Where should I be financially at 39?

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jen25w
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Where should I be financially at 39?

Post by jen25w » Wed Oct 31, 2018 8:25 pm

I know people are encouraged to start investing in their 20's due to the importance of compounding etc., but life seems to take us all in different directions. When I was 25 years old I was still serving tables trying to get through college. Then life happened and I seemed to go in different directions for a few years. At 32 I was in grad school and not working. I now have my graduate degree and this is the first year I'll be grossing, on the conservative side, about $75K a year. I was making $42K a year for the previous 4 years.

Does anyone know how much I'd need to invest right now to be caught up to where I'd be if I'd begun investing when I was 25 years old, like so many people are doing? I hope that makes sense. I read that my goal is to have 25X my annual income to retire which would be about 2.5 million. That's taking into account my husband's income too. We make about $120K a year. I see the "2.5 million" number and feel so defeated and hopeless like it'll never happen.

Now that I'm older I think about where I should be with my finances and I'm scared of not being able to retire comfortably. Maybe I need help getting a baseline of where I should be financially right now. So I can have a goal to get started on? Can anyone give me a rough estimate of how much I should have saved right now if I began when I was 25?

LarryAllen
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Re: Where should I be financially at 39?

Post by LarryAllen » Wed Oct 31, 2018 8:28 pm

I would more look at how frugally you can live, if you can pick up some side hustles, and how much you can save going forward. SAVE SAVE SAVE! I would be obsessive about it for the next 10 years and then see where you are at. You are ahead of many because you are at least aware that you need to be saving. Good luck!

dh
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Re: Where should I be financially at 39?

Post by dh » Wed Oct 31, 2018 8:30 pm

LarryAllen wrote:
Wed Oct 31, 2018 8:28 pm
I would more look at how frugally you can live, if you can pick up some side hustles, and how much you can save going forward. SAVE SAVE SAVE! I would be obsessive about it for the next 10 years and then see where you are at. You are ahead of many because you are at least aware that you need to be saving. Good luck!
Like LarryAllen, I think you two will do great. You have the right attitude. keep on pushing on! :sharebeer

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fortfun
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Re: Where should I be financially at 39?

Post by fortfun » Wed Oct 31, 2018 8:32 pm

Add up your yearly salaries for the past 14 years and multiply by 20%.

i.e. $35k x 14yrs x 20%=$98k
(of course this would have earned compounded interest too.)

As others have said, no use to cry over spilled milk. We didn't save enough early on either but are saving a 100k/yr now to make up for it. We are doing this by cutting our spending as much as possible.

Good luck!
Last edited by fortfun on Wed Oct 31, 2018 8:35 pm, edited 1 time in total.

dziuniek
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Re: Where should I be financially at 39?

Post by dziuniek » Wed Oct 31, 2018 8:33 pm

Step 1... Don't freak out.

You will find there's plenty of people that started even later than you two.


Starting at 39, you have quite a way to retirement age and plenty of time to do it. What's important is that even if you don't get to your goal - you will be much further ahead than you are now.

Also, the 25 times expenses is a derived from the 4% Rule* - which is more of a guideline, a starting point if you will.

Most importantly... you don't multiply 25 times your income, but expenses rather.

At 39 most have a mortgage, kids in daycare, big car payments, possibly student loans... - you have time to take care of these before retirement.

You can now see how much smaller your retirement expenses could possibly be.

Examples:
- Our mortgage is $2,300 (taxes, insurance included) which won't be an expenses in retirement, only property taxes.
- We can probably do with 1 car if needed (cars are a big expenses for a lot of folks)

Study up, read the forum, and save what you can. (but also relax!)

N10sive
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Re: Where should I be financially at 39?

Post by N10sive » Wed Oct 31, 2018 8:36 pm

No one can tell you that because it varies way to much. Some people are better off, some people not so much, some people get a lot of help from parents, some do not etc.

There is a basic number I believe is to have 1x salary by the time your 30 and 2x by the time your 35, 3x by 40 etc....

You can not save as much but live a lot more frugally and be fine.

Grt2bOutdoors
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Re: Where should I be financially at 39?

Post by Grt2bOutdoors » Wed Oct 31, 2018 8:36 pm

No, your goal is to save 20-25x expenses, not annual income. The 20-25x expense is a number less the annual amount of social security you will get (and you will get it so long as you pay into it while working).

If your annual income is $100k gross, you are coming home with say $75k. 25x is say 1.875 million. Social Security will give you between 20-40k in retirement (higher number if both spouses are living, higher of two benefits if one deceases). 25 * 20k is 500k worth of COLA’d benefits (inflation protected somewhat). 1.875 million less .500 million is 1.375 million. You have at least 25 years of working and 25 years of compounding returns.

Don’t get discouraged- you can not go back in time, look forward, one step at a time.

P.S. 42k * 4 = 168k @ 15% savings (avg savings rate in country is between 5-6 percent) is $25k plus 4 years of compounding or about 25% so, roughly 32-33k.
Last edited by Grt2bOutdoors on Wed Oct 31, 2018 8:41 pm, edited 1 time in total.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

ThankYouJack
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Re: Where should I be financially at 39?

Post by ThankYouJack » Wed Oct 31, 2018 8:38 pm

It's usually 25x annual expenses, not income. So say your expenses are $40,000, you would need $1 million - probably even less when you factor in social security.

I wouldn't worry too much about the lost time. It's very tough to retire early. I would just work on having a good savings rate going forward and you'll be way ahead most Americans.

Jags4186
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Re: Where should I be financially at 39?

Post by Jags4186 » Wed Oct 31, 2018 8:42 pm

It’s a pretty simple calculation with unguarranteed results.

Let’s assume you have $0 today and you want to accumulate $2.5 million by the time you are 65. You are 39 today so that gives you 26 years:

With a 5% return you would need to save $4076/mo to have $2.5 million at 65
With a 6% return you would need to save $3522/mo to have $2.5 million at 65
With a 7% return you would need to save $3034/mo to have $2.5 million at 65
With a 8% return you would need to save $2605/mo to have $2.5 million at 65
With a 9% return you would need to save $2232/mo to have $2.5 million at 65

Just so you know, you don’t need 25X your income to retire. If you contribute to Social Security you will get a benefit. You can go to SSA.gov to find out an estimate of what your FRA benefit will be. That benefit will reduce what you need to save. Also, you may make $120,000/yr but you don’t need to replace $120,000/yr in income because you don’t live on $120.000. Your tax burden will likely decrease in retirement, your health insurance premiums may be reduced in retirement, you will no longer need to save money once you are retired. For a couple making $120,000/yr they may find they only need $70,000-$80,000/yr in income. If you get $30,000/yr from Social Security you only need to come up with $50,000. $50,000 can be generated from $1.25 million.

My recommendation is to start saving as much as you can as soon as possible. That is the best you can do. With 25+ years until retirement if you put a good portion of your income away every month, north of 20%, you should end up okay.

togb
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Re: Where should I be financially at 39?

Post by togb » Wed Oct 31, 2018 8:46 pm

If you've saved at least 15%-- and better yet 20%-- all this while you are about where you should be.

If you haven't, start now. Save at least 20% of what you earn (you and your husband both). If you get a bonus/windfall, save at least half.
When you get a raise, add at least half of it to what you are saving... rather than let your expenses keep pace with the bigger salary. Just go at it steady. You'll get there.

Bacchus01
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Re: Where should I be financially at 39?

Post by Bacchus01 » Wed Oct 31, 2018 9:09 pm

Save 15-20% and grow that as increases come.

Right now, the number one investment you can make is in yourself and your career. Grow your salary like mad by working harder and taking the most difficult assignments while living on your current means.

The $ investment returns will not get you nearly as far as the investment in yourself and your career.

jen25w
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Re: Where should I be financially at 39?

Post by jen25w » Wed Oct 31, 2018 9:10 pm

You guys are amazing. ❤️

gwrvmd
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Re: Where should I be financially at 39?

Post by gwrvmd » Wed Oct 31, 2018 10:38 pm

I believe 25X expenses is a poor guide. It assumes that your portfolio only produces income equal to inflation for 25 years and doesn't give a yearly guide.
I think the following guide is more useful, it indicates how much your retirement portfolio should be in reference to your age and your gross income as you progress through life if you want to have the same standard of living when you retire.

30 yo 1X
35 2x
40 3x
45 4x
50 6x
55 8x
60 10x
65 12x (some would say 14)

This essentially tells you where you should be if you want to retire at your current standard of living. It is low in the 30s and 40s when people are having kids and buying houses but you better double you portfolio between 50 and 65 (but income from the portfolio is helping then). It will be influenced by how much SS and pension income you receive but do not use that as an excuse. the above is where you should be.
If you make $80,000 a year, your need a portfolio of $960,000 to maintain your current lifestyle for 25 years (based on 50% stock and 50% bonds portfolio)..........Gordon
Disciple of John Neff

onourway
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Re: Where should I be financially at 39?

Post by onourway » Thu Nov 01, 2018 4:31 am

While it's tough to start thinking about retirement for the first time at age 39, it's a lot tougher when you wait until you are 60! You guys have 20+ years to catch up. It's not going to happen all at once, it's going to happen by saving a little bit at a time, every month. Try to evaluate things on a yearly basis, rather than daily or monthly. It should make your progress easier to track.

The really important thing is to set up your savings to happen every pay period or every month, automatically. Let life continue to happen while your savings happens in the background.

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oldcomputerguy
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Re: Where should I be financially at 39?

Post by oldcomputerguy » Thu Nov 01, 2018 4:51 am

When my boss retired some years back, his parting advice to me was "save all you can". Seems good advice no matter where you are in life.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

indexonlyplease
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Re: Where should I be financially at 39?

Post by indexonlyplease » Thu Nov 01, 2018 5:01 am

Max out your 401k (husband and wife)
Max out Roth IRA (husband and wife)
live debt free
make sure you have an emergency fund
make sure your investments are correct and have a plan. Don't make mistakes in your investments. Set them up one time correctly .

This is the best you can do with your salary. It does not matter what you should of done at 25yrs old.

After all that enjoy what is left of your money. You still have to live.

I like the short book by Bill Bernstein. Read it on amazon.

mancich
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Re: Where should I be financially at 39?

Post by mancich » Thu Nov 01, 2018 5:46 am

As others have said, the past is over. Focus hard on saving/investing as much as possible (using the amazing advice on this forum), live frugally, work hard at your career, and keep your head down. You will be fine.

Grt2bOutdoors
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Re: Where should I be financially at 39?

Post by Grt2bOutdoors » Thu Nov 01, 2018 6:37 am

gwrvmd wrote:
Wed Oct 31, 2018 10:38 pm
I believe 25X expenses is a poor guide. It assumes that your portfolio only produces income equal to inflation for 25 years and doesn't give a yearly guide.
I think the following guide is more useful, it indicates how much your retirement portfolio should be in reference to your age and your gross income as you progress through life if you want to have the same standard of living when you retire.

30 yo 1X
35 2x
40 3x
45 4x
50 6x
55 8x
60 10x
65 12x (some would say 14)

This essentially tells you where you should be if you want to retire at your current standard of living. It is low in the 30s and 40s when people are having kids and buying houses but you better double you portfolio between 50 and 65 (but income from the portfolio is helping then). It will be influenced by how much SS and pension income you receive but do not use that as an excuse. the above is where you should be.
If you make $80,000 a year, your need a portfolio of $960,000 to maintain your current lifestyle for 25 years (based on 50% stock and 50% bonds portfolio)..........Gordon
And if you make 80 but live on 40? You still need 960 - 960 is exactly 24x expenses. But you don’t need 960 in personal savings, rather it’s the savings pool that includes social security and any other income. Not saying OP should stop if/when they get to 960k, I’d keep going as a buffer is a good thing.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

dziuniek
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Re: Where should I be financially at 39?

Post by dziuniek » Thu Nov 01, 2018 7:06 am

Grt2bOutdoors wrote:
Thu Nov 01, 2018 6:37 am
gwrvmd wrote:
Wed Oct 31, 2018 10:38 pm

And if you make 80 but live on 40? You still need 960 - 960 is exactly 24x expenses. But you don’t need 960 in personal savings, rather it’s the savings pool that includes social security and any other income. Not saying OP should stop if/when they get to 960k, I’d keep going as a buffer is a good thing.
+1.

Lots of financial planners aim for a 80% income replacement rate. I believe this is too high for a typical middle income family. This is because Social Security should account for a high percentage of their income in retirement.

SS Should provide you two with what, $30-40 k annually?
That right there takes care of a big chunk.

You've got time, save until it hurts a little - that's my barometer for knowing I'm saving enough.

Good luck, you'll get there!

Olemiss540
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Re: Where should I be financially at 39?

Post by Olemiss540 » Thu Nov 01, 2018 7:20 am

The math is easy once you assume reasonable rates of return. Retirement is based on savings rate or percentage of your income is spending versus savings.

http://www.mrmoneymustache.com/2012/01/ ... etirement/

Keep in mind this does not include social security, so may be a tad conservative considering the age you are most likely to retire.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.

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Sandtrap
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Re: Where should I be financially at 39?

Post by Sandtrap » Thu Nov 01, 2018 7:43 am

Break down long term goals into short term actionable steps.

.... to include the following ... every day ... until it is a behavioral habit.

0. Focus on earning as well as saving and investing. Without the first nothing happens.
1. Minimize expenses
2. Avoid debt
3. Maximize income
4. Invest in your professional and personal education, training, and earning power. (do this creatively and always)
5. Diversify your income stream
6. Avoid personal and financial "Black Swans" and be prepared for the inevitable ones.
7. Surround yourself with those with similar goals and integrity.
8. Nurture a passion for work and fun doing #0-8 above without waver and you might far exceed what a spreadsheet can predict.

(Become an active long term Boglehead forum member) :happy
Have fun. :D

Bacchus01
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Re: Where should I be financially at 39?

Post by Bacchus01 » Thu Nov 01, 2018 7:56 am

gwrvmd wrote:
Wed Oct 31, 2018 10:38 pm
I believe 25X expenses is a poor guide. It assumes that your portfolio only produces income equal to inflation for 25 years and doesn't give a yearly guide.
I think the following guide is more useful, it indicates how much your retirement portfolio should be in reference to your age and your gross income as you progress through life if you want to have the same standard of living when you retire.

30 yo 1X
35 2x
40 3x
45 4x
50 6x
55 8x
60 10x
65 12x (some would say 14)

This essentially tells you where you should be if you want to retire at your current standard of living. It is low in the 30s and 40s when people are having kids and buying houses but you better double you portfolio between 50 and 65 (but income from the portfolio is helping then). It will be influenced by how much SS and pension income you receive but do not use that as an excuse. the above is where you should be.
If you make $80,000 a year, your need a portfolio of $960,000 to maintain your current lifestyle for 25 years (based on 50% stock and 50% bonds portfolio)..........Gordon
I don't agree with this at all, as most here would not agree either. This is too low.

onourway
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Re: Where should I be financially at 39?

Post by onourway » Thu Nov 01, 2018 8:32 am

Bacchus01 wrote:
Thu Nov 01, 2018 7:56 am

I don't agree with this at all, as most here would not agree either. This is too low.
It's based on gross income rather than expenses, but the net result is pretty similar to saying ~25x expenses.

The reality is that most people know their gross income but have no idea what their expenses are, so using a rule of thumb based on income is much more applicable to the large part of the population who may otherwise not be thinking about retirement saving at all, as imperfect as it may be.

smitcat
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Re: Where should I be financially at 39?

Post by smitcat » Thu Nov 01, 2018 8:37 am

onourway wrote:
Thu Nov 01, 2018 8:32 am
Bacchus01 wrote:
Thu Nov 01, 2018 7:56 am

I don't agree with this at all, as most here would not agree either. This is too low.
It's based on gross income rather than expenses, but the net result is pretty similar to saying ~25x expenses.

The reality is that most people know their gross income but have no idea what their expenses are, so using a rule of thumb based on income is much more applicable to the large part of the population who may otherwise not be thinking about retirement saving at all, as imperfect as it may be.
Yes - it might be better than nothing but I agree with Bachus01 that it is misleading and too low for most here. (and too high for others)

aristotelian
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Re: Where should I be financially at 39?

Post by aristotelian » Thu Nov 01, 2018 8:50 am

OP, you do not need 25X current income, you need 25X retirement expenses.

If you make $100K but lose $20K to taxes and save $20K, you are only spending $60K. Let's say you will get $20K from Social Security. You may need to factor taxes and additional expenses in retirement, but $40K expenses would be a decent estimate. In that case, even though your current income is $100K, you would only need to save $1M, not $2.5M, to support your current standard of living.

If the more you save, the lower your expense, and therefore the lower your target number that you need to save.

Here is a good post for the factors that affect whether and when you are on track to retire. It is geared toward early retirement but works the same if your goal is traditional retirement.

http://www.mrmoneymustache.com/2012/01/ ... etirement/

MathWizard
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Re: Where should I be financially at 39?

Post by MathWizard » Thu Nov 01, 2018 9:01 am

Certainly, it is 25x (expenses - other passive income)
Passive income would include Social Security, profits from a rental home for example.

If you aren't going into debt, if you save more, your expenses
are less, so saving helps two ways.

The expenses are those in retirement, so I will assume you no longer have a mortgage or any other debt, and that you are not supporting kids or paying college tuition.

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tennisplyr
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Re: Where should I be financially at 39?

Post by tennisplyr » Fri Nov 02, 2018 8:15 am

ThankYouJack wrote:
Wed Oct 31, 2018 8:38 pm
It's usually 25x annual expenses, not income. So say your expenses are $40,000, you would need $1 million - probably even less when you factor in social security.

I wouldn't worry too much about the lost time. It's very tough to retire early. I would just work on having a good savings rate going forward and you'll be way ahead most Americans.

+1
Those who move forward with a happy spirit will find that things always work out.

Ron Scott
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Re: Where should I be financially at 39?

Post by Ron Scott » Fri Nov 02, 2018 1:16 pm

Sandtrap wrote:
Thu Nov 01, 2018 7:43 am
Break down long term goals into short term actionable steps.

.... to include the following ... every day ... until it is a behavioral habit.

0. Focus on earning as well as saving and investing. Without the first nothing happens.
1. Minimize expenses
2. Avoid debt
3. Maximize income
4. Invest in your professional and personal education, training, and earning power. (do this creatively and always)
5. Diversify your income stream
6. Avoid personal and financial "Black Swans" and be prepared for the inevitable ones.
7. Surround yourself with those with similar goals and integrity.
8. Nurture a passion for work and fun doing #0-8 above without waver and you might far exceed what a spreadsheet can predict.

(Become an active long term Boglehead forum member) :happy
Have fun. :D
Well put!

To elaborate on #6, from my own perspective and specifically in regard to preparation, retirees who need to spend a relatively high % of assets for living expenses (4% and more), rely on higher returns from equities, and who may need to sell equities at a low to fund living expenses are not as well prepared as those who spend a relatively low % of assets for living expenses, can live with relatively low returns, and who will not need to sell equities at a low to fund living expenses. This is common sensical but you'd be surprised...

The market is a great thing and most people benefit from exposing themselves to risk there, but it is volatile, and you don't want to get caught up on the wrong side of volatility.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

davidsorensen32
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Re: Where should I be financially at 39?

Post by davidsorensen32 » Fri Nov 02, 2018 1:38 pm

OP, here is an actionable checklist for you: viewtopic.php?t=194246 How many of these have you achieved ?

Ron Scott
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Re: Where should I be financially at 39?

Post by Ron Scott » Fri Nov 02, 2018 2:05 pm

Bacchus01 wrote:
Thu Nov 01, 2018 7:56 am
gwrvmd wrote:
Wed Oct 31, 2018 10:38 pm
I believe 25X expenses is a poor guide. It assumes that your portfolio only produces income equal to inflation for 25 years and doesn't give a yearly guide.
I think the following guide is more useful, it indicates how much your retirement portfolio should be in reference to your age and your gross income as you progress through life if you want to have the same standard of living when you retire.

30 yo 1X
35 2x
40 3x
45 4x
50 6x
55 8x
60 10x
65 12x (some would say 14)

This essentially tells you where you should be if you want to retire at your current standard of living. It is low in the 30s and 40s when people are having kids and buying houses but you better double you portfolio between 50 and 65 (but income from the portfolio is helping then). It will be influenced by how much SS and pension income you receive but do not use that as an excuse. the above is where you should be.
If you make $80,000 a year, your need a portfolio of $960,000 to maintain your current lifestyle for 25 years (based on 50% stock and 50% bonds portfolio)..........Gordon
I don't agree with this at all, as most here would not agree either. This is too low.
It is too low.

I am conservative and think 30X expenses in savings is a good number for someone retiring around 63-66. The more the better...
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

stocknoob4111
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Re: Where should I be financially at 39?

Post by stocknoob4111 » Fri Nov 02, 2018 2:57 pm

I did not start saving until age 32 and did not start investing consistently since start of this year, i'm 44 btw. Can't change the past, focus on changing the future. No use running hypotheticals of how much you "lost" and being bummed about it, better run the numbers moving forward as that is more constructive.

I don't focus on any numeric goal.. I try to save and invest as much as I possibly can without compromising quality of life important to me - I have a few things such as travel that i'm passionate about and will not give up to save money.

mariezzz
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Re: Where should I be financially at 39?

Post by mariezzz » Fri Nov 02, 2018 3:07 pm

dziuniek wrote:
Wed Oct 31, 2018 8:33 pm
Step 1... Don't freak out.

You will find there's plenty of people that started even later than you two.


Starting at 39, you have quite a way to retirement age and plenty of time to do it. What's important is that even if you don't get to your goal - you will be much further ahead than you are now.

Also, the 25 times expenses is a derived from the 4% Rule* - which is more of a guideline, a starting point if you will.

Most importantly... you don't multiply 25 times your income, but expenses rather.

At 39 most have a mortgage, kids in daycare, big car payments, possibly student loans... - you have time to take care of these before retirement.

You can now see how much smaller your retirement expenses could possibly be.

Examples:
- Our mortgage is $2,300 (taxes, insurance included) which won't be an expenses in retirement, only property taxes.
- We can probably do with 1 car if needed (cars are a big expenses for a lot of folks)

Study up, read the forum, and save what you can. (but also relax!)
The above is excellent advice.

All you can do is try to save as much as you can by asking yourself, at every expense, is this really worth it? You also need to realize that 'comfortable' for one person is excessive for another. Keep in mind: you define what 'enough' is. You'll also have some social security.

Don't get caught up in the worry that you don't have the million plus that so many on this forum have. If I had 1 million at this point, I would retire. I live frugally enough that a million right now would be far more than I need for the rest of my life (that would be $40K per year if I just kept up with inflation, and I don't spend that much right now. If the money were invested, it would most likely grow beyond the initial principal.).

What you can save depends on your income and your expenses. You have a degree of control over expenses. While you can add to your income by working a second part-time job, and you could consider that, you also need to factor in how that affects your quality of life. At $75K annually, there's no real need to take on a second job. Keep living as frugally as you did as a graduate student (and if you were not all that frugal, live even more frugally).

Max out your retirement accounts annually (401k if you have one; TIRA or Roth IRA). There are some good reasons to invest in tax deferred as opposed to Roth if you don't think your tax bracket will be higher in retirement (and some have argued that tax-deferred is best for almost everyone).

I would think on an income of $75K, you would have no problem putting $24K into a 401k and a TIRA - and you'll save taxes on all that money. Do that for 10 years, invest in at least 60% equities, and you'll be well on your way to a decent retirement.

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Sandtrap
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Re: Where should I be financially at 39?

Post by Sandtrap » Fri Nov 02, 2018 8:26 pm

davidsorensen32 wrote:
Fri Nov 02, 2018 1:38 pm
OP, here is an actionable checklist for you: viewtopic.php?t=194246 How many of these have you achieved ?
post checklist reprinted below
Hello, should we feel we’ve “arrived” when we achieve

1. Vanguard Flagship status
2. 2 commas in our networth excluding primary residence
3. Paid off primary residence
4. All investments in 3 fund portfolio
5. >401K in our 401(k)
6. >800+ FICO
7. <0.10bps weighted ER
8. > 2nd bend on Social security curve : https://www.ssa.gov/oact/cola/bendpoints.html
9. > $2,000 per year on CC promos
10. TLH: -$3000 deduction every year from taxable income
11. ~0 increase in tax liability due to investment from income
12. Fully funded college tuition per kid in 529s
13. 4% SWR + Pension > living costs for the rest of our lives?
14. Term life insurance + living wills
15. Maintain AA even during bear markets
16. No cable - no CNBC, no WSJ, no Jim Cramer
17. 6 months emergency fund in Vanguard Intermediate Term Tax Exempt Admiral shares

What else?

mariezzz
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Re: Where should I be financially at 39?

Post by mariezzz » Fri Nov 02, 2018 8:59 pm

I think one can be quite satisfied without achieving most on the list. To the OP: I would not feel I had failed if I hadn't met most on the list by the time I retire.
Even people who do quite well are not going to achieve many of those: #1, #2, #8 (a very small percent ever reach the 2nd bend point), #9, #12 (there are other ways to pay for college, some better in some circumstances

Others are a bit too specific (#4, #6 (what about 780?), #17 (why not hold the money in some other way?), #14 (not everyone needs term life insurance), #10, #11

Reasonable are #3, #5 (or as much as is possible given one's salary & circumstances), #7, #13 (living costs can be adjusted), #15, #15
Sandtrap wrote:
Fri Nov 02, 2018 8:26 pm
davidsorensen32 wrote:
Fri Nov 02, 2018 1:38 pm
OP, here is an actionable checklist for you: viewtopic.php?t=194246 How many of these have you achieved ?
post checklist reprinted below
Hello, should we feel we’ve “arrived” when we achieve

1. Vanguard Flagship status
2. 2 commas in our networth excluding primary residence
3. Paid off primary residence
4. All investments in 3 fund portfolio
5. >401K in our 401(k)
6. >800+ FICO
7. <0.10bps weighted ER
8. > 2nd bend on Social security curve : https://www.ssa.gov/oact/cola/bendpoints.html
9. > $2,000 per year on CC promos
10. TLH: -$3000 deduction every year from taxable income
11. ~0 increase in tax liability due to investment from income
12. Fully funded college tuition per kid in 529s
13. 4% SWR + Pension > living costs for the rest of our lives?
14. Term life insurance + living wills
15. Maintain AA even during bear markets
16. No cable - no CNBC, no WSJ, no Jim Cramer
17. 6 months emergency fund in Vanguard Intermediate Term Tax Exempt Admiral shares

What else?

mariezzz
Posts: 290
Joined: Mon Oct 02, 2017 11:02 pm

Re: Where should I be financially at 39?

Post by mariezzz » Fri Nov 02, 2018 9:04 pm

To the OP:
Assuming you have a 401k/403b at your current employer:
If your employer's 401k will allow you to contribute huge amounts between now & the end of the year, do it, if you can survive financially without the money for a couple months.

That will allow you to put a large amount in the 401k for 2018, and then you can max out your contribution for 2019.

If you can also max out your 2018 Traditional IRA (to which you can contribute until April 15, 2019), do that as well, but max out the 2018 401k first.

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Cycle
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Re: Where should I be financially at 39?

Post by Cycle » Fri Nov 02, 2018 9:13 pm

My wife and I started saving in our early twenties, and in 4 years at 39 we should have 2.2MM-ish

There's no magic number, we plan on working indefinitely, but hopefully with the freedom to work part time. Megacorp will likely not be suoer appealing a decade from now. We were "fi" couple years ago since we spend so little.

25 times your annual spend though would be a good target. Make a game of increasing your savings rate.

FoolMeOnce
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Re: Where should I be financially at 39?

Post by FoolMeOnce » Fri Nov 02, 2018 10:29 pm

jen25w wrote:
Wed Oct 31, 2018 8:25 pm
Does anyone know how much I'd need to invest right now to be caught up to where I'd be if I'd begun investing when I was 25 years old, like so many people are doing?
If the bolded part is contributing to your angst, let that go, most people are not saving and investing at age 25. (Notwithstanding the post directly above mine :happy ).

dziuniek
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Re: Where should I be financially at 39?

Post by dziuniek » Sat Nov 03, 2018 6:38 am

I just wanted to add one thing.

We can all play the what if game.

If I started at 25, I would be 50% of the way to financial independence by now (at 33). Hindsight is 20/20 and we did have a heck of a bull market for the last decade.

If I invested in Amazon... Tesla... etc...

You can only make choices in the now.

To put things in perspective, probably atleast half of my friends don't have a 401k or don't use it. Even if end up at 15X Expenses at 65, I'll have 10 to 100 times more money stashed that them. Not that it matters, but it's all relative. Per Fidelity I think the average 401k balance is just a little bit north of $100k. With 2 401ks.... (contribution limit just went up to $19k for 2019)... you could have more than the average 401k user in 4 years....

RobLyons
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Re: Where should I be financially at 39?

Post by RobLyons » Sat Nov 03, 2018 6:40 am

fortfun wrote:
Wed Oct 31, 2018 8:32 pm
We didn't save enough early on either but are saving a 100k/yr now to make up for it. We are doing this by cutting our spending as much as possible.

Good luck!

Whoa!! Incredible. Congrats
"Great parenting sets the foundation for a better world"

mmmodem
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Re: Where should I be financially at 39?

Post by mmmodem » Sat Nov 03, 2018 9:47 am

jen25w wrote:
Wed Oct 31, 2018 8:25 pm
Can anyone give me a rough estimate of how much I should have saved right now if I began when I was 25?
Sure. I graduated at 27 and got a job paying $50k a year. I maxed out 401k and Roth IRA almost every year. The past 12 years (I'm 39) I've gotten married and had kids. DW did not max out 401k every year as she wasn't fully employed every year. We do not have taxable accounts as we spent what little remained from our meager salaries in a HCOL area after maxing out retirement. Our combined retirement just crested $1M this year.

And we can retire in a couple more years as the extreme savings means we have very low expenses. So if you're starting at 39 and do the same as we did, you can retire early at 55. In other words, take a deep breath. You're doing just fine.

Charon
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Re: Where should I be financially at 39?

Post by Charon » Sat Nov 03, 2018 1:10 pm

Ron Scott wrote:
Fri Nov 02, 2018 2:05 pm
It is too low.

I am conservative and think 30X expenses in savings is a good number for someone retiring around 63-66. The more the better...
Frankly, statements like this are why people like the OP are overwhelmed and disheartened. 30X expenses is a crazy goal for most people (it would support your current lifestyle indefinitely with no SS, given the just over 3% withdrawal rate). 30X expenses is a great goal for a rich person who intends to retire at 45. It's an absurd and generally impossible goal for a person of modest income who intends to retire at 67 (and get half or more of their retirement income from SS, like most people).

This applies, to a lesser extent, to everyone saying 25X expenses too. That 4% SWR is for a safe 30-year retirement without SS.

"The more the better" is kind of true, but if you start throwing around numbers like this, don't be surprised if normal (non-Boglehead) people of modest income throw up their hands and don't bother even trying.

OP, try to save at least 15% of your income, and ramp that up to 25% as you can. Bonus, the higher you can get that savings rate, the less money you're living on, and the less money you actually need to save! Also, vote for people who'll protect and strengthen Social Security.

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Re: Where should I be financially at 39?

Post by welderwannabe » Sat Nov 03, 2018 1:47 pm

jen25w wrote:
Wed Oct 31, 2018 8:25 pm
I see the "2.5 million" number and feel so defeated and hopeless like it'll never happen.
It may not feel like it, but you have plenty of time to put away a nice nest egg to retire. You just don't want to wait any longer. Put at least 15% of your income away...20% would be better. Grind it out.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

Ron Scott
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Re: Where should I be financially at 39?

Post by Ron Scott » Sat Nov 03, 2018 3:00 pm

Charon wrote:
Sat Nov 03, 2018 1:10 pm
Ron Scott wrote:
Fri Nov 02, 2018 2:05 pm
It is too low.

I am conservative and think 30X expenses in savings is a good number for someone retiring around 63-66. The more the better...
30X expenses is a crazy goal for most people (it would support your current lifestyle indefinitely with no SS, given the just over 3% withdrawal rate).

That 4% SWR is for a safe 30-year retirement without SS.
There is nothing to back your fantastical assertions. Neither of us is able to predict future investment return rates to know today whether the 4% "rule" will suffice in mid-21st century America. And no "expert" here can either.

All we can do is prepare. Retirees who spend a relatively low % of assets for living expenses, can live with relatively low returns, and who will not need to sell equities at a low to fund living expenses are simply better prepared.
Retirement is a game best played by those prepared for more volatility in the future than has been seen in the past. The solution is not to predict investment losses but to prepare for them.

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