thangngo wrote: ↑
Thu Aug 24, 2017 11:33 am
skor99 wrote: ↑
Wed Aug 23, 2017 7:32 pm
I was talking to a friend who am I open with about money topics and issues. We got talking about how much an average earning professional like an engineer or accountant should have saved after working for 20 years. To keep things simple, we just talked about a single earner family.
Obviously there are many factors at play such as number of kids and COL etc. But as a ballpark, I was of the opinion that a person starting out say in the mid 50s salary range right after college and working their way upto say 120K per year with two kids in a MCOL area with a 30 yr mortgage on a 300 K house ( all average numbers) should have around $450K - $500K saved including their retirement accounts ( not including home equity). He laughed at the suggestion and said 150K-200K is more like it in the real world and even lesser for financially ignorant people. He hinted that he falls in roughly the same pattern and is not close to 500K. I know for sure that he is sensible with his money, so his lower number is not due to excessive spending.
I understand the number can vary widely, but as a general guideline, is 400K too much in the real non boglehead world for an average middle aged professional ?
At the very least, one individual should be able to save close to $1M (not counting growth of the portfolio). Here's the math for an average professional:
18,000 retirement account 401k
5,000 + Roth IRA
2,000 + brokerage/savings
25,000 = average annual saving
40 × years of working
Following a general guideline: 1/3 pay the tax man, 1/3 savings, and 1/3 spending:
Start salary at 60k: 20k tax, 20k savings, 20 spending
At 5 year mark, salary at 100k: 30k tax, 30k savings, 30k spending
At 10 year mark, salary at 160k: 48k tax, 48k savings, 48k spending, and so on.
If you live below your means, the more money you bring in, the more money you should be able to save.
If you live below your means, know your annual budget from the general guideline, then make decision on your life style and purchases.
So, 500k savings after 20 years of working s/b a conservative number since you don't count any growth of the portfolio.