How do you compare with other investors your age?

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deci02
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How do you compare with other investors your age?

Post by deci02 » Fri Sep 20, 2013 11:06 am

From Vanguard Retirement Planning, for those who love data points (and you know who you are). Not sure if this has been posted here previously.

http://t.co/8OIOeZy4GQ

Levett
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Re: How do you compare with other investors your age?

Post by Levett » Fri Sep 20, 2013 11:27 am

I guess all Bogleheads are "above average." ;-)

Imagine that!

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scone
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Re: How do you compare with other investors your age?

Post by scone » Fri Sep 20, 2013 11:52 am

Wow. Just, wow. I am so far away from the norm, I might as well be in another galaxy. I expected Vanguard investors to have a higher savings rate. :shock:
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore

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Re: How do you compare with other investors your age?

Post by Grt2bOutdoors » Fri Sep 20, 2013 12:30 pm

Bogleheads are an anamoly, ubersaver is an understatement. Did you see the definiton of a champion saver? 10%! :o I think Bogleheads are blowing these numbers presented out of the water. Just remember, you are fortunate if you are able to do so. Pay it forward - which I think we do every day by offering valuable advice for others to learn from. Keep up the good work. :sharebeer
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thx1138
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Re: How do you compare with other investors your age?

Post by thx1138 » Fri Sep 20, 2013 12:31 pm

scone wrote:I expected Vanguard investors to have a higher savings rate. :shock:


These are not "Vanguard investors". The study is only looking at 401k plans managed by Vanguard. It doesn't look at IRAs or taxable accounts. So the "investors" made no choice about Vanguard at all, their employers made the choice. Fortunately for them they probably have a decent 401k plan if they choose to use it. But there is no Vanguard selection bias going on here as you might expect to see from IRA/taxable where the investor made a choice to come to Vanguard.

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Re: How do you compare with other investors your age?

Post by nisiprius » Fri Sep 20, 2013 12:37 pm

I don't compare myself with other investors. Well, I try not to. As Popeye said, "I yam what I yam."
Last edited by nisiprius on Fri Sep 20, 2013 12:38 pm, edited 1 time in total.
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Re: How do you compare with other investors your age?

Post by The Wizard » Fri Sep 20, 2013 12:38 pm

thx1138 wrote:
scone wrote:I expected Vanguard investors to have a higher savings rate. :shock:


These are not "Vanguard investors". The study is only looking at 401k plans managed by Vanguard. It doesn't look at IRAs or taxable accounts. So the "investors" made no choice about Vanguard at all, their employers made the choice. Fortunately for them they probably have a decent 401k plan if they choose to use it. But there is no Vanguard selection bias going on here as you might expect to see from IRA/taxable where the investor made a choice to come to Vanguard.

Correct.
I have like 5% of my investment assets at VG and 95% at TIAA-CREF, so the data at that link is meaningless...
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Rodc
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Re: How do you compare with other investors your age?

Post by Rodc » Fri Sep 20, 2013 12:40 pm

nisiprius wrote:I don't compare myself with other investors. Well, I try not to. As Popeye said, "I yam what I yam."


Exactly.

I try to only compare to my own goals.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

bradshaw1965
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Re: How do you compare with other investors your age?

Post by bradshaw1965 » Fri Sep 20, 2013 12:41 pm

Due to tax advantaged rules and inertia my investments don't only live at Vanguard. I'm aware of the problems of the differing account homes, but I'd assume that quite a few people consider it, "just the way it is". This is a super simple sample of retirement plan account balances *at* Vanguard, sorted by age. I don't know that it says much about net-worth, etc.

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baw703916
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Re: How do you compare with other investors your age?

Post by baw703916 » Fri Sep 20, 2013 12:44 pm

My Vanguard account is about average for my age bracket. It's not my only account, though.
Most of my posts assume no behavioral errors.

thx1138
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Re: How do you compare with other investors your age?

Post by thx1138 » Fri Sep 20, 2013 12:45 pm

A look at some other important things glossed over

- This is only looking at 401k plans, not IRAs or taxable. So this is not necessarily the total savings of the participants.
- The average tenure was 8 years. Since people likely rarely rollover into an employer plan rather than a IRA when they change jobs this means we are probably only looking at on average 8 years of savings in these numbers. Don't feel too giddy about how you compare without considering a fair comparison.
- There is extreme skew in the distribution, $86K average balance but median is $28K for all ages combined. Looking at one age demographic, for 45-54 average is $103K and median is $46K. So things for the majority of workers (i.e. median numbers) are even worse than the averages (i.e. skewed by the best and wealthiest savers) reported in the linked summary. Worse by more than a factor of two.
- The skew distribution remains across all tested demographics (income, age, gender, tenure). It really looks like there are "savers" and "spenders" and the gap between them is quite large at least when viewed through this kind of data.

Anyway, if curious be sure to follow the link to the full study (98 page PDF). I've barely glanced at it and already there is a lot more interesting in there than the short summary article implies.

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Re: How do you compare with other investors your age?

Post by chaz » Fri Sep 20, 2013 12:51 pm

Very interesting.
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letsgobobby
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Re: How do you compare with other investors your age?

Post by letsgobobby » Fri Sep 20, 2013 12:56 pm

On Bogleheads, if you're not a millionaire, you're not above average:

viewtopic.php?t=69143

viewtopic.php?f=2&t=111638&p=1626063

tough crowd!

tigermilk
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Re: How do you compare with other investors your age?

Post by tigermilk » Fri Sep 20, 2013 1:25 pm

letsgobobby wrote:On Bogleheads, if you're not a millionaire, you're not above average:

viewtopic.php?t=69143

viewtopic.php?f=2&t=111638&p=1626063

tough crowd!

Both those threads have pretty meaningless polls IMO. A better poll would be net worth normalized by age. It seems as though there are quite a few here who have already reached retirement age that tend to skew the results.

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Re: How do you compare with other investors your age?

Post by letsgobobby » Fri Sep 20, 2013 1:33 pm

duplicate
Last edited by letsgobobby on Fri Sep 20, 2013 1:48 pm, edited 1 time in total.

letsgobobby
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Re: How do you compare with other investors your age?

Post by letsgobobby » Fri Sep 20, 2013 1:48 pm

The first poll makes no pretense to correct for age. It does show that half of all respondents to that poll are millionaires. The purpose of the poll was not to calculate a precise ratio of millionaires:non-millionaires, but rather to demonstrate that Bogleheads are *far* from average in terms of savings, and that should be taken into account by visitors, guests, new posters, and old hacks alike, as it may influence our life experiences/values/perspectives/opinions.

The second poll includes a link to a graph which does show net worth by age, so I think that may be what you are looking for.

Edit: oops, that second poll isn't the thread I thought it was. Here is the megathread with poll, graph, and spreadsheet:

viewtopic.php?f=10&t=88801

scone
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Re: How do you compare with other investors your age?

Post by scone » Fri Sep 20, 2013 1:52 pm

Whatever. Clearly, Bogleheads can pick more nits off the head of a pin than any mere Vanguard investor! And no, I'm not going to give a statistical proof of that. :wink:

It does look like these investors are doing pretty poorly. If they are anywhere close to "normal," this is bad indeed.
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henry A
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Re: How do you compare with other investors your age?

Post by henry A » Fri Sep 20, 2013 4:20 pm

I think it is somewhat interesting that the percentage invested in target retirement funds decreases drastically with age.. What kind of assumptions can you make from that? The older you get, the 'smarter' people think they are? Or should young investors just start out with their own stock/bond allocated funds from the start?

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Re: How do you compare with other investors your age?

Post by lindisfarne » Fri Sep 20, 2013 4:40 pm

Those numbers at the Vanguard link still are higher than the average American's total investments, even if they don't reflect other accounts that people with some investments at Vanguard might have.

"Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008. "
http://online.wsj.com/article/SB10001424127887323639604578368823406398606.html

"According to a Pew Research Center survey in August [2012], while two-thirds of middle-class Americans are satisfied they've saved enough for their golden years, the opposite is true for most people. (The Pew survey: preview.tinyurl.com/8bo58d4)"
http://www.reuters.com/article/2012/09/21/us-column-save-retirement-idUSBRE88K0NB20120921

2retire
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Re: How do you compare with other investors your age?

Post by 2retire » Fri Sep 20, 2013 4:51 pm

henry A wrote:I think it is somewhat interesting that the percentage invested in target retirement funds decreases drastically with age.. What kind of assumptions can you make from that? The older you get, the 'smarter' people think they are? Or should young investors just start out with their own stock/bond allocated funds from the start?

The numbers simply reflect that Target Date funds are now the default choices for new entrants (auto enrollee's) into most 401(k) plans. People that have been in plans a long time tend to stick with what they have. If Target Date funds weren't around when they started saving, they don't tend to see a reason to switch to them now.

Most people say they are happy with their investments as long as they go up. They really have no idea what to compare their returns to. That is why people stay with advisors. As long as their balance goes up, they feel they are doing well and their advisor is doing well by them.

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Re: How do you compare with other investors your age?

Post by john94549 » Fri Sep 20, 2013 8:47 pm

A problem with all these surveys is how anyone (other than, perhaps, the IRS) can accurately opine as to "how much" folks have in retirement savings. Even the IRS would be limited in its opinions. For example, if a retiree has $2 million in IRAs/401Ks, sure, assume those as retirement funds. But what if a retiree has $1 million in a brokerage account (taxable) and another $300K in taxable CDs/savings accounts. Is the grand total deemed "retirement savings", or assets of a couple who might be of retirement age. There is also a certain hubris, since retirement assets might well include real estate, coins, or whatever.

Further compounding the confusion, how might any single institution presume to opine as to the "savings rate" of an investor. One might "save" 18% of one's income in a 401K (as does my wife), yet allocate 60% of that to a Schwab fund (SWPPX) and 40 % to a Vanguard fund (VBTSX). How would that enter into the mix? Would Vanguard assume her savings rate is .4 X 18 = 7.2%, since that is all Vanguard "sees"? More to the point, would Vanguard even "see" that monthly contribution as 7.2% of her monthly income unless someone shared her income with Vanguard?

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Re: How do you compare with other investors your age?

Post by madbrain » Fri Sep 20, 2013 9:26 pm

Grt2bOutdoors wrote:Did you see the definiton of a champion saver? 10%!


It gets worse : those "champion savers" are 65 and older.

In other words, they should already be retired, and are trying to make up for lost time ... I am not sure they deserve that title.

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wander
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Re: How do you compare with other investors your age?

Post by wander » Fri Sep 20, 2013 9:35 pm

I don't see what to gain for comparing with other folks. I will just be me and I am doing great.

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Re: How do you compare with other investors your age?

Post by john94549 » Fri Sep 20, 2013 9:43 pm

madbrain wrote:
Grt2bOutdoors wrote:Did you see the definiton of a champion saver? 10%!


It gets worse : those "champion savers" are 65 and older.

In other words, they should already be retired, and are trying to make up for lost time ... I am not sure they deserve that title.


As I noted, I wouldn't get riled up over these numbers. Yes, some retirees skew the numbers by over-withholding their 401Ks while filing for spousal benefits. As we do. I doubt there's a scientific survey to account for couples who are partially retired, one spouse working while collecting spousal benefits, the other spouse retired, while the working spouse contributes to a 401K, but to two or more separate funds

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Re: How do you compare with other investors your age?

Post by Ged » Fri Sep 20, 2013 9:51 pm

The Wizard wrote:I have like 5% of my investment assets at VG and 95% at TIAA-CREF, so the data at that link is meaningless...


My percentage at Vanguard is small as well. I think this understates the total numbers for Vanguard customers by quite a bit.

OTOH, compared to the general population, who knows?

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Re: How do you compare with other investors your age?

Post by Texas hold em71 » Fri Sep 20, 2013 10:20 pm

I am never very comfortable looking at a portion of someone's assets and making a judgement about their financial position. Maybe because the Financial Engines light on my 401(k) sits on yellow because I have so much of my 401(k) in bond funds because my stock funds are in taxable. So according to Financial Engines, I may not have enough to retire :D

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Re: How do you compare with other investors your age?

Post by Bracket » Fri Sep 20, 2013 11:37 pm

If someone were to take a similar look at the "average"
Fidelity retirement plan investor, they'd include me and my current Fidelity 401k and conclude that I had saved 70k. Meanwhile they'd be ignoring my old TSP, my wife's 401k, my taxable Vanguard account, taxable Fidelity account, my VBS brokerage, our two Vanguard Roth IRAs, my TD Ameritrade, etc etc.

And when they commented on my savings rate within my Fidelity 401k it would always be whatever the current 401k maximum contribution is divided by my salary, which is of course a useless number since my savings rate is actually much higher than that given that I also save money in all these other accounts. So I really don't see how any useful conclusions can be drawn from the data presented, unless you assume that none of these people save for retirement using any other investment vehicles.

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Re: How do you compare with other investors your age?

Post by The Wizard » Sat Sep 21, 2013 4:25 am

wander wrote:I don't see what to gain for comparing with other folks. I will just be me and I am doing great.

The same with me and with a lot of us.
The best reason for having COMPREHENSIVE data on savings/investments vs age would be for academic studies on how best to deal with the "problem" of impoverished old people.
Usually, it comes down to having certain multiples of your annual income saved vs age and number of years worked, assuming no pension, just SS.
And usually only the top one or two deciles of folks at a given age are hitting that goal, the rest being woefully undersaved.
Regardless, that VG article is NOT the comprehensive study I'm talking about...
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Bustoff
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Re: How do you compare with other investors your age?

Post by Bustoff » Sat Sep 21, 2013 5:09 am

Interesting to see the large "cash" positions in the two oldest age groups.
Age 55–64 held 19% in cash and age 65+ had 29% in cash as distinguished from bonds.

I don't seem to see much discussion among Bogleheads about the percentage of cash they keep outside their portfolios.
I always wonder if the amount of cash and CD's that I hold is too much or too little. I don't consider short-term bond fund to be cash.

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Cautious Optimist
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Re: How do you compare with other investors your age?

Post by Cautious Optimist » Sat Sep 21, 2013 7:48 am

My two rules: 1) How much do I have..?? Not enough 2) How much do I need..?? More..!!

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nedsaid
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Re: How do you compare with other investors your age?

Post by nedsaid » Sat Sep 21, 2013 10:50 am

I must be from Lake Woebegone. I am above average in account balance and savings rate. I bit under my age group in percentage invested in stocks. I don't know about the better looking part.
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zaboomafoozarg
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Re: How do you compare with other investors your age?

Post by zaboomafoozarg » Sat Sep 21, 2013 5:53 pm

Compared to all investors my age, I am above average by quite a bit.

Compared to some investors my age on this forum, I feel like a failure :(

But all told I will probably be alright :D

crowd79
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Re: How do you compare with other investors your age?

Post by crowd79 » Sat Sep 21, 2013 6:35 pm

I am below average for people in my income range, only because I just started an IRA with Vanguard 2 years ago. My main account is my work 401k where most of my money is.

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Re: How do you compare with other investors your age?

Post by hq38sq43 » Sat Sep 21, 2013 7:26 pm

Married 51+ years and reasonably prudent (and lucky) financially, we have everything we need and most of what we want. For those doing better, congratulations. For those doing worse, sympathy and best wishes.
Harry at Bradenton

Dandy
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Re: How do you compare with other investors your age?

Post by Dandy » Mon Sep 23, 2013 5:28 pm

Unfortunately, it only counts monies in VG retirement plan accounts - many people have significant assets in their company retirement plans (not with VG) and other assets, I was excited to send this to my daughters so they could "see where they stand" but I find it not very useful for that purpose - or much value in general.

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Re: How do you compare with other investors your age?

Post by maitrina » Mon Sep 23, 2013 6:00 pm

Dandy wrote:Unfortunately, it only counts monies in VG retirement plan accounts - many people have significant assets in their company retirement plans (not with VG) and other assets, I was excited to send this to my daughters so they could "see where they stand" but I find it not very useful for that purpose - or much value in general.


Yep. My Vanguard account represents 1.6% of my retirement portfolio.
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mojave
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Re: How do you compare with other investors your age?

Post by mojave » Tue Sep 24, 2013 3:36 pm

Is this for individuals or couples?

If individuals, I am the same as average :( but saving more than twice (5% vs 12%) :)

If couples, we are double that our age, not including my husband's pension :D

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Re: How do you compare with other investors your age?

Post by IlliniDave » Wed Sep 25, 2013 6:44 am

Interesting stuff. I get an amount of encouragement seeing how I compare to my general peers. Some good points were brought up regarding the fact that the data Vanguard presents is not the complete picture for many of the participants. I've been with one company since I graduated > 25 years ago and started participating in the 401 during my second year. Even in the PDF report I didn't see any data that compared well to thet type of tenure. Too bad they didn't add a little more resolution at the top end of the tenure scale.

Nevertheless, I do max out my 401k contribution, and I was surprised how few people did (think it was < 10% for age 45-54, which I'm right in the middle of). I was surprised that I was just a little above average for % held in equities (I'm on a glide path to 70%, average was 66%). Sometimes reading discussions here I get the sense I'm rather reckless. I'm pauperish for a Boglehead, but other sources (like the Statistical Abstract published by the Census Bureau) suggest my financial lot will likely be favorable compared to my demographic peers. It's good to know the moderate ongoing sacrifices are paying off and accelerating me towards my goals. Tells me I'm doing something right.
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leonidas
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Re: How do you compare with other investors your age?

Post by leonidas » Wed Sep 25, 2013 7:52 am

It seems odd to me that someone 35-44 has an average balance of 54k. I must be misreading or not understanding the statistic. Either way, I stack up really well since i have 13 times that amount. My savings rate though is somewhat low at 7% plus another 7% match. I also seem to have a much lower equities percentage. I am about 52%.

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Re: How do you compare with other investors your age?

Post by ofcmetz » Wed Sep 25, 2013 8:47 am

leonidas wrote:It seems odd to me that someone 35-44 has an average balance of 54k. I must be misreading or not understanding the statistic. Either way, I stack up really well since i have 13 times that amount. My savings rate though is somewhat low at 7% plus another 7% match. I also seem to have a much lower equities percentage. I am about 52%.


They don't count other money people have elsewhere I'm assuming. We have about 11% of our money in ROTH IRA's at Vanguard. The rest is in employer plans and probably doesn't factor into these numbers.
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Re: How do you compare with other investors your age?

Post by zaboomafoozarg » Wed Sep 25, 2013 7:45 pm

leonidas wrote:It seems odd to me that someone 35-44 has an average balance of 54k.


This would not surprise me at all. For most of the people I know, I'd be surprised if they had made it to that amount in that age range.

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Re: How do you compare with other investors your age?

Post by ruralavalon » Thu Sep 26, 2013 4:38 pm

Thanks for the link, still interesting even though the study is limited to 401ks managed by Vanguard and does not cover assets in any IRAS, etc. the 401k particpants may have elsewhere.

I am well ahead of the curve now, but do recall my 20's and 30's when I was not.
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Re: How do you compare with other investors your age?

Post by travellight » Thu Sep 26, 2013 10:39 pm

Financially, I think I am ahead of my age; physically, I like to think I am below my age.

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Re: How do you compare with other investors your age?

Post by lindisfarne » Fri Sep 27, 2013 12:59 am

leonidas wrote:It seems odd to me that someone 35-44 has an average balance of 54k. I must be misreading or not understanding the statistic. Either way, I stack up really well since i have 13 times that amount. My savings rate though is somewhat low at 7% plus another 7% match. I also seem to have a much lower equities percentage. I am about 52%.


The people 35-44 who HAVE a retirement fund have a balance of 54k. It doesn't include all those who don't have an account at that institution (and all those who do not have an account at all).

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Re: How do you compare with other investors your age?

Post by Grt2bOutdoors » Fri Sep 27, 2013 9:31 am

leonidas wrote:It seems odd to me that someone 35-44 has an average balance of 54k. I must be misreading or not understanding the statistic. Either way, I stack up really well since i have 13 times that amount. My savings rate though is somewhat low at 7% plus another 7% match. I also seem to have a much lower equities percentage. I am about 52%.


You may have much higher compensation than the average. You disclose that you are 52% equity, but were you always at that allocation or have you just toned it down recently? If your compensation is higher than the average, then that fat 7% match which by the way is very generous compared to the general population which gets 0 - 4% would skew your balances upwards.

It reminds me of an acquaintance who also just happens to receive a 7% match, and complains his retirement account won't amount to much - he tosses in 10% of salary, plus the 7% match he receives and on top of it, will walk out with a defined benefit of 70% of his final 3 years on the job. :oops: Some people don't know just how good they have it.
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leonidas
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Re: How do you compare with other investors your age?

Post by leonidas » Fri Sep 27, 2013 10:07 am

Grt2bOutdoors wrote:You may have much higher compensation than the average. You disclose that you are 52% equity, but were you always at that allocation or have you just toned it down recently? If your compensation is higher than the average, then that fat 7% match which by the way is very generous compared to the general population which gets 0 - 4% would skew your balances upwards.


Yes, I do have above average income so that will account for a large part of the differences. I also live in Jersey so COL is on the higher side. Ashamed to say it but my savings outside of my thrift would make a boglehead cry. As for my equity allocation, that varied so much during my pre-boglehead days. During '93-'99 I was at 100% (In my 20's). I got married in '99 and became more conservative and went down to 20% equity (market timing) and maybe 20% gold/gold stock funds. Since then I bounced from about 20% to 60% equity.

After finding this board in 2007/08 the ideas being discussed were too powerful to ignore and I decided to create an asset allocation and index most of it (I own gold and a few managed funds and stocks outside my thrift plan). I now try to re balance at around 50 stock, 45 bonds and 5 gold. I leave market timing to the professionals :happy
Last edited by leonidas on Fri Sep 27, 2013 10:10 am, edited 1 time in total.

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Re: How do you compare with other investors your age?

Post by barnaclebob » Fri Sep 27, 2013 10:09 am

2retire wrote:
henry A wrote:I think it is somewhat interesting that the percentage invested in target retirement funds decreases drastically with age.. What kind of assumptions can you make from that? The older you get, the 'smarter' people think they are? Or should young investors just start out with their own stock/bond allocated funds from the start?

The numbers simply reflect that Target Date funds are now the default choices for new entrants (auto enrollee's) into most 401(k) plans. People that have been in plans a long time tend to stick with what they have. If Target Date funds weren't around when they started saving, they don't tend to see a reason to switch to them now.

Most people say they are happy with their investments as long as they go up. They really have no idea what to compare their returns to. That is why people stay with advisors. As long as their balance goes up, they feel they are doing well and their advisor is doing well by them.


I think the main reasons for the target date funds for younger people are that:

A) They are simple and people think everything is taken care of with them, and for the most part it is
B) Young people don't have enough to buy the individual funds which make up the TR funds.

Ken.
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Re: How do you compare with other investors your age?

Post by Ken. » Fri Sep 27, 2013 7:57 pm

Interesting to see folks in the 44-64 age groups having a high allocation to stocks, 71% in the 44-54 age bracket, especially if you are in your 50's. Rather than using the 100 minus your age formula it's more like 120 minus your age.

hicabob
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Re: How do you compare with other investors your age?

Post by hicabob » Fri Sep 27, 2013 8:07 pm

But - I, and probably a few others, have about 35k at Vanguard but significantly more at Fidelity, TD + Scottrade for historical reasons.

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ruralavalon
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Re: How do you compare with other investors your age?

Post by ruralavalon » Sat Sep 28, 2013 6:51 am

Ken. wrote:Interesting to see folks in the 44-64 age groups having a high allocation to stocks, 71% in the 44-54 age bracket, especially if you are in your 50's. Rather than using the 100 minus your age formula it's more like 120 minus your age.

age 45 - 54 = 70% stocks
age 55 - 64 = 60% stocks

Not greatly different than folks here @ Bogelheads.org,
age 50 = 60% stocks
age 60 = 53% stocks
2011 chart, and discussion ,

And the differnce may reflect IRAs etc. included here, but not in that survey which just covered 401ks.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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