumptions. FTA: "Our savings factor rule of thumb is based on some key assumptions: You start saving a total of 15% of your income every year starting at age 25, invest more than 50% of your savings in stocks on average over your lifetime, retire at age 67." So how do I adjust their chart for someone who finished school at age 32 and wants to retire at 50? The only way is to work backwards.

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