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

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Turbo29
Posts: 571
Joined: Tue May 01, 2018 7:12 am

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

Post by Turbo29 » Mon Jul 08, 2019 12:55 pm

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 frequent some strength training sites where the average person squats 675lb, bench presses 405lb, and deadlifts 765lb. Those are called "internet lifts."

I think some poster's stated net worths on this site are likewise "internet net worths."

deltaneutral83
Posts: 1233
Joined: Tue Mar 07, 2017 4:25 pm

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

Post by deltaneutral83 » Mon Jul 08, 2019 12:58 pm

Turbo29 wrote: ↑
Mon Jul 08, 2019 12:55 pm
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 frequent some strength training sites where the average person squats 675lb, bench presses 405lb, and deadlifts 765lb. Those are called "internet lifts."

I think some poster's stated net worths on this site are likewise "internet net worths."
Again, the particulars are important too. With some areas being 2.8x-3.0x more expensive in the cost of living department someone saying they squat 225, benches 135, and deadlifted 255 that would seem much less intimidating. Home prices alone are probably 4x-5x in the costliest areas to the lower quadrant in the country.

owenmia
Posts: 141
Joined: Mon Jun 24, 2019 10:19 am

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

Post by owenmia » Mon Jul 08, 2019 1:00 pm

Hm,

I have 400K as a nest egg and what I get will depend on what wall street decides to give me (not much if I am lucky)

With anemic economic growth in the U.S. and less than 4% expected market returns, I will have 800k to retire. But I guess that is better than zero.

However, compared to the 55% of the country that has ZERO to 50k saved, I should feel blessed.

SrGrumpy
Posts: 1065
Joined: Wed Aug 05, 2015 3:21 pm

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

Post by SrGrumpy » Mon Jul 08, 2019 1:02 pm

Another thread discusses an old lady with a nest egg of about $250,000 (and some generous relations). I think that is closer to the average reality.

EdNorton
Posts: 120
Joined: Wed Jan 02, 2019 11:11 am

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

Post by EdNorton » Mon Jul 08, 2019 1:03 pm

That is just about what we had when we retired,but both of us had small pensions and health insurance till age 65,also a paid off house. That was 3 years ago. Now up to 2.4M, have to spend a little more.
:sharebeer
Outside a dog, a book is man's best friend, inside a dog, it's too dark to read - Groucho

User avatar
Sandtrap
Posts: 8281
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

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

Post by Sandtrap » Mon Jul 08, 2019 1:07 pm

No pensions for DW and I.
Does not apply.
J🏝

*There's no actionable input useful to each with this query.
It's more accurate to post a portfolio review to ascertain what fits each person according to their unique financial scenario and long term goals.

25X (25 years) annual retirement expenses at age 65 is often brought up here. This would equate to 17X (17 years) at an annual retirement expense of 100k/year.
Last edited by Sandtrap on Mon Jul 08, 2019 2:05 pm, edited 1 time in total.
Wiki Bogleheads Wiki: Everything You Need to Know

User avatar
goodenyou
Posts: 1786
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

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

Post by goodenyou » Mon Jul 08, 2019 1:08 pm

What is the average salary of an American? How does that salary compare to what they "need" in retirement? High wage earners don't typically lower their standard of living in retirement.

FWIW, my FIL has a net worth close to 8 figures and lives on SS. His 6-digit RMDs go right back to saving after paying Uncle Sam. He was and is extremely frugal and single most of his adult life.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

Calico
Posts: 359
Joined: Thu Jan 01, 2015 5:45 pm

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

Post by Calico » Mon Jul 08, 2019 1:18 pm

Do averages like this really help anyone? Everyone will have a different number because we all live in different areas and have different ideas of "comfortable."

I did some math. I currently spend about $64k a year (including everything). Take away my mortgage and that goes down to $42k a year (and that's for me and my teen-aged daughter. I don't expect she will be part of my retirement). And I am very happy and comfortable in my life and I live in a high cost of living area (outside metro DC). I have everything I need and many things I just want.

So for me, $1.7 million is a whole lot more than what I need. I roughly figure this is $1million to live exactly as I do now (and that's assuming no social security and assuming I choose to stay in this HCOLA--which I don't). That's been my goal for the last 20 years and it seems like a good one (and I on track for the most part. Divorce set me back a little).

On top of all that, I don't plan to retire. I am just saving just in case I "have" to retire. But that's another thread.

Vanguard Fan 1367
Posts: 1074
Joined: Wed Feb 08, 2017 3:09 pm

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

Post by Vanguard Fan 1367 » Mon Jul 08, 2019 1:19 pm

snackdog wrote: ↑
Mon Jul 08, 2019 10:39 am
Bogleheads, being conservative, probably would prefer about double that amount.
I liked someone's post on here complaining about folks who say they have 6 million in liquid assets and wonder if that is enough to retire. :happy

desihorn
Posts: 13
Joined: Thu Sep 27, 2018 9:01 am

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

Post by desihorn » Mon Jul 08, 2019 1:30 pm

Independent George wrote: ↑
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.
This is a good point. Means-testing should be ideally on lifetime earnings and not on accumulated savings.

Wakefield1
Posts: 1059
Joined: Mon Nov 14, 2016 10:10 pm

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

Post by Wakefield1 » Mon Jul 08, 2019 1:53 pm

NotWhoYouThink wrote: ↑
Mon Jul 08, 2019 10:26 am
$1.7M per individual or per couple? Includes home value? With or without pension?
Yes and also are we talking 65+ (Medicare eligible) or earlier and having to worry about other health insurance?

azanon
Posts: 2544
Joined: Mon Nov 07, 2011 10:34 am

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

Post by azanon » Mon Jul 08, 2019 2:00 pm

The average person actually has no clue what they need, so I don't know why they're being asked. The knowledge that most of us Bogleheads take for granted is so far beyond what the average person knows. My boss (a GS-14, incredibly intelligent person) who's nearing retirement, asked me if her TSP is enough and I helped with that. If she doesn't know, how much less does the average Joe on some poll know.

Now if a poll of CFAs is conducted asking the same question, please someone give the link to that.

visualguy
Posts: 1510
Joined: Thu Jan 30, 2014 1:32 am

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

Post by visualguy » Mon Jul 08, 2019 2:02 pm

Wakefield1 wrote: ↑
Mon Jul 08, 2019 1:53 pm
NotWhoYouThink wrote: ↑
Mon Jul 08, 2019 10:26 am
$1.7M per individual or per couple? Includes home value? With or without pension?
Yes and also are we talking 65+ (Medicare eligible) or earlier and having to worry about other health insurance?
These numbers are essentially meaningless because the details of the particular circumstances make such a huge difference.

User avatar
goodenyou
Posts: 1786
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

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

Post by goodenyou » Mon Jul 08, 2019 2:04 pm

Vanguard Fan 1367 wrote: ↑
Mon Jul 08, 2019 1:19 pm
snackdog wrote: ↑
Mon Jul 08, 2019 10:39 am
Bogleheads, being conservative, probably would prefer about double that amount.
I liked someone's post on here complaining about folks who say they have 6 million in liquid assets and wonder if that is enough to retire. :happy
It would depend on what their expenses are in retirement. I know people who couldn't pay their yearly property taxes with 6 million in liquid assets. Those people exist.
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

stoptothink
Posts: 6040
Joined: Fri Dec 31, 2010 9:53 am

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

Post by stoptothink » Mon Jul 08, 2019 2:11 pm

Turbo29 wrote: ↑
Mon Jul 08, 2019 12:55 pm
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 frequent some strength training sites where the average person squats 675lb, bench presses 405lb, and deadlifts 765lb. Those are called "internet lifts."

I think some poster's stated net worths on this site are likewise "internet net worths."
No doubt in my mind this is the case. The humblebrag posts used to bother me, but at some point you have to realize it is your issue (to choose to be bothered by something that doesn't affect you at all). Now, when they start throwing around statements like "how is it even possible to live off <$100k/yr?" when we live off half of that with a 15yr mortgage, cash-flowing wife's college, a child in daycare, etc.; yeah, my eyes roll so far back in my head that I fear I might not be able to roll them back.

The wife and I could have a great retirement with less than half of $1.7M in retirement accounts, but seeing as we are right around there in our mid-30's and both have jobs that we don't detest, no rush whatsoever. We'll keep accumulating until the jobs become a real burden.

ohai
Posts: 988
Joined: Wed Dec 27, 2017 2:10 pm

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

Post by ohai » Mon Jul 08, 2019 2:14 pm

So, basically, that $1.7 million is a survey of the people's current net worth, rather than their future spending predictions. If you have $500k, you want $1 million. If you have $1 million, you want $2 million, and so on..

Independent George
Posts: 468
Joined: Wed Feb 17, 2016 12:13 pm

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

Post by Independent George » Mon Jul 08, 2019 2:18 pm

Does anyone have a link to the actual survey results? I don't see it on the Schwab website; it's hard to make a substantive comment without seeing what was actually surveyed.

ETA: Nevermind, I see it posted above.

Bulgogi Head
Posts: 51
Joined: Thu Dec 21, 2017 7:45 pm

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

Post by Bulgogi Head » Mon Jul 08, 2019 2:20 pm

I see lots of “I” statements in this thread. Are the numbers being listed here for individuals or households? For example, the OP figure of $1.7M per person is obviously a lot harder to achieve than $1.7M combined for a married couple.

User avatar
HomerJ
Posts: 13197
Joined: Fri Jun 06, 2008 12:50 pm

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

Post by HomerJ » Mon Jul 08, 2019 2:21 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.
This is what annoys people. Don't use silly words like "survive".

I'm hoping you did this on purpose, trying to be funny.
The J stands for Jay

User avatar
HomerJ
Posts: 13197
Joined: Fri Jun 06, 2008 12:50 pm

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

Post by HomerJ » Mon Jul 08, 2019 2:25 pm

bhsince87 wrote: ↑
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.
Are you actually paying $40,000 a year in health-care premiums right now?

Seems like you could easily work the system better than that. If you're only living on $50k per year for everything else, just withdraw $50k-$60k, and get the ACA subsidy.
Last edited by HomerJ on Mon Jul 08, 2019 2:31 pm, edited 1 time in total.
The J stands for Jay

Tommy
Posts: 149
Joined: Mon Mar 07, 2016 11:47 pm

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

Post by Tommy » Mon Jul 08, 2019 2:27 pm

Wakefield1 wrote: ↑
Mon Jul 08, 2019 1:53 pm
NotWhoYouThink wrote: ↑
Mon Jul 08, 2019 10:26 am
$1.7M per individual or per couple? Includes home value? With or without pension?
Yes and also are we talking 65+ (Medicare eligible) or earlier and having to worry about other health insurance?
Agree. If both people 65+ , have SS and Medicare this is very good number. It will allow pretty comfortable retirement - travel, entertainment, etc. If we are talking about FIRE (people below 60) not sure...

User avatar
HomerJ
Posts: 13197
Joined: Fri Jun 06, 2008 12:50 pm

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

Post by HomerJ » Mon Jul 08, 2019 2:30 pm

Bulgogi Head wrote: ↑
Mon Jul 08, 2019 2:20 pm
I see lots of “I” statements in this thread. Are the numbers being listed here for individuals or households? For example, the OP figure of $1.7M per person is obviously a lot harder to achieve than $1.7M combined for a married couple.
"Retiring with $X amount" implies no more income for the household coming in. Now, that may mean one person or two (or more), but it's a household number.
The J stands for Jay

visualguy
Posts: 1510
Joined: Thu Jan 30, 2014 1:32 am

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

Post by visualguy » Mon Jul 08, 2019 2:31 pm

HomerJ wrote: ↑
Mon Jul 08, 2019 2:21 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.
This is what annoys people. Don't use silly words like "survive".

I'm hoping you did this on purpose, trying to be funny.
He most likely means survive at his location and lifestyle. If he tried to maintain those on $1.7M, he would run out of money. In other words, not survive financially.

H-Town
Posts: 1959
Joined: Sun Feb 26, 2017 2:08 pm

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

Post by H-Town » Mon Jul 08, 2019 2:36 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.
$1.7M is the new $1M, which has been a milestone for retirement since forever. After you take into account 2% inflation and the number of years to your retirement, the number should even get bigger. In 20 years, $1M don't have the same buying power as today's $1M.

Plus, you should account for divorce as well, which the odds sitting at 30-50% (?). If you get to $1.7M, suddenly the divorce settlement left you with 850k. I guess you can survive no matter what, but still not the "riding into the sunset scene" you wanted all along.

myleaf
Posts: 49
Joined: Tue Sep 20, 2016 10:55 am

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

Post by myleaf » Mon Jul 08, 2019 2:41 pm

The average of 1.7M is a bit misleading.

From the material:

< 100K 4%
100K to < 250K 7%
250K to < 500K 10%
500K to < 750K 11%
750K to < 1M 14%
1M to <3M 33%
3M to <5M 8%
5M to <10M 2%
>10M 1%
"Never met an electron I did not like"

Independent George
Posts: 468
Joined: Wed Feb 17, 2016 12:13 pm

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

Post by Independent George » Mon Jul 08, 2019 2:48 pm

myleaf wrote: ↑
Mon Jul 08, 2019 2:41 pm
The average of 1.7M is a bit misleading.
It's extremely misleading, and not the least bit useful. That number only has meaning in the context of the age of the respondent, their current assets, and their expected cost of living. Taken in isolation, it is not only misleading, but meaningless.

User avatar
mrspock
Posts: 446
Joined: Tue Feb 13, 2018 2:49 am
Location: Vulcan

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

Post by mrspock » Mon Jul 08, 2019 2:53 pm

White Coat Investor wrote: ↑
Mon Jul 08, 2019 12:47 pm
willthrill81 wrote: ↑
Mon Jul 08, 2019 12:02 pm
...
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. :)
Forgive me, but am I mis-reading the humor here? If you worked at a job just for money, isn't that exactly what you'd do? :) The harder decision IMO is working a job you enjoy, or worse -- love, but having the tension between limited time on this earth, and the other things you adore (e.g. family, travel, making music, art etc), along with putting yourself in the position to re-invent yourself. Way harder call...

I look out on the horizon and see maybe 10 years where I can do all the things I could/can in the last 10 (in my 30s), and after that it will (likely?) begin declining in various ways. It's not as simple as do I like my job....it's balancing that against having time to do everything else. Realistically, dropping 40-50 waking hours each week on something I enjoy doing, but has limited freedom in where I can be, when I can do it, is ultimately, at odds with the other.

lostdog
Posts: 1901
Joined: Thu Feb 04, 2016 2:15 pm

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

Post by lostdog » Mon Jul 08, 2019 3:02 pm

My 70 year old mother gets $1,500 a month SS and a $300 monthly pension. She fully retired this past April. Prior to this she was semi-retired and collecting SS.

She has 20K in savings. She saves her $300 monthly pension for vacations with her friends.

User avatar
walletless
Posts: 921
Joined: Fri Aug 15, 2014 4:55 pm

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

Post by walletless » Mon Jul 08, 2019 3:09 pm

I use 3.5% SWR since I plan to retire in my 50s in a HCOL area. For $150,000 annual expense, my magic number is ~4.3 Million dollars. I am in my late 30s and expect to each the number in my late 40s, in about 10-11 years. I might work for few more years after that until my son completes college, then retire.

Bacchus01
Posts: 3107
Joined: Mon Dec 24, 2012 9:35 pm

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

Post by Bacchus01 » Mon Jul 08, 2019 3:35 pm

Independent George wrote: ↑
Mon Jul 08, 2019 2:48 pm
myleaf wrote: ↑
Mon Jul 08, 2019 2:41 pm
The average of 1.7M is a bit misleading.
It's extremely misleading, and not the least bit useful. That number only has meaning in the context of the age of the respondent, their current assets, and their expected cost of living. Taken in isolation, it is not only misleading, but meaningless.
While the number itself may not be useful, the debate and discussion about the number's applicability is both educational and enlightening. If it causes the average person to stop and assess their goals and progress, with appropriate adjustments for their situation, then it is very helpful.

bhsince87
Posts: 2467
Joined: Thu Oct 03, 2013 1:08 pm

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

Post by bhsince87 » Mon Jul 08, 2019 3:37 pm

myleaf wrote: ↑
Mon Jul 08, 2019 2:41 pm
The average of 1.7M is a bit misleading.

From the material:

< 100K 4%
100K to < 250K 7%
250K to < 500K 10%
500K to < 750K 11%
750K to < 1M 14%
1M to <3M 33%
3M to <5M 8%
5M to <10M 2%
>10M 1%
That makes a lot more sense. Thanks for sharing!

It could also be listed this way, which I think is more clear. But also seems to be missing 10%?

<500k 21%

500k to 1M 25%

1M to 3M 33%

>3M 11%
Last edited by bhsince87 on Mon Jul 08, 2019 3:43 pm, edited 1 time in total.
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams

Thesaints
Posts: 2828
Joined: Tue Jun 20, 2017 12:25 am

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

Post by Thesaints » Mon Jul 08, 2019 3:40 pm

It all depends on desired lifestylein retirement and on lifestyle during work life.
I can see a stereotypical FIRE-er subsisting on water and saltines wanting to retire as soon as possible. Too bad his planned retirement also consists of a spartan diet and accommodation.
Compare to someone feasting at lobster and champagne while working, who wouldn’t have many problems in waiting a little linger to secure a retirement made of first class air passages and 5 star hotel suites...

User avatar
HomerJ
Posts: 13197
Joined: Fri Jun 06, 2008 12:50 pm

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

Post by HomerJ » Mon Jul 08, 2019 3:47 pm

H-Town wrote: ↑
Mon Jul 08, 2019 2:36 pm
Plus, you should account for divorce as well, which the odds sitting at 30-50% (?). If you get to $1.7M, suddenly the divorce settlement left you with 850k. I guess you can survive no matter what, but still not the "riding into the sunset scene" you wanted all along.
Divorce at an older age where you've accumulated $1.7 million together is not 30%-50%.
The J stands for Jay

User avatar
corn18
Posts: 1478
Joined: Fri May 22, 2015 6:24 am

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

Post by corn18 » Mon Jul 08, 2019 3:54 pm

My number is $1.8M of savings @ age 55 with no debt. But I have a COLA pension and free health care, so maybe I am not average.
Last edited by corn18 on Mon Jul 08, 2019 4:12 pm, edited 1 time in total.
Don't do something, just stand there!

IlliniDave
Posts: 2321
Joined: Fri May 17, 2013 7:09 am

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

Post by IlliniDave » Mon Jul 08, 2019 4:05 pm

I guess it depends on what your needs/wants/visions are. I'm retiring at 55 or 56, with a good bit less than this and still won't spend all the money. The average American retiree has no where near that kind of money. I think the median net worth of 65 year-olds in the US is under $200K.

I like to take numbers like these as numbers people would like to have. Some get there, most never do.
Don't do something. Just stand there!

CoastalWinds
Posts: 405
Joined: Sat Apr 06, 2019 8:28 pm

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

Post by CoastalWinds » Mon Jul 08, 2019 4:08 pm

I put very little stock in what “Americans think.” I really wish there was a stock that somehow captured the stupidity of Americans (BHs excluded, of course). We could invest in it and enjoy lucrative, risk-free returns every year.

User avatar
Sandtrap
Posts: 8281
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

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

Post by Sandtrap » Mon Jul 08, 2019 4:25 pm

Bacchus01 wrote: ↑
Mon Jul 08, 2019 3:35 pm
Independent George wrote: ↑
Mon Jul 08, 2019 2:48 pm
myleaf wrote: ↑
Mon Jul 08, 2019 2:41 pm
The average of 1.7M is a bit misleading.
It's extremely misleading, and not the least bit useful. That number only has meaning in the context of the age of the respondent, their current assets, and their expected cost of living. Taken in isolation, it is not only misleading, but meaningless.
While the number itself may not be useful, the debate and discussion about the number's applicability is both educational and enlightening. If it causes the average person to stop and assess their goals and progress, with appropriate adjustments for their situation, then it is very helpful.
+1
Good point.

j :happy
Wiki Bogleheads Wiki: Everything You Need to Know

JackoC
Posts: 891
Joined: Sun Aug 12, 2018 11:14 am

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

Post by JackoC » Mon Jul 08, 2019 4:38 pm

Leif wrote: ↑
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
Yes median v average. It's an even more pronounced difference when it comes to net worth. The *average* US household net worth is ca. $800k if you compare latest total household net worth with number of US households. It was over $1mil for households headed by somebody over 55 per this link using 2016 data. The *median* is <$100k, was $200k ballpark for households headed by people over 55 in 2016. The figure given by Schwab as retirement target is an average (distribution given in an earlier post).
https://www.marketwatch.com/story/whats ... 2018-09-24

Those overall numbers include house value. Although I still don't see the logic in people quoting NW's without house value. It just introduces a difference between renters and owners that's easily correct for by simply correctly stating one's NW ie including home equity. I can see why Charles Schwab doesn't include houses: because they are in the business of making commissions, advisory and management fees off clients' financial assets not houses so financial assets only is the important number to them. But govt figures include houses, and it only makes sense to include them. Anyway that topic is an old one, some people are adamant about houses 'not being assets'. Somebody is wrong on the internet! What shall I do? :D

Anyway as already been stated an almost endless list of variables makes quoting a single number meaningless. Younger people aiming for a nominal $ target decades from now v older people who already have that much in real money; people counting IRA/401k values, or appreciated taxable assets that will have to be sold, w/ subtracting taxes due; H/L cost areas; non-SS pensions; age of retirement; renters v owners if following the peculiar convention of not including home equity in NW, etc.

And $1.7 million any way you count it is not representative of the large majority of US households, as money in hand*, ever. Though it's not that far from the $ *average*, skewed by people with many times as much.

*by convention the PV of Social Security or Medicare benefits is not included in household NW although the PV of SS plus Medicare for a two person retired household could exceed $1.7 mil. But if you included those as household assets in aggregate figures the federal govt's liabilities would have to be vastly larger than what's recorded now, since it's just a future transfer of money from one pocket to another not actual national wealth.
Last edited by JackoC on Mon Jul 08, 2019 4:39 pm, edited 1 time in total.

H-Town
Posts: 1959
Joined: Sun Feb 26, 2017 2:08 pm

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

Post by H-Town » Mon Jul 08, 2019 4:39 pm

HomerJ wrote: ↑
Mon Jul 08, 2019 3:47 pm
H-Town wrote: ↑
Mon Jul 08, 2019 2:36 pm
Plus, you should account for divorce as well, which the odds sitting at 30-50% (?). If you get to $1.7M, suddenly the divorce settlement left you with 850k. I guess you can survive no matter what, but still not the "riding into the sunset scene" you wanted all along.
Divorce at an older age where you've accumulated $1.7 million together is not 30%-50%.
I'm curious what's the % of divorce when you're already financially secured and more mature. I imagine it would be lower than 30-50%... On the other hand, we still have Bezos head case not too long ago.

Calli114
Posts: 158
Joined: Tue May 16, 2017 12:54 am

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

Post by Calli114 » Mon Jul 08, 2019 4:42 pm

1.7M in a LCOL area would seem like a decent amount for me; beyond just subsistence I'm planning on some luxury travel but not a lot of other splurging.

Tdubs
Posts: 677
Joined: Tue Apr 24, 2018 7:50 pm

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

Post by Tdubs » Mon Jul 08, 2019 4:49 pm

willthrill81 wrote: ↑
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.
I'm going to guess the percentage of retirees with a two-comma 401k is in the single digits. This is just Schwab trying to scare people into running to an FA

User avatar
Hawaiishrimp
Posts: 445
Joined: Tue Apr 14, 2015 4:13 am

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

Post by Hawaiishrimp » Mon Jul 08, 2019 4:53 pm

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.
Same here. 2.5MM makes more sense to me. I also live in a VHCOL area. I intend to move to a lower COL area after I declare FIRE.
I save and invest my money, so money can make money for me, so I don't have to make money eventually.

Dottie57
Posts: 6696
Joined: Thu May 19, 2016 5:43 pm

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

Post by Dottie57 » Mon Jul 08, 2019 5:01 pm

Single and don’t have 1.7m. I figure SS at 70 + 4rmds is 40 + 40 will give me much more spendable income than I have had during working time.. my take home was 1.8k every two weeks or about 47k.

I thought middle class was under 100k

User avatar
White Coat Investor
Posts: 14113
Joined: Fri Mar 02, 2007 9:11 pm
Location: Greatest Snow On Earth

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

Post by White Coat Investor » Mon Jul 08, 2019 5:07 pm

mrspock wrote: ↑
Mon Jul 08, 2019 2:53 pm
White Coat Investor wrote: ↑
Mon Jul 08, 2019 12:47 pm
willthrill81 wrote: ↑
Mon Jul 08, 2019 12:02 pm
...
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. :)
Forgive me, but am I mis-reading the humor here? If you worked at a job just for money, isn't that exactly what you'd do? :) The harder decision IMO is working a job you enjoy, or worse -- love, but having the tension between limited time on this earth, and the other things you adore (e.g. family, travel, making music, art etc), along with putting yourself in the position to re-invent yourself. Way harder call...

I look out on the horizon and see maybe 10 years where I can do all the things I could/can in the last 10 (in my 30s), and after that it will (likely?) begin declining in various ways. It's not as simple as do I like my job....it's balancing that against having time to do everything else. Realistically, dropping 40-50 waking hours each week on something I enjoy doing, but has limited freedom in where I can be, when I can do it, is ultimately, at odds with the other.
I agree it's hard to spend 40-50 hours doing something, even if you like it, and still be able to do all the other great stuff in life to do. Half time work is way better.

I was just poking fun at the fact that there are people who do work they hate, just for the money. That sounds like a terrible way to pass a big part of your life.
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

User avatar
HomerJ
Posts: 13197
Joined: Fri Jun 06, 2008 12:50 pm

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

Post by HomerJ » Mon Jul 08, 2019 5:10 pm

H-Town wrote: ↑
Mon Jul 08, 2019 4:39 pm
HomerJ wrote: ↑
Mon Jul 08, 2019 3:47 pm
H-Town wrote: ↑
Mon Jul 08, 2019 2:36 pm
Plus, you should account for divorce as well, which the odds sitting at 30-50% (?). If you get to $1.7M, suddenly the divorce settlement left you with 850k. I guess you can survive no matter what, but still not the "riding into the sunset scene" you wanted all along.
Divorce at an older age where you've accumulated $1.7 million together is not 30%-50%.
I'm curious what's the % of divorce when you're already financially secured and more mature. I imagine it would be lower than 30-50%... On the other hand, we still have Bezos head case not too long ago.
Well I don't know about older people, but I did read a study once that said age and education were two big variables, with age being the biggest.

For instance, get married young (like 18-24) and your chances of divorce later on were very high.. like 60% for high-school education, 50% for college educated.

But get married later in life (like 28-35) and your chances of divorce were much lower... like 35% for high-school education, and 25% for college educated.

I'm guessing after 20+ years of marriage, the chances are even lower.
The J stands for Jay

dfwgirl
Posts: 3
Joined: Wed Jan 17, 2018 10:18 am

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

Post by dfwgirl » Mon Jul 08, 2019 5:13 pm

:D
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.

ncbill
Posts: 552
Joined: Sun Jul 06, 2008 4:03 pm
Location: Western NC

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

Post by ncbill » Mon Jul 08, 2019 5:14 pm

bhsince87 wrote: ↑
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.
Depends on how much you need to live...I can see it would be more of a problem in HCOL areas where one's required "spend" is higher.

But here in our MCOL area I could easily "manage" our withdrawal to ~$40k...even were that all coming from a traditional IRA based on our family size that would still qualify us for a 90+% subsidy on the ACA premium for a silver-level plan.
Last edited by ncbill on Mon Jul 08, 2019 5:22 pm, edited 1 time in total.

User avatar
HomerJ
Posts: 13197
Joined: Fri Jun 06, 2008 12:50 pm

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

Post by HomerJ » Mon Jul 08, 2019 5:18 pm

White Coat Investor wrote: ↑
Mon Jul 08, 2019 5:07 pm
I was just poking fun at the fact that there are people who do work they hate, just for the money. That sounds like a terrible way to pass a big part of your life.
That's how 99% of the human population throughout history lived their lives.

Or maybe the percentage is lower if we're talking about "HATING" your job. Maybe it isn't/wasn't that high.

But one is pretty fortunate to do something they ENJOY for a living.

I saw a documentary once where a guy who was a kid in the 1950s asked his Dad back then why he worked a crummy job at a hat factory. His father back-handed him upside the head saying, "To feed you, you schmuck!"

That always stuck with me (and the guy telling the story, obviously).
Last edited by HomerJ on Mon Jul 08, 2019 5:20 pm, edited 1 time in total.
The J stands for Jay

User avatar
willthrill81
Posts: 12570
Joined: Thu Jan 26, 2017 3:17 pm
Location: USA

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

Post by willthrill81 » Mon Jul 08, 2019 5:19 pm

White Coat Investor wrote: ↑
Mon Jul 08, 2019 5:07 pm
mrspock wrote: ↑
Mon Jul 08, 2019 2:53 pm
White Coat Investor wrote: ↑
Mon Jul 08, 2019 12:47 pm
willthrill81 wrote: ↑
Mon Jul 08, 2019 12:02 pm
...
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. :)
Forgive me, but am I mis-reading the humor here? If you worked at a job just for money, isn't that exactly what you'd do? :) The harder decision IMO is working a job you enjoy, or worse -- love, but having the tension between limited time on this earth, and the other things you adore (e.g. family, travel, making music, art etc), along with putting yourself in the position to re-invent yourself. Way harder call...

I look out on the horizon and see maybe 10 years where I can do all the things I could/can in the last 10 (in my 30s), and after that it will (likely?) begin declining in various ways. It's not as simple as do I like my job....it's balancing that against having time to do everything else. Realistically, dropping 40-50 waking hours each week on something I enjoy doing, but has limited freedom in where I can be, when I can do it, is ultimately, at odds with the other.
I agree it's hard to spend 40-50 hours doing something, even if you like it, and still be able to do all the other great stuff in life to do. Half time work is way better.

I was just poking fun at the fact that there are people who do work they hate, just for the money. That sounds like a terrible way to pass a big part of your life.
Indeed it is, but sadly that's life on planet Earth for a lot of people right now. I doubt that driving a garbage truck, working at a sanitation facility, or scrubbing toilets is done by many because they love the work.

Image
“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

User avatar
goodenyou
Posts: 1786
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

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

Post by goodenyou » Mon Jul 08, 2019 5:19 pm

HomerJ wrote: ↑
Mon Jul 08, 2019 5:10 pm
H-Town wrote: ↑
Mon Jul 08, 2019 4:39 pm
HomerJ wrote: ↑
Mon Jul 08, 2019 3:47 pm
H-Town wrote: ↑
Mon Jul 08, 2019 2:36 pm
Plus, you should account for divorce as well, which the odds sitting at 30-50% (?). If you get to $1.7M, suddenly the divorce settlement left you with 850k. I guess you can survive no matter what, but still not the "riding into the sunset scene" you wanted all along.
Divorce at an older age where you've accumulated $1.7 million together is not 30%-50%.
I'm curious what's the % of divorce when you're already financially secured and more mature. I imagine it would be lower than 30-50%... On the other hand, we still have Bezos head case not too long ago.
Well I don't know about older people, but I did read a study once that said age and education were two big variables, with age being the biggest.

For instance, get married young (like 18-24) and your chances of divorce later on were very high.. like 60% for high-school education, 50% for college educated.

But get married later in life (like 28-35) and your chances of divorce were much lower... like 35% for high-school education, and 25% for college educated.

I'm guessing after 20+ years of marriage, the chances are even lower.
The divorce rate is rising fastest in older people. "Silver-Splitting" is on the rise.

https://www.newser.com/story/276838/gra ... -rise.html
"Ignorance more frequently begets confidence than does knowledge" | "The best years you have left are the ones you have right now"

Locked