How much should I have saved for retirement by age 40?

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miamivice
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How much should I have saved for retirement by age 40?

Post by miamivice » Sat Jun 29, 2019 8:53 am

Simple question, no easy answer.

How much should one have saved for retirement by age 40? I'm not interested in the financial house calculators of 5x income or whatnot, because I think those are designed to make everyone feel they are behind the curve.

What did you aim for? What worked well for you? What should I am for?

For reference, our expenses today are right around $110k per year. Probably all but $30k a year are for expenses we will not have in retirement (mortgage, daycare, home equity loan, gas to/from work), but of course, we will have other expenses for unknown things. I would project we might spend $50k to $100k a year in retirement.

Other than retirement savings, we will have two social security checks plus two pension checks each month coming in, providing maybe $40k - 50k a year in income. Maybe $15k a year in a side hustle income.

runner3081
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Re: How much should I have saved for retirement by age 40?

Post by runner3081 » Sat Jun 29, 2019 9:47 am

Biggest question will be, when do you want to retire?

Retiring at 50 will provide a much different answer compared to retiring at 70.

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TomatoTomahto
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Re: How much should I have saved for retirement by age 40?

Post by TomatoTomahto » Sat Jun 29, 2019 9:54 am

To be honest, we didn't even ask the question until well after the age of 40. At 50 (my 50, wife is younger), we had two young kids, so retirement wasn't a consideration. Additionally, at 50, we decided that I'd stay at home and my wife would be the breadwinner. At that time, we made approximately equal incomes and didn't know that her career would blossom, so I don't know if we wanted to confront the question of retirement head on.

It all worked out. Saving a lot and LBYM works well, although by comparison to many BHs, we are spendthrifts.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: How much should I have saved for retirement by age 40?

Post by KlangFool » Sat Jun 29, 2019 9:54 am

miamivice wrote:
Sat Jun 29, 2019 8:53 am
Simple question, no easy answer.

How much should one have saved for retirement by age 40?
miamivice,

Do you assume that you will be fully-employed continuously until your retirement age?

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Re: How much should I have saved for retirement by age 40?

Post by bloom2708 » Sat Jun 29, 2019 9:56 am

$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

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Re: How much should I have saved for retirement by age 40?

Post by bloom2708 » Sat Jun 29, 2019 9:56 am

$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

catlady
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Re: How much should I have saved for retirement by age 40?

Post by catlady » Sat Jun 29, 2019 10:12 am

We want the ability to retire early and/or change careers in our 40s so we’re aiming for between 16-20x yearly spending saved by age 40.

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miamivice
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Re: How much should I have saved for retirement by age 40?

Post by miamivice » Sat Jun 29, 2019 10:17 am

catlady wrote:
Sat Jun 29, 2019 10:12 am
We want the ability to retire early and/or change careers in our 40s so we’re aiming for between 16-20x yearly spending saved by age 40.
What kind of dollar amount is this for you?

catlady
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Re: How much should I have saved for retirement by age 40?

Post by catlady » Sat Jun 29, 2019 10:25 am

miamivice wrote:
Sat Jun 29, 2019 10:17 am
catlady wrote:
Sat Jun 29, 2019 10:12 am
We want the ability to retire early and/or change careers in our 40s so we’re aiming for between 16-20x yearly spending saved by age 40.
What kind of dollar amount is this for you?
Our current yearly expenses are slightly higher than your stated expenses upthread. For transparency, we’re high income DINKs.

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Re: How much should I have saved for retirement by age 40?

Post by ChowYunPhat » Sat Jun 29, 2019 10:34 am

In our 30s and now in our 40s we didn't really focus on the question very much. Save as much as you can is the answer, as the dollars you save early on are worth much more than dollars saved later. If you start doing this, it will make life much easier down the road.
A wise man and his money are friends forever...

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Re: How much should I have saved for retirement by age 40?

Post by JD2775 » Sat Jun 29, 2019 10:34 am

bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.

Well, I'm screwed...

onourway
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Re: How much should I have saved for retirement by age 40?

Post by onourway » Sat Jun 29, 2019 10:44 am

Too many moving parts to answer with any degree of certainty other than 'as much as is practical'. There is a huge difference between $50-100k expenses, and a huge difference between wanting to retire at 50, 60, or 70. Our expenses and ages are similar, and we shoot to save about 1 year of expenses every year across all our various accounts. We do this on good, but not exorbitant incomes by keeping our major costs in check - house is ~1x current income, cars are purchased in cash, etc. My hope is that by age 50 we will be able to let off; right around the time our kids go to college.

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Re: How much should I have saved for retirement by age 40?

Post by Jags4186 » Sat Jun 29, 2019 10:59 am

I don’t think it’s good to look at it as how much you should have saved because investment returns have such a huge effect on how much you have saved.

$1000/mo invested into the SP500 Index Fund grew to $1,098,000 between 1983 and 2000
$1000/mo invested into the SP500 Index Fund grew to $353,000 between 1992 and 2009

What’s important is that you are saving as much as possible for as long as possible. Give yourself a healthy target savings percentage and things should work out in the long run.

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Re: How much should I have saved for retirement by age 40?

Post by Dottie57 » Sat Jun 29, 2019 11:37 am

JD2775 wrote:
Sat Jun 29, 2019 10:34 am
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.

Well, I'm screwed...
Me too and I’m retired! :annoyed

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Re: How much should I have saved for retirement by age 40?

Post by Grt2bOutdoors » Sat Jun 29, 2019 11:45 am

$300k at age 40. $750k at age 50. $1.5 million at age 60.
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Re: How much should I have saved for retirement by age 40?

Post by BanquetBeer » Sat Jun 29, 2019 12:27 pm

I don’t want to have to work after 45 (or be able to *attempt* to live paycheck to paycheck if I do)

I live on half so each year put about 1x current spend away. Goal of increased standard of living. Depends what your goal is in life. Oil field has too many boom/bust cycles I don’t want to count on that for 40+ years.

With your target spend/retirement age and an assumed interest rate (or firecalc average) you can get a ball park.

But if 5x income is unrealistic for you - you’re probably not on the retire early path.

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vineviz
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Re: How much should I have saved for retirement by age 40?

Post by vineviz » Sat Jun 29, 2019 12:33 pm

miamivice wrote:
Sat Jun 29, 2019 8:53 am
Simple question, no easy answer.

How much should one have saved for retirement by age 40? I'm not interested in the financial house calculators of 5x income or whatnot, because I think those are designed to make everyone feel they are behind the curve.

What did you aim for? What worked well for you? What should I am for?
It turns out that having roughly 5x of your income saved at retirement is a very reasonable benchmark under certain common assumptions. Assume you retire at age 65. Assume you will fund most of your expenses with your retirement portfolio.

If you relax those assumptions (e.g. let's say you're correct that pensions + Social Security will cover roughly half your spending needs) then something less than 5x of income saved by age 40 is necessary.

Something closer to 3x might be sufficient, but only if your pension and Social Security estimates are accurate. If it turns out you need to fund more of your retirement on your own, it gets harder and harder to make up that shortfall as you age.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

longinvest
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Re: How much should I have saved for retirement by age 40?

Post by longinvest » Sat Jun 29, 2019 12:35 pm

miamivice wrote:
Sat Jun 29, 2019 8:53 am
Simple question, no easy answer.

How much should one have saved for retirement by age 40? I'm not interested in the financial house calculators of 5x income or whatnot, because I think those are designed to make everyone feel they are behind the curve.

What did you aim for? What worked well for you? What should I am for?

For reference, our expenses today are right around $110k per year. Probably all but $30k a year are for expenses we will not have in retirement (mortgage, daycare, home equity loan, gas to/from work), but of course, we will have other expenses for unknown things. I would project we might spend $50k to $100k a year in retirement.

Other than retirement savings, we will have two social security checks plus two pension checks each month coming in, providing maybe $40k - 50k a year in income. Maybe $15k a year in a side hustle income.
Here's a rational approach to this.

It's not how much one has saved at 40 that matters; it's how much one makes and already has accumulated in relation to one's planned retirement age and future pensions that determine how much one should save. What remains of one's salary after taxes and savings is what "one's means" are (as in "living below one's means").

Our wiki's VPW Accumulation And Retirement Worksheet has an Accumulation sheet to calculate this. It is meant to be updated each year, during accumulation, to refresh its suggestions according to the evolving situation of its user (changing salary, changing portfolio balance, changing Social Security projections).

Here's a screenshot:

Image

In the illustrated example, it tells us that a couple, both spouses of age 40, with a combined family income of $120,000 and a $384,650 portfolio (60/40 stocks/bonds) which plans to retire at age 55 should save $2,700 per month in 2019. If stocks were to lose 50%, the portfolio would suffer a -$115,395 loss down to $269,255. As a result, savings would have to be increased by $398 per month (up to $3,098) to compensate for the losses.

In other words, it's important to keep enough flexibility in the 2019 spending budget to easily cut discretionary expenses by $398 after unfavorable market returns. This is the required flexibility that must be kept in the budget.

In 2019, after removing savings and Social Security (SS) contributions (the "OASI" part of Social Security taxes), the couple is left with ($120,000 - 12 X $2700 - $3,710 -$2,650) = $81,246 available to pay taxes and expenses. The worksheet projects that, in retirement, the sum of Social Security payments (including replacement withdrawals from the portfolio between ages 55 and 69) and Variable portfolio withdrawals (VPW) will be ($26,664 her SS + $21,336 his SS + $33,246 VPW withdrawal) = $81,246 available to pay taxes and expenses. As you can see, the worksheet aims to balance accumulation-time and retirement-time money available for taxes and expenses.

Added: Here's a link to a convenient Social Security Estimator developed by forum member Neurosphere.
Last edited by longinvest on Sat Jun 29, 2019 12:56 pm, edited 5 times in total.
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Re: How much should I have saved for retirement by age 40?

Post by abuss368 » Sat Jun 29, 2019 12:36 pm

miamivice wrote:
Sat Jun 29, 2019 8:53 am
Simple question, no easy answer.

How much should one have saved for retirement by age 40? I'm not interested in the financial house calculators of 5x income or whatnot, because I think those are designed to make everyone feel they are behind the curve.

What did you aim for? What worked well for you? What should I am for?

For reference, our expenses today are right around $110k per year. Probably all but $30k a year are for expenses we will not have in retirement (mortgage, daycare, home equity loan, gas to/from work), but of course, we will have other expenses for unknown things. I would project we might spend $50k to $100k a year in retirement.

Other than retirement savings, we will have two social security checks plus two pension checks each month coming in, providing maybe $40k - 50k a year in income. Maybe $15k a year in a side hustle income.
Expenses you will not have at retirement is also cash flow out saving for retirement.
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Re: How much should I have saved for retirement by age 40?

Post by abuss368 » Sat Jun 29, 2019 12:37 pm

miamivice wrote:
Sat Jun 29, 2019 8:53 am
Simple question, no easy answer.

How much should one have saved for retirement by age 40? I'm not interested in the financial house calculators of 5x income or whatnot, because I think those are designed to make everyone feel they are behind the curve.

What did you aim for? What worked well for you? What should I am for?

For reference, our expenses today are right around $110k per year. Probably all but $30k a year are for expenses we will not have in retirement (mortgage, daycare, home equity loan, gas to/from work), but of course, we will have other expenses for unknown things. I would project we might spend $50k to $100k a year in retirement.

Other than retirement savings, we will have two social security checks plus two pension checks each month coming in, providing maybe $40k - 50k a year in income. Maybe $15k a year in a side hustle income.
Spending $50k - $100k in retirement is a very wide range.
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Re: How much should I have saved for retirement by age 40?

Post by abuss368 » Sat Jun 29, 2019 12:39 pm

bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

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Re: How much should I have saved for retirement by age 40?

Post by Ron Ronnerson » Sat Jun 29, 2019 1:16 pm

I don’t think you can get quality answers to your question without more clarification. Here are two different scenarios based on the inputs you’ve given:

Scenario 1: You will need $50k. You and your spouse will work until 70 and collect maximum social security checks of $3800/month each. You will get $50k in pensions per year with a cost-of-living adjustment. Your side income will generate $15k and you keep earning money from that side income until age 85. You don’t need to save anything as your income streams are much higher than your expenses in retirement.

Scenario 2: You will need $100k. You and your spouse will both work until age 50. You choose to take social security at age 62 and get $1k a month each. Your pensions bring in $40k but you lose spending power each year since there is no cost-of-living adjustment. A high inflation rate in the future treats you unkindly. The side income (which was a “maybe”) doesn’t materialize. You should be saving as much as you can because your expenses greatly exceed your income streams after retiring.

To answer your question, you should save between nothing and as much as you can. Personally, I’d try to be conservative and narrow the range of possibilities so that you can plan accordingly. On a related note, due to the power of compounding, it is better to save earlier than later. In fact, the earlier, the better. Even if you think that you may not need the money, it is good to have options in the future. Life can surprise us sometimes.

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Re: How much should I have saved for retirement by age 40?

Post by snackdog » Sat Jun 29, 2019 1:32 pm

If you started work at age 20, you could be ready to retire by 40 (or even 30 in an extreme case). If you fooled around with education, borrowed for school, graduated and then ran up debt you could still have negative net worth at 40 despite large income. Each person has their own answer.

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Re: How much should I have saved for retirement by age 40?

Post by Green Street » Sat Jun 29, 2019 2:02 pm

This question relates to me as I’ll be retiring at 41. Plan is to have 2.25M with about 65k in expenses annually. Probably overkill, but life happens. Ultimately it comes down to when do you want to retire.
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Re: How much should I have saved for retirement by age 40?

Post by aerosurfer » Sat Jun 29, 2019 2:02 pm

abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
I may not quite be at the 1 Mil by 40 (my conservative estimate is by 42) but close, and on par with that trajectory or better going forward. Currently 38 and about $525k invested

Pilot for a Major airline.

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Re: How much should I have saved for retirement by age 40?

Post by bloom2708 » Sat Jun 29, 2019 2:17 pm

abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
Both working at a Megacorp. Decent salaries but neither over $125k. Now only one working. Lower cost area. We are not yet 50. This was goals. May or may not hit the 50 one.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

BanquetBeer
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Re: How much should I have saved for retirement by age 40?

Post by BanquetBeer » Sat Jun 29, 2019 2:39 pm

abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
2 (driven/smart/talented) engineers living off of one salary - You will be far far ahead of this goal. I know many similar couples who don’t have much because they don’t prioritize savings.

Saving 35-80k/person/yr adds up quickly but you won’t always be living large (compared to your peers). 50% increase from starting pay in 5 years for decent performers

squirm
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Re: How much should I have saved for retirement by age 40?

Post by squirm » Sat Jun 29, 2019 2:43 pm

Much of it also depends if you're on a pension. If so that changes the equation.

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Re: How much should I have saved for retirement by age 40?

Post by drk » Sat Jun 29, 2019 5:28 pm

bloom2708 wrote:
Sat Jun 29, 2019 2:17 pm
abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
Both working at a Megacorp. Decent salaries but neither over $125k. Now only one working. Lower cost area. We are not yet 50. This was goals. May or may not hit the 50 one.
Oh, those are combined assets?

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Re: How much should I have saved for retirement by age 40?

Post by fourwheelcycle » Sat Jun 29, 2019 6:34 pm

Build your own spreadsheet out to age 100.

Include a column for your annual expenses, with a fixed reference cell for annual CPI increases. You already said you can see when some expenses will drop out as you approach retirement. Other expenses, like travel, may increase. You can build those expectations into the spreadsheet.

Include columns for each current and future annual income source, with fixed reference cells for annual pay increases and future annual SS increases (a distant guess!). Include columns for 1099 DIV income and for future RMDs (the IRS has an age-based RMD calculation table you can plug right into your spreadsheet). Include a column for federal and state taxes and FICA taxes (an impressive total percentage!) Include a column for projected net additions to retirement and taxable savings each year.

Break out your taxable and retirement savings columns by equities and bonds. Include fixed reference cells for those percentage portfolio allocations. Then add fixed reference cells for projected annual stock and bond index fund returns, which will affect your 1099 DIV income and your RMD and other retirement withdrawal income.

When the whole spreadsheet is working, play around with target retirement ages and ages to begin SS. You know when RMDs will begin, but you can also add a column for additional retirement savings withdrawals if your spreadsheet says you will need them.

When you are all done you can answer your own question for any age out to your target retirement age - just make sure you still have a positive number in your total savings column at age 100!

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miamivice
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Re: How much should I have saved for retirement by age 40?

Post by miamivice » Sun Jun 30, 2019 10:14 am

Thanks all.

We have about $800k in retirement today. Hopefully it will all work out.

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Re: How much should I have saved for retirement by age 40?

Post by bloom2708 » Mon Jul 01, 2019 10:45 am

drk wrote:
Sat Jun 29, 2019 5:28 pm
Oh, those are combined assets?
I am married. I guess our goals are for the household.

The OP asked a very generic goal, didn't say single or married. Many variables in play.

Set Big Hairy Audacious Goals (BHAG) and try to hit them. If you fail, you still probably did OK compared to the masses.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

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Re: How much should I have saved for retirement by age 40?

Post by MotoTrojan » Mon Jul 01, 2019 11:33 am

aerosurfer wrote:
Sat Jun 29, 2019 2:02 pm
abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
I may not quite be at the 1 Mil by 40 (my conservative estimate is by 42) but close, and on par with that trajectory or better going forward. Currently 38 and about $525k invested

Pilot for a Major airline.
How will you double your portfolio in 4 years?

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HomerJ
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Re: How much should I have saved for retirement by age 40?

Post by HomerJ » Mon Jul 01, 2019 11:52 am

abuss368 wrote:
Sat Jun 29, 2019 12:37 pm
Spending $50k - $100k in retirement is a very wide range.
This.

There are a ton of variables here...

When do you hope to retire? (This may not be up to you).

How much do you want to spend in retirement?

How much Social Security will you get?

If you only need $50k a year in retirement, you may not need to have saved much at all by 40. Social Security alone might cover most of your needs, if there are two of you.

Of course, you can't guarantee you will keep a job until 65-70 (and you probably don't want to work that long), so you'll need to have saved something.
The J stands for Jay

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Re: How much should I have saved for retirement by age 40?

Post by HomerJ » Mon Jul 01, 2019 11:56 am

MotoTrojan wrote:
Mon Jul 01, 2019 11:33 am
aerosurfer wrote:
Sat Jun 29, 2019 2:02 pm
abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
I may not quite be at the 1 Mil by 40 (my conservative estimate is by 42) but close, and on par with that trajectory or better going forward. Currently 38 and about $525k invested

Pilot for a Major airline.
How will you double your portfolio in 4 years?
If he's saving $75k a year, that gets him to $825k.

And if the portfolio grows another 6% a year, that will get him there.
The J stands for Jay

Seasonal
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Re: How much should I have saved for retirement by age 40?

Post by Seasonal » Mon Jul 01, 2019 12:22 pm

Simple approach: pick a rule of thumb, such as save 10%-20% of salary.

Analytical approach: Estimate annual retirement spending and subtract estimated social security, pension and other income. Estimate rate of return between now and retirement. Estimate how large a portfolio you'll need to have at least 25x estimated net spending. Subtract current savings. Everything should be adjusted for estimated inflation (or do all calculations in real terms). Use a financial calculator, Excel or the like to figure how much you'll have to save each year at the estimated rate of return to have the required portfolio at retirement. Take into account estimated salary increases. Realize that your estimates are not likely to be accurate, so re-estimate and recalculate over time. Even then it's not going to be very accurate until you get close to retirement.

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Re: How much should I have saved for retirement by age 40?

Post by TravelforFun » Mon Jul 01, 2019 12:25 pm

Per 'The Millionaire Next Door' author, Thomas Stanley, your net worth should be at least equal to your age divided by 10 and multiplied by your annual income.

TravelforFun

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Re: How much should I have saved for retirement by age 40?

Post by MotoTrojan » Mon Jul 01, 2019 12:39 pm

HomerJ wrote:
Mon Jul 01, 2019 11:56 am
MotoTrojan wrote:
Mon Jul 01, 2019 11:33 am
aerosurfer wrote:
Sat Jun 29, 2019 2:02 pm
abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
I may not quite be at the 1 Mil by 40 (my conservative estimate is by 42) but close, and on par with that trajectory or better going forward. Currently 38 and about $525k invested

Pilot for a Major airline.
How will you double your portfolio in 4 years?
If he's saving $75k a year, that gets him to $825k.

And if the portfolio grows another 6% a year, that will get him there.
Based on recent market conditions and age I would’ve guessed they were not contributing $75k/year but fair.

airborne
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Re: How much should I have saved for retirement by age 40?

Post by airborne » Mon Jul 01, 2019 6:18 pm

MotoTrojan wrote:
Mon Jul 01, 2019 12:39 pm
HomerJ wrote:
Mon Jul 01, 2019 11:56 am
MotoTrojan wrote:
Mon Jul 01, 2019 11:33 am
aerosurfer wrote:
Sat Jun 29, 2019 2:02 pm
abuss368 wrote:
Sat Jun 29, 2019 12:39 pm


Interested in what your career was to achieve those goals.
I may not quite be at the 1 Mil by 40 (my conservative estimate is by 42) but close, and on par with that trajectory or better going forward. Currently 38 and about $525k invested

Pilot for a Major airline.
How will you double your portfolio in 4 years?
If he's saving $75k a year, that gets him to $825k.

And if the portfolio grows another 6% a year, that will get him there.
Based on recent market conditions and age I would’ve guessed they were not contributing $75k/year but fair.
Also a pilot for a major airline here. Higher-tier airlines contribute 15-16% of gross wages into a 401(k). Assuming an income of $220k+ it isn't all that difficult to max out the $56k 401(k), plus $6k backdoor Roth IRA, plus another $13k-$30k into taxable to reach $75k-$100k/year.

michaeljc70
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Re: How much should I have saved for retirement by age 40?

Post by michaeljc70 » Mon Jul 01, 2019 6:23 pm

I didn't read any responses. But $50k to $100k needed for retirement is way too big of a range. $100k is double $50k. If you cannot nail it down more than that, most answers won't be useful beyond the standard 25x expenses (which may be 30x+ if a long retirement).

aerosurfer
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Re: How much should I have saved for retirement by age 40?

Post by aerosurfer » Tue Jul 02, 2019 12:34 pm

MotoTrojan wrote:
Mon Jul 01, 2019 11:33 am
aerosurfer wrote:
Sat Jun 29, 2019 2:02 pm
abuss368 wrote:
Sat Jun 29, 2019 12:39 pm
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.
Interested in what your career was to achieve those goals.
I may not quite be at the 1 Mil by 40 (my conservative estimate is by 42) but close, and on par with that trajectory or better going forward. Currently 38 and about $525k invested

Pilot for a Major airline.
How will you double your portfolio in 4 years?
~$60k/year savings
Using 6-7% return estimates at 80/20AA

May have rounded up a little bit, but puts me 900+

If you count total NW from another thread, add in 150-175k in home equity as well over the course of that time frame.
Last edited by aerosurfer on Tue Jul 02, 2019 12:41 pm, edited 1 time in total.

tesuzuki2002
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Re: How much should I have saved for retirement by age 40?

Post by tesuzuki2002 » Tue Jul 02, 2019 12:39 pm

miamivice wrote:
Sat Jun 29, 2019 8:53 am
Simple question, no easy answer.

How much should one have saved for retirement by age 40? I'm not interested in the financial house calculators of 5x income or whatnot, because I think those are designed to make everyone feel they are behind the curve.

What did you aim for? What worked well for you? What should I am for?

For reference, our expenses today are right around $110k per year. Probably all but $30k a year are for expenses we will not have in retirement (mortgage, daycare, home equity loan, gas to/from work), but of course, we will have other expenses for unknown things. I would project we might spend $50k to $100k a year in retirement.

Other than retirement savings, we will have two social security checks plus two pension checks each month coming in, providing maybe $40k - 50k a year in income. Maybe $15k a year in a side hustle income.
It really all depends on your retirement date!!

Planning for 60 using a 30 year retirement conservatively you need $3M with your max of $100K annual spend.

core4portfolio
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Re: How much should I have saved for retirement by age 40?

Post by core4portfolio » Tue Jul 02, 2019 12:43 pm

JD2775 wrote:
Sat Jun 29, 2019 10:34 am
bloom2708 wrote:
Sat Jun 29, 2019 9:56 am
$1 million by 40, mortgage paid off

$2 million by 50

See what happens at 55 and up.

Well, I'm screwed...
+ 1
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

RobLyons
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Re: How much should I have saved for retirement by age 40?

Post by RobLyons » Tue Jul 02, 2019 1:01 pm

It's completely individual!

Successful (future) retirees may have $1M by age 40 while others may have just $100k..
"Great parenting sets the foundation for a better world"

seity
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Re: How much should I have saved for retirement by age 40?

Post by seity » Tue Jul 02, 2019 1:06 pm

RobLyons wrote:
Tue Jul 02, 2019 1:01 pm
It's completely individual!

Successful (future) retirees may have $1M by age 40 while others may have just $100k..
Exactly this!!! I had about 100k at 40. I am on track to successfully retire at 57.
I have never earned over 100k, so what I need is not going to be the same as someone who earned and spent more over their lifetime.

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fizxman
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Location: Harrisburg, PA

Re: How much should I have saved for retirement by age 40?

Post by fizxman » Tue Jul 02, 2019 1:14 pm

$1,000,000,000

I turn 39 in 5 days. I won't hit my number in 371 days (2020 is a leap year so I get an extra day).

Since no two posters are the same, everyone could give a completely different number, so I don't know how this information is helpful.

wootwoot
Posts: 341
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Re: How much should I have saved for retirement by age 40?

Post by wootwoot » Tue Jul 02, 2019 1:42 pm

50k, all 40 year olds should have at least 50k

decapod10
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Re: How much should I have saved for retirement by age 40?

Post by decapod10 » Tue Jul 02, 2019 1:44 pm

Sometimes I’ll look at a funded ratio just for fun.

Funded ratio = assets/liabilities

Liabilities = Retirement spending, converted to lump sum and discounted to present value. You basically need the # of years of retirement, $/year of expenses, a discount rate, and # of years from now to retirement. You convert all spending into a single lump sum at retirement, then convert that to today's dollars again using the discount rate.

Assets = Current retirement savings (you can project the value at retirement based on whatever real return $% you want if you choose), pension, SS, etc. You should convert the pension again to a lump sum to the time you start collecting, then convert it to present value.

It’s got it’s problems for sure, but an interesting number to look at. We are way underfunded based on that of course, lol.

Edited for clarity
fizxman wrote:
Tue Jul 02, 2019 1:14 pm
$1,000,000,000
::Laughs in Dr. Evil::
Last edited by decapod10 on Tue Jul 02, 2019 3:34 pm, edited 1 time in total.

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KlingKlang
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Re: How much should I have saved for retirement by age 40?

Post by KlingKlang » Tue Jul 02, 2019 1:51 pm

We had only $333,500 back in 1995, but that was with a paid off house and no other debt.

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miamivice
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Re: How much should I have saved for retirement by age 40?

Post by miamivice » Tue Jul 02, 2019 1:54 pm

seity wrote:
Tue Jul 02, 2019 1:06 pm
RobLyons wrote:
Tue Jul 02, 2019 1:01 pm
It's completely individual!

Successful (future) retirees may have $1M by age 40 while others may have just $100k..
Exactly this!!! I had about 100k at 40. I am on track to successfully retire at 57.
I have never earned over 100k, so what I need is not going to be the same as someone who earned and spent more over their lifetime.
Why does the fact that you earned less than 100k mean you need less in retirement than someone who earned more?

We save heavily. Most of our disposable income spending is on our kids, which we won't be doing in retirement. I've never figured out why we "need" to live on a higher budget that someone who earned less.

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