Average amount saved for retirement by age

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
DrewOnRetirement
Posts: 8
Joined: Tue Jun 22, 2010 6:39 pm

Average amount saved for retirement by age

Post by DrewOnRetirement » Thu Apr 07, 2011 9:14 pm

I've read a number of articles about the average amount an individual has saved for retirement by age and the numbers seem ridiculously low. This doesn't include social security, pensions, or ones primary residence. The following is in the ball park of the majority of my findings...

< 35: $6,306
35 – 44: $22,460
45 – 54: $43,797
55 – 64: $69,127

First off, I'll admit that I've been doing this to find out how much I'm ahead of the pack and to rid myself of any dismay coming from the possibility of not saving enough for an early retirement, but come on! Would anyone like to comment these numbers? Am I in my own little investment world where I've forgotten about how the average person spends their money in our consumer based economy?

What would you consider a fair amount for someone to have saved by the following age groups?

25, 35, 45, 55, 65

User avatar
Opponent Process
Posts: 5157
Joined: Tue Sep 18, 2007 9:19 pm

Post by Opponent Process » Thu Apr 07, 2011 9:23 pm

yes I do understand your shock. however we are a very biased, privileged group focused on personal finance and retirement planning. something we find important and meaningful. any special interest community will be shocked at how people outside of their community don't conform. right now there's someone posting on a body piercing forum who's shocked at the ridiculously low number of body piercings by age group.
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37

sunspotzsz
Posts: 221
Joined: Fri May 08, 2009 9:35 am

Post by sunspotzsz » Thu Apr 07, 2011 9:29 pm

Those who save and act responsibly will pay for other people's retirement, at least partially.

Tuxx
Posts: 863
Joined: Tue Mar 30, 2010 1:19 am

Post by Tuxx » Thu Apr 07, 2011 9:37 pm

Could this be because of underwater mortgages? I know plenty of folks that would have to cut a check for $200K+ just to get out of the mortgage.

User avatar
bob90245
Posts: 6511
Joined: Mon Feb 19, 2007 8:51 pm

Post by bob90245 » Thu Apr 07, 2011 9:44 pm

I posted similar data before:

http://www.bogleheads.org/forum/viewtop ... 643#743643
bob90245 wrote:From an April 2005 Money Magazine article, they list the median net worth (excluding home) for the following age brackets:

25 to 34: $15,000
35 to 44: $94,250
45 to 54: $163,334
55 to 64: $217,475
65 and up: $199,458
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.

Lorraine
Posts: 81
Joined: Fri Jan 14, 2011 3:49 pm

Post by Lorraine » Thu Apr 07, 2011 9:46 pm

To me it's a bit surprising but not totally shocking. I've seen too many 10 cent millionaires. :shock:

User avatar
Ice-9
Posts: 1256
Joined: Wed Oct 15, 2008 12:40 pm
Location: Rockville, MD

Post by Ice-9 » Thu Apr 07, 2011 9:49 pm

I always feel like I'm behind on saving for retirement until I read threads like this. Maybe I'm doing OK after all.

User avatar
Opponent Process
Posts: 5157
Joined: Tue Sep 18, 2007 9:19 pm

Post by Opponent Process » Thu Apr 07, 2011 9:54 pm

Ice-9 wrote:I always feel like I'm behind on saving for retirement until I read threads like this. Maybe I'm doing OK after all.
but I'm guessing none of us on here wants the "average" retirement.
30/30/20/20 | US/International/Bonds/TIPS | Average Age=37

User avatar
market timer
Posts: 5866
Joined: Tue Aug 21, 2007 1:42 am

Post by market timer » Thu Apr 07, 2011 9:59 pm

25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.

Jack
Posts: 3254
Joined: Tue Feb 27, 2007 2:24 am

Post by Jack » Thu Apr 07, 2011 10:13 pm

It's not too surprising.

The top 1% of households owns 43% of all financial wealth in the U.S. The bottom 80% of households own only 7%.

Similar numbers apply to income. The top 1% have increasing real incomes. The median real income is declining.

staythecourse
Posts: 5533
Joined: Mon Jan 03, 2011 9:40 am

Post by staythecourse » Thu Apr 07, 2011 10:19 pm

market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
Agreed. If you want just some simple numbers those are as good as any.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

User avatar
ofcmetz
Posts: 2265
Joined: Tue Feb 08, 2011 8:09 pm
Location: Louisiana

Re: Average amount saved for retirement by age

Post by ofcmetz » Thu Apr 07, 2011 10:31 pm

DrewOnRetirement wrote:
What would you consider a fair amount for someone to have saved by the following age groups?

25, 35, 45, 55, 65
I'm 31, and have a pension, but have been saving as if I did not. That being said, let's say my wife and I made 100K combined income for the purposes of this argument starting around age 25 and taking inflation out of these numbers.

So family portfolio age 25, $0

Age 35, $150,000

Age 45, $450,000

Age 55, $1,050,000

Age 65, $2,300,000 and start drawing down.

I pulled these numbers out of my head based off continuous employment and a constant 15 to 16% savings rate.

I see average America is far from this.
Never underestimate the power of the force of low cost index funds.

User avatar
pjstack
Posts: 1308
Joined: Tue Feb 20, 2007 5:03 am
Location: Harbor City, CA

Post by pjstack » Thu Apr 07, 2011 10:49 pm

However, NOT including Social Security, pensions, and primary residence is to ignore a goodly chunk of money.

I'm 75 and have nowhere near the mandatory million that seems to be required, but I've been retired since I was 44.

But I do have a pension and Social Security and my house is almost paid off.

If I told you the paltry amount I have saved/invested you would probably recoil in horror, but actually I live rather well.

Of course, now that I'm old and somewhat disabled I don't have expensive hobbies like skiing and scuba diving any more, and I don't travel on little expeditions, so my expenses are less.

But still, it's been a great life so far.
pjstack

billjohnson
Posts: 620
Joined: Thu Nov 04, 2010 10:41 pm

Re: Average amount saved for retirement by age

Post by billjohnson » Thu Apr 07, 2011 11:05 pm

DrewOnRetirement wrote: < 35: $6,306
35 – 44: $22,460
45 – 54: $43,797
55 – 64: $69,127
Would anyone like to comment on these numbers?
I believe these numbers are skewed by a large number of people who have saved nothing.

yobria
Posts: 5978
Joined: Mon Feb 19, 2007 11:58 pm
Location: SF CA USA

Post by yobria » Thu Apr 07, 2011 11:13 pm

sunspotzsz wrote:Those who save and act responsibly will pay for other people's retirement, at least partially.
Not if we retire early enough ;).

Nick

User avatar
wlpotts
Posts: 60
Joined: Sun Mar 18, 2007 3:11 am
Location: San Diego
Contact:

Re: Average amount saved for retirement by age

Post by wlpotts » Fri Apr 08, 2011 12:07 am

DrewOnRetirement wrote:I've read a number of articles about the average amount an individual has saved for retirement by age ....

...I'll admit that I've been doing this to find out how much I'm ahead of the pack and to rid myself of any dismay coming from the possibility of not saving enough for an early retirement...! Would anyone like to comment these numbers?
Hi Drew,

I'll comment. In my experience I would encourage you to forget the pursuit of age versus accumulated savings comparisons. None of the results from these statisical purportions will you find any solice. Importantly, they are not relevant to your situation in life now; nor do they recognize your specific realities of your future circumstance.

There are many rescources discussed and available here on the Bogleheads forum that offer each of us a path to educate ourselves to make a rational and reasonable decisions by our own responsibilty.

I would encourage you to embrace these tools, apply your perspective, and use your knowledge and insight to make your own decisions.

Comparing onself to others is a self defeating endeavor and does not create value for anyone.

Please do not take this reply as a criticism, I personally been the down this road before and found it as a deadend and dis-heartening effort. Your reality now and those going forward that you'll face in life has no relevance of being compared to " the average individual".

Respectfully,
Warren P.
Some have it. Some don't. Either way, here I am!

The Wizard
Posts: 11497
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Average amount saved for retirement by age

Post by The Wizard » Fri Apr 08, 2011 4:34 am

wlpotts wrote: ...I'll comment. In my experience I would encourage you to forget the pursuit of age versus accumulated savings comparisons. None of the results from these statisical purportions will you find any solice. Importantly, they are not relevant to your situation in life now; nor do they recognize your specific realities of your future circumstance.
I partially agree, since we each have some variation in income and lifestyle.
But I think it's worthwhile to determine one's annual expenditures and then take a look at how many multiples of that you have sacked away.

For example, if your annual spending is $60K, then having 25 times that ($1.5M) at age 60 isn't too bad, assuming social security in addition, but no pension.

One could then determine where you should be at age 30, 40, 50 by assuming retirement assets double every 10 years. That's easiliy enough done, but the sticky wicket at age 30 is estimating what your expenses will be at age 60.

afan
Posts: 3365
Joined: Sun Jul 25, 2010 4:01 pm

Post by afan » Fri Apr 08, 2011 4:59 am

Someone who can live on their pension and social security may have little need for, or ability to, save for retirement. Even with the decline in the number of people covered by pensions, that is still millions of people.

Lower income people spend what they earn, and have little choice in the matter. They are hoping to make it through today, and saving for retirement is a dream, but not a reality. Many people are counting on SSI.

User avatar
DaleMaley
Posts: 1577
Joined: Thu Mar 01, 2007 8:04 pm
Location: Fairbury, Illinois
Contact:

Post by DaleMaley » Fri Apr 08, 2011 5:34 am

Although it doesn't work well for younger people, the Millionaire Next Door estimator does seem to work ok as you get older:
Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

For example, if you are 35 years old and earn $100,000 per year with no inheritances, then your net worth should be $350,000: 35 times 100,000 divided by 10 equals 350,000. If you meet this standard, consider yourself to be “on track” for moderate wealth accumulation and a successful retirement fund. You aren’t a super achiever, but you aren’t behind either.
If you are a super saver, your net worth should be twice Stanley's formula. Many Bogleheads probably meet or exceed the super saver guideline.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett

Wolkenspiel
Posts: 540
Joined: Wed Sep 30, 2009 7:45 am

Post by Wolkenspiel » Fri Apr 08, 2011 5:37 am

market timer wrote: 65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
$1.5M average for 30M people between 60 and 70 exceeds the sum of total US stock market cap + total US housing value. I don't see enough assets to go around to make the average retiree financially independent. It also seems that vastly increased saving would imply significantly less consumption and therefore would tend to deflate asset prices.

User avatar
DaleMaley
Posts: 1577
Joined: Thu Mar 01, 2007 8:04 pm
Location: Fairbury, Illinois
Contact:

Post by DaleMaley » Fri Apr 08, 2011 5:44 am

Jack wrote:It's not too surprising.

The top 1% of households owns 43% of all financial wealth in the U.S. The bottom 80% of households own only 7%.

Similar numbers apply to income. The top 1% have increasing real incomes. The median real income is declining.
Pareto found that 20% of the population has 80% of the wealth or income clear back around 1900 in both Italy and England. The U.S. is currently slightly more skewed as of 2007 with 20% of the population having 85% of the wealth or income.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett

jefmafnl
Posts: 400
Joined: Sun Mar 25, 2007 7:11 am

Stats

Post by jefmafnl » Fri Apr 08, 2011 6:02 am

Perhaps the median would be a more meaningful measure than the mean (average) in this case ...

J

verygoodthings
Posts: 78
Joined: Thu Feb 10, 2011 3:58 pm

Post by verygoodthings » Fri Apr 08, 2011 6:03 am

We can't answer this question appropriately, or anyone trying to do so is being a bit silly. The average numbers really apply to each individual persons careers and earning pattern.

The best book I've read on this subject is called Your Money Ratios. It basically lays out savings plans for 25/30/35/40/45/50/55/60/65. Instead of listing nominal numbers, it gives targets based on annual income. From what I remember, it ramps up to 12X your annual earnings in investable assets by retirement age. Then the author describes why he thinks that is an appropriate savings number, based on living on 80% of your final income in retirement (20% comes from SS, then 60% comes from a 4 or 5 percent draw down).

So the question is really, what kind of lifestyle is a person used to living?

One interesting thing with retirement is that if a person hits a phase of high earnings late in their career, it actually hurts their retirement. They get used to a higher standard of living, but their investments get smaller relatively. The opposite could potentially be true as well, if someone were to graduate to part time work and really work on their cost of living late in their career, it should improve their retirement.

tim1999
Posts: 3361
Joined: Tue Dec 16, 2008 7:16 am

Re: Average amount saved for retirement by age

Post by tim1999 » Fri Apr 08, 2011 6:07 am

billjohnson wrote: I believe these numbers are skewed by a large number of people who have saved nothing.
That's what I thought. Many millions of Americans are on some form of public assistance, earn minimum wage or similar, have kids they can't afford, can't work for health reasons, lost a job and raided retirement savings, etc.

For the crowd on this website, you can probably multiply those averages by 10 each, if not more.

scrabbler1
Posts: 2109
Joined: Fri Nov 20, 2009 2:39 pm

Re: Average amount saved for retirement by age

Post by scrabbler1 » Fri Apr 08, 2011 7:21 am

Cherokee8215 wrote:
billjohnson wrote: I believe these numbers are skewed by a large number of people who have saved nothing.
That's what I thought. Many millions of Americans are on some form of public assistance, earn minimum wage or similar, have kids they can't afford, can't work for health reasons, lost a job and raided retirement savings, etc.

For the crowd on this website, you can probably multiply those averages by 10 each, if not more.
This was my first thought, too.

My second thought was that from jefmafnl, who posted that the median would be more appropriate than the mean.

living2notWork
Posts: 132
Joined: Sat Jan 01, 2011 3:35 pm

Post by living2notWork » Fri Apr 08, 2011 7:41 am

market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
I agree with ^^This^^. It's just a matter of can it be done with the current life style most Americans are leading. Too bad financial planning was not taught in HS or really college. I had to seek it out while I was in college and use my "extra curricular" class on it.

Grt2bOutdoors
Posts: 17997
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Post by Grt2bOutdoors » Fri Apr 08, 2011 7:44 am

DaleMaley wrote:Although it doesn't work well for younger people, the Millionaire Next Door estimator does seem to work ok as you get older:
Multiply your age times your realized pretax annual household income from all sources except inheritances. Divide by ten. This, less any inherited wealth, is what your net worth should be.

For example, if you are 35 years old and earn $100,000 per year with no inheritances, then your net worth should be $350,000: 35 times 100,000 divided by 10 equals 350,000. If you meet this standard, consider yourself to be “on track” for moderate wealth accumulation and a successful retirement fund. You aren’t a super achiever, but you aren’t behind either.
If you are a super saver, your net worth should be twice Stanley's formula. Many Bogleheads probably meet or exceed the super saver guideline.
I think this had been discussed before in another thread, but the one issue I have with the Millionaire Next Door formula of UAW, AAW or AAW is for individuals or couples who recently had a significant rise in household income, prior to the increase was making an average salary. The formula might indicate they are an UAW when in reality they may have been average or above average using the prior income level.

Grt2bOutdoors
Posts: 17997
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Post by Grt2bOutdoors » Fri Apr 08, 2011 7:54 am

market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
There's just a couple of issues that could affect people getting to these numbers: 1) get hit with a long stretch of unemployment and contributions fall off the cliff, 2)a chronic or financially devastating illness that medical insurance is not sufficient in covering, 3) last I looked, I can't take a piece of my house siding to the grocery store to buy goods, why count home equity as part of the accessible asset base? You can value the home at anything you like, but given the recent past history, I wouldn't put too much stock in "equity".

peter71
Posts: 3768
Joined: Tue Jul 24, 2007 8:28 pm

Post by peter71 » Fri Apr 08, 2011 8:30 am

Wolkenspiel wrote:
market timer wrote: 65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
$1.5M average for 30M people between 60 and 70 exceeds the sum of total US stock market cap + total US housing value. I don't see enough assets to go around to make the average retiree financially independent. It also seems that vastly increased saving would imply significantly less consumption and therefore would tend to deflate asset prices.
Very interesting point!

User avatar
HomerJ
Posts: 10965
Joined: Fri Jun 06, 2008 12:50 pm

Post by HomerJ » Fri Apr 08, 2011 8:46 am

market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
And remember that $50k a year with another $20k SS, and no mortgage payment and no need to save anymore is easily equivalent to a $100k lifestyle.

dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Post by dhodson » Fri Apr 08, 2011 8:47 am

someone mentioned above there are tools on this and other sites to help in this type of decision. can people comment on what tools they think are the best at making these complicated predictions? there are just so many variables beyond just investment performance.

Grt2bOutdoors
Posts: 17997
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Post by Grt2bOutdoors » Fri Apr 08, 2011 8:53 am

Wolkenspiel wrote:
market timer wrote: 65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
$1.5M average for 30M people between 60 and 70 exceeds the sum of total US stock market cap + total US housing value. I don't see enough assets to go around to make the average retiree financially independent. It also seems that vastly increased saving would imply significantly less consumption and therefore would tend to deflate asset prices.
I wouldn't worry too much about huge increases in the savings rate for two reasons: 1) the vast majority of Americans are not earning enough in income to pay for basic essentials and sock away more than 5-10% of disposable income. That is far below what we've seen on some of the threads floating around this forum. 2) Those who have assets are not all "misers" they will spend down some of those assets before leaving this world, and if they do not, the government or their heirs will.

Stonebr
Posts: 1461
Joined: Wed Jan 21, 2009 11:19 am
Location: Maine

Post by Stonebr » Fri Apr 08, 2011 8:54 am

rrosenkoetter wrote:
market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
And remember that $50k a year with another $20k SS, and no mortgage payment and no need to save anymore is easily equivalent to a $100k lifestyle.
Per person? Sheesh! You guys spend a lot more than my wife and I do.
"have more than thou showest, | speak less than thou knowest" -- The Fool in King Lear

Grt2bOutdoors
Posts: 17997
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Post by Grt2bOutdoors » Fri Apr 08, 2011 8:54 am

rrosenkoetter wrote:
market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
And remember that $50k a year with another $20k SS, and no mortgage payment and no need to save anymore is easily equivalent to a $100k lifestyle.
I want to move where that 50k +20K will afford me a 100K lifestyle.
Where is Utopia? Living in the Northeast with that retirement plan will just offer basic survival, not much else with these oppressive taxes - property, sales and otherwise.

User avatar
HomerJ
Posts: 10965
Joined: Fri Jun 06, 2008 12:50 pm

Post by HomerJ » Fri Apr 08, 2011 9:05 am

GRT2BOUTDOORS wrote:
rrosenkoetter wrote:
market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
And remember that $50k a year with another $20k SS, and no mortgage payment and no need to save anymore is easily equivalent to a $100k lifestyle.
I want to move where that 50k +20K will afford me a 100K lifestyle.
Where is Utopia? Living in the Northeast with that retirement plan will just offer basic survival, not much else with these oppressive taxes - property, sales and otherwise.
My point is that people who make 100k today will only need 50k from their investments when they retire to enjoy the exact same lifestyle..

Right now, they make $100k

$15k gets saved
$25k goes to the mortgage...

That's $40k they won't have to spend in retirement...

So if they enjoy their lives making $100k a year right now, they will enjoy their lives exactly the same pulling only $50k a year from their investments (and $10k in SS)...

So they don't need to replace their $100k income in retirement... They only need half of that... The trick is to look at your expenses, not your income.

The Wizard
Posts: 11497
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Post by The Wizard » Fri Apr 08, 2011 9:09 am

It helps to put together a spreadsheet itemizing your annual expenses. I've done this as part of my retirement planning process, and being age 61 at present, the numbers are quite accurate; I don't have to speculate 20 years down the road.

On my expense spreadsheet, I exclude any funds going to savings and investments, since those funds are not "expended". And I have a second column which makes adjustments to certain expenses that would change when I terminate employment: monthly parking goes to zero, but health insurance premiums increase, for instance.

My expenses come to around $45K per year on my sheet, but that purposefully excludes my approximate four weeks a year of totally discretionary travel expenses...

Grt2bOutdoors
Posts: 17997
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Post by Grt2bOutdoors » Fri Apr 08, 2011 9:19 am

rrosenkoetter wrote:
GRT2BOUTDOORS wrote:
rrosenkoetter wrote:
market timer wrote:25: good education
35: good career, paid off student loan debt
45: $300K
55: $800K
65: $1.5 million

Per person, in today's dollars, including home equity in primary residence.

This would be for someone hoping to support a ~$50K/year lifestyle per person. It wouldn't even require a taxable account.
And remember that $50k a year with another $20k SS, and no mortgage payment and no need to save anymore is easily equivalent to a $100k lifestyle.
I want to move where that 50k +20K will afford me a 100K lifestyle.
Where is Utopia? Living in the Northeast with that retirement plan will just offer basic survival, not much else with these oppressive taxes - property, sales and otherwise.
My point is that people who make 100k today will only need 50k from their investments when they retire to enjoy the exact same lifestyle..

Right now, they make $100k

$15k gets saved
$25k goes to the mortgage...

That's $40k they won't have to spend in retirement...

So if they enjoy their lives making $100k a year right now, they will enjoy their lives exactly the same pulling only $50k a year from their investments (and $10k in SS)...

So they don't need to replace their $100k income in retirement... They only need half of that... The trick is to look at your expenses, not your income.

"The trick is to look at your expenses" - too bad the powers that be don't feel that way. :roll:

They will need greater than 50K - you have to take into account that any retirement income will likely be taxed, perhaps at a much higher rate than in effect today.

I live in an average home in New York - my yearly nut excluding mortgage expense is: roughly 25K. Upon retirement, I can easily see that number being double. That's gets me to 50K - maybe I can stay here and not have to move, but I'm not planning on staying only to have all my income go into government coffers. It leaves no room for error (house repairs, uncovered medical expense, etc.)

User avatar
HomerJ
Posts: 10965
Joined: Fri Jun 06, 2008 12:50 pm

Post by HomerJ » Fri Apr 08, 2011 9:29 am

GRT2BOUTDOORS wrote:They will need greater than 50K - you have to take into account that any retirement income will likely be taxed, perhaps at a much higher rate than in effect today.
Well, that's an unknown... but yeah, you better try to save more so you have a cushion...

I'm just saying that paying off the mortgage and savings consume a large part of most people's incomes, but you shouldn't have to spend that money in retirement.

User avatar
JupiterJones
Posts: 2639
Joined: Tue Aug 24, 2010 3:25 pm
Location: Nashville, TN

Re: Average amount saved for retirement by age

Post by JupiterJones » Fri Apr 08, 2011 9:41 am

billjohnson wrote:
DrewOnRetirement wrote: < 35: $6,306
35 – 44: $22,460
45 – 54: $43,797
55 – 64: $69,127
Would anyone like to comment on these numbers?
I believe these numbers are skewed by a large number of people who have saved nothing.
I believe you're right. (This is what happens when you try to use average on non-normal data.)

This is interesting stuff, but I guess it would be more useful to see what the average (or better yet, median) amount is just among households who have made even a slight attempt to save something.

JJ
Stay on target...

hsv_climber
Posts: 3969
Joined: Tue Sep 22, 2009 7:56 pm

Post by hsv_climber » Fri Apr 08, 2011 9:51 am

OP and all these posts don't include federal & state pensions that many federal & state workers will receive.
For example, a school teacher might have $0 in savings by the age of 62, but he/she might be entitled to $30K, COLA-adjusted pension for the rest of his/her life.
As we all know, that would be equivalent to ~$1 mil. portfolio.

Grt2bOutdoors
Posts: 17997
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Post by Grt2bOutdoors » Fri Apr 08, 2011 9:52 am

rrosenkoetter wrote:
GRT2BOUTDOORS wrote:They will need greater than 50K - you have to take into account that any retirement income will likely be taxed, perhaps at a much higher rate than in effect today.
Well, that's an unknown... but yeah, you better try to save more so you have a cushion...

I'm just saying that paying off the mortgage and savings consume a large part of most people's incomes, but you shouldn't have to spend that money in retirement.
Agree with your comments, you offer good advice.

User avatar
mcrunyan
Posts: 139
Joined: Wed Feb 02, 2011 3:38 pm
Location: SoCal

Re: Average amount saved for retirement by age

Post by mcrunyan » Fri Apr 08, 2011 9:56 am

billjohnson wrote:
DrewOnRetirement wrote: < 35: $6,306
35 – 44: $22,460
45 – 54: $43,797
55 – 64: $69,127
Would anyone like to comment on these numbers?
I believe these numbers are skewed by a large number of people who have saved nothing.
Alternatively, one could look these numbers as being skewed by the few people who have saved a great deal. If these are averages, then I suspect most people have less. Would love to see some histograms.

KyleAAA
Posts: 6446
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Post by KyleAAA » Fri Apr 08, 2011 9:57 am

Are those numbers totals or do they just reflect 401k balances? Many of the numbers I see in articles like this only reflect 401k balances. Hell, I just started a new job so my balance is still $0.

richard
Posts: 7961
Joined: Tue Feb 20, 2007 3:38 pm
Contact:

Post by richard » Fri Apr 08, 2011 10:09 am

It's easy to forget that the median income in this country is under $50,000 a year and that half make less than that.

staythecourse
Posts: 5533
Joined: Mon Jan 03, 2011 9:40 am

Post by staythecourse » Fri Apr 08, 2011 10:27 am

afan wrote:Someone who can live on their pension and social security may have little need for, or ability to, save for retirement. Even with the decline in the number of people covered by pensions, that is still millions of people.

Lower income people spend what they earn, and have little choice in the matter. They are hoping to make it through today, and saving for retirement is a dream, but not a reality. Many people are counting on SSI.
Disagree completely. It is a cop out to state the poor don't have money to save. They do they just choose to spend it.

I would love to see how many poor who state they don't have enough to save for retirement who have cable television, eat out, and have cell phones.

If you have money for all of that you have enough to save. $5000 in a IRA per year is under $14 a day.

Life choices people make is what decides their futures. Simple as that.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

mike_slc
Posts: 971
Joined: Fri May 16, 2008 11:04 pm

Post by mike_slc » Fri Apr 08, 2011 10:35 am

staythecourse wrote: I would love to see how many poor who state they don't have enough to save for retirement who have cable television, eat out, and have cell phones.
Yeah the nerve of those people! :roll:

User avatar
Sheepdog
Posts: 4950
Joined: Tue Feb 27, 2007 3:05 pm
Location: Indiana, retired 1998 at age 65

Post by Sheepdog » Fri Apr 08, 2011 10:37 am

A real story:
What this person saved. Not enough, you would say, but.... It has worked out. It wasn't because of spending...it was income and taking care of the kids through their education. They went into their adulthood without any debt. I have never been in debt other than a mortgage which was paid off in 1992 at age 59. We have always lived modestly and frugally. We helped extended family and helped charities..

Our case history:
I recommend that no one do this, It is scary.... But it shows that late savings for retirement is possible if you have adequate income then. Timing and investment luck definitely helped me

Retirement savings by age
Age:
60 $150,000 Last child graduated from college. This was 1993.
61 $165,000
62 $245,000
63 $325,000
64 $397,000
65 $460,000 Retired 1998
Add $223,000 pension lump sum to IRA = $683,000

Started regular 4.5% annual withdrawals immediately.
Result? Have more than maintained that investment balance over 12+years. Our lifestyle has never wavered over the last 40+ years.
Retirement has been successful.
Don't follow my lead, but you can tell late savers who come here that it is not too late.

Jim
People should not say everything they think. They should think about everything they say.

The Wizard
Posts: 11497
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Post by The Wizard » Fri Apr 08, 2011 10:42 am

mike_slc wrote:
staythecourse wrote: I would love to see how many poor who state they don't have enough to save for retirement who have cable television, eat out, and have cell phones.
Yeah the nerve of those people! :roll:
I think there are fair number of folks out there who just want to enjoy life and have no desire to become Financial Kingpins...

User avatar
BlueEars
Posts: 3585
Joined: Sat Mar 10, 2007 12:15 am
Location: West Coast

Post by BlueEars » Fri Apr 08, 2011 11:01 am

Sheepdog wrote:...(snip)...
Don't follow my lead, but you can tell late savers who come here that it is not too late.

Jim
Great story Sheepdog. My hat is off to you.

Speaking of dogs, my old Corgi was always so happy and never worried about his next meal. That's because he lived with working fools. Maybe that's how some Americans do it, maybe they're on to something. :shock:

Grt2bOutdoors
Posts: 17997
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Post by Grt2bOutdoors » Fri Apr 08, 2011 11:13 am

Sheepdog wrote:A real story:
What this person saved. Not enough, you would say, but.... It has worked out. It wasn't because of spending...it was income and taking care of the kids through their education. They went into their adulthood without any debt. I have never been in debt other than a mortgage which was paid off in 1992 at age 59. We have always lived modestly and frugally. We helped extended family and helped charities..

Our case history:
I recommend that no one do this, It is scary.... But it shows that late savings for retirement is possible if you have adequate income then. Timing and investment luck definitely helped me

Retirement savings by age
Age:
60 $150,000 Last child graduated from college. This was 1993.
61 $165,000
62 $245,000
63 $325,000
64 $397,000
65 $460,000 Retired 1998
Add $223,000 pension lump sum to IRA = $683,000

Started regular 4.5% annual withdrawals immediately.
Result? Have more than maintained that investment balance over 12+years. Our lifestyle has never wavered over the last 40+ years.
Retirement has been successful.
Don't follow my lead, but you can tell late savers who come here that it is not too late.

Jim
Thanks for the great example - and kudos to you for pulling it off!
There are many roads to retirement, one just doesn't want to take the exit that leads off the cliff.

Locked