Americans believe they need $1.7 million, on average, to retire

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mtmingus
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Americans believe they need $1.7 million, on average, to retire

Post by mtmingus » Mon Jul 08, 2019 10:15 am

What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
Last edited by mtmingus on Mon Jul 08, 2019 10:18 am, edited 1 time in total.

chisey
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Re: Americans believe they need $1.7 million, on average, to retire

Post by chisey » Mon Jul 08, 2019 10:18 am

mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension, no mortgages/rents, and excluding main residences.
Excluding main residence, that's about what we figure. That's for early retirement in a LCOL area.

rantk81
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Re: Americans believe they need $1.7 million, on average, to retire

Post by rantk81 » Mon Jul 08, 2019 10:19 am

chisey wrote:
Mon Jul 08, 2019 10:18 am
mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension, no mortgages/rents, and excluding main residences.
Excluding main residence, that's about what we figure. That's for early retirement in a LCOL area.
Yep. A little bit north of that figure is my target (plus a paid off home, in a MCOL area) for very early retirement (around age 40.)

delamer
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Re: Americans believe they need $1.7 million, on average, to retire

Post by delamer » Mon Jul 08, 2019 10:19 am

That’s $68,000/year plus Social Security to live on, in the scenario you are proposing.

My spouse and I both have substantial pensions so your scenario isn’t relevant to our savings needs.

Thesaints
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Re: Americans believe they need $1.7 million, on average, to retire

Post by Thesaints » Mon Jul 08, 2019 10:21 am

Average per capita yearly income is $31,786. It means people manage to at least survive on that much money. How many think that is a good number ?

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HomerJ
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Re: Americans believe they need $1.7 million, on average, to retire

Post by HomerJ » Mon Jul 08, 2019 10:21 am

mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
Seems a bit high.

4% of $1.7 million is $68,000

That's a lot of money if you have a paid off house. And we're not including Social Security.

I doubt the "average" American needs that much.

Might be more reasonable if you are talking about the "average" top 20% of Americans who respond to Charles Schwab surveys.

It's reasonable for me. We're shooting for about that much in retirement, with a paid off house.
Last edited by HomerJ on Mon Jul 08, 2019 10:22 am, edited 1 time in total.
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Re: Americans believe they need $1.7 million, on average, to retire

Post by randomguy » Mon Jul 08, 2019 10:22 am

mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
I am above average so I am thinking 3 million:) But lets see what 1.7 million sounds gives you. Call that 70k of income +30k of ss = 100k of income which will replace a salary income of around 120k or so. Sounds about right for the average upper middle class person who will have an account with Schwab.

NotWhoYouThink
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Re: Americans believe they need $1.7 million, on average, to retire

Post by NotWhoYouThink » Mon Jul 08, 2019 10:26 am

$1.7M per individual or per couple? Includes home value? With or without pension?

02nz
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Re: Americans believe they need $1.7 million, on average, to retire

Post by 02nz » Mon Jul 08, 2019 10:27 am

It was an online survey of 401k participants (does not appear that it was limited to Schwab account holders).

Press release with highlights: https://www.aboutschwab.com/schwab-401k ... study-2019.

Slide deck: https://content.schwab.com/web/retail/p ... 9-975C.pdf

I wouldn't get obsessed over "the number." Besides the issues of different expenses and locations with different costs of living, the survey participants range in age from 25 to 70. If they gave future nominal dollars, $1.7 million at retirement for at 25-year-old is obviously very different from the same dollar figure for someone about to retire.

For comparison, Fidelity suggests having 10X income saved by the time of retirement (age 67). At a median household income of about $60K, that's $600K, a more realistic number for typical households.
Last edited by 02nz on Mon Jul 08, 2019 10:30 am, edited 2 times in total.

Thesaints
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Re: Americans believe they need $1.7 million, on average, to retire

Post by Thesaints » Mon Jul 08, 2019 10:27 am

Retiring at what age ? With How many mouths to feed ? Averages can be dangerous numbers to rely on; the average shoe size in the US is 10 for men, for instance.

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mtmingus
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Re: Americans believe they need $1.7 million, on average, to retire

Post by mtmingus » Mon Jul 08, 2019 10:31 am

HomerJ wrote:
Mon Jul 08, 2019 10:21 am
mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
Seems a bit high.

4% of $1.7 million is $68,000

That's a lot of money if you have a paid off house. And we're not including Social Security.

I doubt the "average" American needs that much.

Might be more reasonable if you are talking about the "average" top 20% of Americans who respond to Charles Schwab surveys.

It's reasonable for me. We're shooting for about that much in retirement, with a paid off house.
Agreed. Those customers of CS or Fido or Vanguard, are not "average" American in terms of household assets. Those responded, are probably even more "skewed".
But so are most of the users on this forum. I was thinking if there were a survey on this forum, we might get something very close to that.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by mrb09 » Mon Jul 08, 2019 10:31 am

Thesaints wrote:
Mon Jul 08, 2019 10:27 am
Retiring at what age ? With How many mouths to feed ? Averages can be dangerous numbers to rely on; the average shoe size in the US is 10 for men, for instance.
Indeed! If "on average" 91% said "one million" and the remainder said "ten million", you'd end up with about 1.7 million.

runner3081
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Re: Americans believe they need $1.7 million, on average, to retire

Post by runner3081 » Mon Jul 08, 2019 10:34 am

Doesn't seem to be far off.

Our target is $2m for early retirement at 50.

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snackdog
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Re: Americans believe they need $1.7 million, on average, to retire

Post by snackdog » Mon Jul 08, 2019 10:39 am

Bogleheads, being conservative, probably would prefer about double that amount.

DoctorPhysics
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Re: Americans believe they need $1.7 million, on average, to retire

Post by DoctorPhysics » Mon Jul 08, 2019 10:44 am

2.5 mil @ at 4% withdraw rate is 100k/year, 3% withdraw is 75k/year.

I think 1.7 mil is too low, I am in a VHCOL area.

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AtlasShrugged?
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Re: Americans believe they need $1.7 million, on average, to retire

Post by AtlasShrugged? » Mon Jul 08, 2019 10:45 am

Let's try to make this more actionable. That 1.7MM number might be what they think they need, but I think ignores objective reality. The objective reality is that the overwhelming majority of people will retire with far less than 1.7MM. It is this group I would like the Bogleheads to address - those whose retirement balances are not 1.7MM (or a multiple thereof), but much lower. What are things they can do to materially help themselves?

Yes, most people already know the 'Boglehead Trinity': Save more, Cut expense, Work longer. We can dispense with these three. Heard that a million times (and said it often enough). I am much more interested in hearing from Retirees who retired with much less than 1.7MM, and read what they actually did, and the success (or failure).
“If you don't know, the thing to do is not to get scared, but to learn.”

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Re: Americans believe they need $1.7 million, on average, to retire

Post by neilpilot » Mon Jul 08, 2019 10:46 am

$1.7 in 401k is very different from that balance in Roth or after tax account. Discussion of an average is somewhat meaningless given this and so many other variables.

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willthrill81
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Re: Americans believe they need $1.7 million, on average, to retire

Post by willthrill81 » Mon Jul 08, 2019 10:50 am

mrb09 wrote:
Mon Jul 08, 2019 10:31 am
Thesaints wrote:
Mon Jul 08, 2019 10:27 am
Retiring at what age ? With How many mouths to feed ? Averages can be dangerous numbers to rely on; the average shoe size in the US is 10 for men, for instance.
Indeed! If "on average" 91% said "one million" and the remainder said "ten million", you'd end up with about 1.7 million.
Yes, using an arithmetic average in this context is likely to lead to skewed results.

We would like to have a bit more than that when I plan to retire at age 55.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Rudedog » Mon Jul 08, 2019 10:55 am

Sounds about right, maybe a little low.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by deltaneutral83 » Mon Jul 08, 2019 10:59 am

Depends on where you live an how many dependents you have and if you're 65 I think. 85% of the population in the southeast would think they hit the lottery if they essentially had an "annuity" paying out $68K a year plus social security and on medicare. Those might be soup kitchen numbers though in San Fran or NYC and not yet 65 and relying on the exchanges with an extra dependent.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by willthrill81 » Mon Jul 08, 2019 11:03 am

deltaneutral83 wrote:
Mon Jul 08, 2019 10:59 am
Depends on where you live an how many dependents you have and if you're 65 I think. 85% of the population in the southeast would think they hit the lottery if they essentially had an "annuity" paying out $68K a year plus social security and on medicare. Those might be soup kitchen numbers though in San Fran or NYC and not yet 65 and relying on the exchanges with an extra dependent.
Actually, a survey by Go Banking Rates found the median household income in San Francisco to be $96k, and they defined the 'middle-class range' from $64k to $192k. So $68k plus SS wouldn't be far from the median even there.

I really think that (1) Americans are overestimating their retirement income needs, (2) the survey's results are skewed, or (3) some combination of #1 and #2.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Americans believe they need $1.7 million, on average, to retire

Post by B. Wellington » Mon Jul 08, 2019 11:07 am

HomerJ wrote:
Mon Jul 08, 2019 10:21 am
mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
Seems a bit high.

4% of $1.7 million is $68,000

That's a lot of money if you have a paid off house. And we're not including Social Security.

I doubt the "average" American needs that much.

Might be more reasonable if you are talking about the "average" top 20% of Americans who respond to Charles Schwab surveys.

It's reasonable for me. We're shooting for about that much in retirement, with a paid off house.
+1

FWIW... Target $1.3M W/ Paid for house, also LCOLA.

bradshaw1965
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Re: Americans believe they need $1.7 million, on average, to retire

Post by bradshaw1965 » Mon Jul 08, 2019 11:11 am

Doesn't sound that unreasonable for an upper-middle class retirement but I think I'm more concerned about getting my head around the psychological changes of the decumulation stage and the need for self-directed fulfillment then I am about the exact number.

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JPH
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Re: Americans believe they need $1.7 million, on average, to retire

Post by JPH » Mon Jul 08, 2019 11:17 am

Who did they survey? Millionnaires? The average American probably cannot imagine ever having even one million.
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willthrill81
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Re: Americans believe they need $1.7 million, on average, to retire

Post by willthrill81 » Mon Jul 08, 2019 11:19 am

JPH wrote:
Mon Jul 08, 2019 11:17 am
Who did they survey? Millionnaires? The average American probably cannot imagine ever having even one million.
Considering that half the population can't lay their hands on $1k, and the median net worth of 65-69 year olds is about $210k, I believe that you're correct.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Bacchus01 » Mon Jul 08, 2019 11:21 am

I think the number is high for most people. It would be very low for us, but I think for the 80% of the people in the middle of the population, that number is high.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Mike Scott » Mon Jul 08, 2019 11:22 am

Most of the retirees that I know live on Social Security. Some have a pension to add to that. I will guess half own a house and half rent. The vast majority have no savings or investments other than what is in their checking account or maybe an actual stash of cash under the mattress. That's reality for many if not most Americans. What people believe and what they do may be two different ends of the spectrum.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Independent George » Mon Jul 08, 2019 11:23 am

It's hard to understand that number without any context - is it scaled for age and COL? If I wanted to retire tomorrow at age $42, I'd want at least 2M in assets, and preferably more. If we're talking age 65, I think I could manage with $900k in current dollars and a paid-off mortgage in my current location, secure at $1.2M, and comfortable at $1.5M.

I'm actually pleasantly surprised that the number is so high - I would have expected people to be overly optimistic about retiring with a much smaller amount saved.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by desihorn » Mon Jul 08, 2019 11:25 am

I am just glad to see that there are "normal" people here. The threads with "I have $20M and I don't know if that is enough.." freak me out.

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willthrill81
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Re: Americans believe they need $1.7 million, on average, to retire

Post by willthrill81 » Mon Jul 08, 2019 11:26 am

Mike Scott wrote:
Mon Jul 08, 2019 11:22 am
Most of the retirees that I know live on Social Security. Some have a pension to add to that. I will guess half own a house and half rent. The vast majority have no savings or investments other than what is in their checking account or maybe an actual stash of cash under the mattress. That's reality for many if not most Americans. What people believe and what they do may be two different ends of the spectrum.
My MiL is one of them. She has lived on $1k of SS benefit and a little savings on the side for the last 14 years. She's very frugal but always has been, and she manages fine. Being in a VLCOL area and owning her home outright enable her to do make ends meet.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Americans believe they need $1.7 million, on average, to retire

Post by willthrill81 » Mon Jul 08, 2019 11:28 am

desihorn wrote:
Mon Jul 08, 2019 11:25 am
I am just glad to see that there are "normal" people here. The threads with "I have $20M and I don't know if that is enough.." freak me out.
I experience a mixture of disgust and laughter at those threads, but the source of those folks angst appears to be concern about maintaining their, relatively speaking, very expensive lifestyle. They often live in VHCOL areas, spend with little concern, and the thought of having an income 'only' something like 5 times that of the median household is beyond their comprehension.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Whatyear? » Mon Jul 08, 2019 11:30 am

desihorn wrote:
Mon Jul 08, 2019 11:25 am
I am just glad to see that there are "normal" people here. The threads with "I have $20M and I don't know if that is enough.." freak me out.
+1 :)

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Re: Americans believe they need $1.7 million, on average, to retire

Post by maroon » Mon Jul 08, 2019 11:32 am

Seriously?

I know multiple people living solely on Social Security, so < $20K/year. The $1.7 million figure would seem ludicrous to them. It's somewhat ludicrous to me, actually, and I'm a high saver.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by delamer » Mon Jul 08, 2019 11:37 am

willthrill81 wrote:
Mon Jul 08, 2019 11:28 am
desihorn wrote:
Mon Jul 08, 2019 11:25 am
I am just glad to see that there are "normal" people here. The threads with "I have $20M and I don't know if that is enough.." freak me out.
I experience a mixture of disgust and laughter at those threads, but the source of those folks angst appears to be concern about maintaining their, relatively speaking, very expensive lifestyle. They often live in VHCOL areas, spend with little concern, and the thought of having an income 'only' something like 5 times that of the median household is beyond their comprehension.
There are lots of retired people who get by OK on $30,000 and would react with “a mixture of disgust and laughter” at someone who said they needed $100,000.

But people who have an expensive lifestyle while working and want to continue it in retirement? Why would that bother anyone else?

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Nate79 » Mon Jul 08, 2019 11:38 am

Maybe the authors mixed up a decimal place. $170k average nest egg amount for retirement makes much more sense.....

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Grt2bOutdoors » Mon Jul 08, 2019 11:42 am

DoctorPhysics wrote:
Mon Jul 08, 2019 10:44 am
2.5 mil @ at 4% withdraw rate is 100k/year, 3% withdraw is 75k/year.

I think 1.7 mil is too low, I am in a VHCOL area.
What age are you retiring? Have you viewed the Social Security actuarial tables of longevity? Most people I know and relatives are included in that, even with advances in modern medicine are not making it past 90 or 91. I think you are shortchanging yourself by limiting your withdrawal rate to 4%. If you are retiring with 2.5 million today, that plus social security puts you in the top 5-10% of retirees.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Leif » Mon Jul 08, 2019 11:45 am

Thesaints wrote:
Mon Jul 08, 2019 10:21 am
Average per capita yearly income is $31,786. It means people manage to at least survive on that much money. How many think that is a good number ?
That is the median per capita income in 2017. The average per capita is $48,150 in 2017. The average is much higher due to high wealth level at the top.

- The Census Bureau reports it in the Current Population Survey, Table PINC-01

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Grt2bOutdoors » Mon Jul 08, 2019 11:47 am

maroon wrote:
Mon Jul 08, 2019 11:32 am
Seriously?

I know multiple people living solely on Social Security, so < $20K/year. The $1.7 million figure would seem ludicrous to them. It's somewhat ludicrous to me, actually, and I'm a high saver.
Same here, ludicrous. But then again, when retired or even not retired, fear is a real factor. Also, some folks may want to leave a legacy for their heirs and I believe that plays a role in the amount they desire to accumulate. But, most retirees and near retirees have accumulated nowhere near that figure.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Grt2bOutdoors » Mon Jul 08, 2019 11:50 am

JPH wrote:
Mon Jul 08, 2019 11:17 am
Who did they survey? Millionnaires? The average American probably cannot imagine ever having even one million.
If they did survey millionaires, then the millionaires are undershooting the amount they need to accumulate.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Americans believe they need $1.7 million, on average, to retire

Post by ohai » Mon Jul 08, 2019 11:50 am

Most retirees probably do not have $1.7 million, and yet they don't just go homeless or something. So, this number in actuality, is more than what the median person needs.

So perhaps, as stated above, the sample is biased towards people with a lot of assets. Otherwise, perhaps the question is phrased in a way that makes people state a higher number. For instance "how much would you feel comfortable retiring", or retiring early, or something.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by willthrill81 » Mon Jul 08, 2019 12:02 pm

delamer wrote:
Mon Jul 08, 2019 11:37 am
willthrill81 wrote:
Mon Jul 08, 2019 11:28 am
desihorn wrote:
Mon Jul 08, 2019 11:25 am
I am just glad to see that there are "normal" people here. The threads with "I have $20M and I don't know if that is enough.." freak me out.
I experience a mixture of disgust and laughter at those threads, but the source of those folks angst appears to be concern about maintaining their, relatively speaking, very expensive lifestyle. They often live in VHCOL areas, spend with little concern, and the thought of having an income 'only' something like 5 times that of the median household is beyond their comprehension.
There are lots of retired people who get by OK on $30,000 and would react with “a mixture of disgust and laughter” at someone who said they needed $100,000.

But people who have an expensive lifestyle while working and want to continue it in retirement? Why would that bother anyone else?
It probably shouldn't bother me, but when I see these folks being unwilling to take on the slim possibility of reducing their spending from $400k to $250k in retirement and keep working for another 5-10 years as a result, I can't help but shake my head.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Americans believe they need $1.7 million, on average, to retire

Post by MathWizard » Mon Jul 08, 2019 12:05 pm

We will retire soon with a little less than that number.

I suspect that Schwab came up with that number based upon what people wanted for income and multiplied by 25, not on
what they had accumulated, or they had a skewed sample.

Now of course that it was they think they need, not what they have or will accumulate.
Also this ignores SS, and home, again shkewing.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by desihorn » Mon Jul 08, 2019 12:09 pm

delamer wrote:
Mon Jul 08, 2019 11:37 am
willthrill81 wrote:
Mon Jul 08, 2019 11:28 am
desihorn wrote:
Mon Jul 08, 2019 11:25 am
I am just glad to see that there are "normal" people here. The threads with "I have $20M and I don't know if that is enough.." freak me out.
I experience a mixture of disgust and laughter at those threads, but the source of those folks angst appears to be concern about maintaining their, relatively speaking, very expensive lifestyle. They often live in VHCOL areas, spend with little concern, and the thought of having an income 'only' something like 5 times that of the median household is beyond their comprehension.
There are lots of retired people who get by OK on $30,000 and would react with “a mixture of disgust and laughter” at someone who said they needed $100,000.

But people who have an expensive lifestyle while working and want to continue it in retirement? Why would that bother anyone else?
More power to them! That is not the issue. You just get this nagging feeling that you are are not doing enough.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Bacchus01 » Mon Jul 08, 2019 12:14 pm

willthrill81 wrote:
Mon Jul 08, 2019 11:26 am
Mike Scott wrote:
Mon Jul 08, 2019 11:22 am
Most of the retirees that I know live on Social Security. Some have a pension to add to that. I will guess half own a house and half rent. The vast majority have no savings or investments other than what is in their checking account or maybe an actual stash of cash under the mattress. That's reality for many if not most Americans. What people believe and what they do may be two different ends of the spectrum.
My MiL is one of them. She has lived on $1k of SS benefit and a little savings on the side for the last 14 years. She's very frugal but always has been, and she manages fine. Being in a VLCOL area and owning her home outright enable her to do make ends meet.
My inlaws "retired" on SS of about $1K/month and a land-contract of about $1400/month. The land contract ran out, and they had about $75K total in savings/investments. We bought their house from them and bumped their "savings" to about $125K after they cleared their mortgage (which they had even at 70+ years old).

After 7 years now, they still have that $1K/month SS, the land contract has ran out, and they are spending down their savings still. However, they both worked part time until last year (they are both 80+ now) and one still works part-time nearly 30 hours a week.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Trader Joe » Mon Jul 08, 2019 12:14 pm

mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
My target is significantly much higher than $1.7 million. I could never survive in retirement on this amount.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Bacchus01 » Mon Jul 08, 2019 12:17 pm

Trader Joe wrote:
Mon Jul 08, 2019 12:14 pm
mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
My target is significantly much higher than $1.7 million. I could never survive in retirement on this amount.
I could easily "survive" on that amount.

I just don't want to.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by Independent George » Mon Jul 08, 2019 12:44 pm

willthrill81 wrote:
Mon Jul 08, 2019 11:28 am
I experience a mixture of disgust and laughter at those threads, but the source of those folks angst appears to be concern about maintaining their, relatively speaking, very expensive lifestyle. They often live in VHCOL areas, spend with little concern, and the thought of having an income 'only' something like 5 times that of the median household is beyond their comprehension.
I do find myself rolling my eyes at the obvious humblebragging some folks engage in, but I think the Boglehead tendency towards "excess" saving is a rational one.

I can only speak for myself, but the reason I feel I "need" so much to retire on are my concerns over (1) health expenses as I age, and (2) the possibility of reduced social security benefits in the future. The first seems like a near certainty, and while there is disagreement over the second, I'd at least say that it represents a nonzero possibility. The irony is that the most likely method of reducing benefits in the future is means-testing, whereby my high savings rate becomes the exact mechanism which causes the benefit cut.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by White Coat Investor » Mon Jul 08, 2019 12:46 pm

mtmingus wrote:
Mon Jul 08, 2019 10:15 am
What's the magic number for retirement savings? $1.7 million, according to a survey from Charles Schwab.

How many of here are retired, or thinking of retiring, near this #?
Assuming no pension and excluding paid for main residences in the numbers.
No, I didn't retire or think of retiring near this #.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Re: Americans believe they need $1.7 million, on average, to retire

Post by bhsince87 » Mon Jul 08, 2019 12:47 pm

Depends a lot on when they plan to retire. $1.7m sounds great for someone age 65, on medicare, with some Social Security.

For age 55 with 10 years of ACA insurance and potentially 10 extra years of withdrawal, I wouldn't be comfortable with that amount.

I didn't pull the trigger until we were about 2X that amount (at age 53).

Figuring about a 3% SWR, that nets us $100k per year. But $40k of that will be healthcare, and maybe $10 in taxes. That leaves a bout $50k per year. That should be comfortable, but certainly not an extravagant lifestyle.

Of course, if/when Social Security and Medicare kick in, then we can loosen the purse strings abit. But who knows? Maybe our initial $3.4 million we be down to $1.7m by then.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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Re: Americans believe they need $1.7 million, on average, to retire

Post by White Coat Investor » Mon Jul 08, 2019 12:47 pm

willthrill81 wrote:
Mon Jul 08, 2019 12:02 pm
delamer wrote:
Mon Jul 08, 2019 11:37 am
willthrill81 wrote:
Mon Jul 08, 2019 11:28 am
desihorn wrote:
Mon Jul 08, 2019 11:25 am
I am just glad to see that there are "normal" people here. The threads with "I have $20M and I don't know if that is enough.." freak me out.
I experience a mixture of disgust and laughter at those threads, but the source of those folks angst appears to be concern about maintaining their, relatively speaking, very expensive lifestyle. They often live in VHCOL areas, spend with little concern, and the thought of having an income 'only' something like 5 times that of the median household is beyond their comprehension.
There are lots of retired people who get by OK on $30,000 and would react with “a mixture of disgust and laughter” at someone who said they needed $100,000.

But people who have an expensive lifestyle while working and want to continue it in retirement? Why would that bother anyone else?
It probably shouldn't bother me, but when I see these folks being unwilling to take on the slim possibility of reducing their spending from $400k to $250k in retirement and keep working for another 5-10 years as a result, I can't help but shake my head.
I can't believe people would work at a job just for money and retire as soon as they had enough to do so. :)
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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