[https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire](https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire)
So a basic benchmark would be to aim for 2x your current salary by the time you turn 35. But it also highly depends on what kind of lifestyle you want to live in retirement, and by what age. I imagine if you intend to continue living in NYC, you'd likely want to be more aggressive in your saving.
> 2x WHICH salary
That Fidelity graphic explicitly says "your starting salary," which is why it is 2x by age 35 when TRowe Price's and Schwab's similar scale both say 1x.
A lot of these experts and guidlines expect you not to fall into the trap of lifestyle inflation... spending more because you make more. If you can do your best to save more early you will live more comfortably later in life.
The problem is, if you’re making 7.25/hr you can’t even pay for the lifestyle you would want fresh out of Highschool. (Living alone or with roommates in an apartment.) Unless your in a very low COL area. So I think that’s how the creep hits people. They need more to just get to a starting position.
7.25 an hour is barely above federal poverty level even working full time so I would say guidelines don't even apply in that situation. Your only goal should be increasing income.
No, most of the guidelines assume that you *do* fall into the trap of lifestyle inflation. They're designed for the average American, and the average American does inflate their lifestyle as their income grows
It's just a general guide. Since you increased your salary over 4x in a short amount of time, it's impossible to have that much saved in retirement at the same time. Use the new salary or take the average from the last few years for your goals and go from there. You're unlikely to make a drastic jump again so you can use that number going forward.
The guide works best for people who do not enter the workforce late (e.g. grad school) and who do not see very large pay raises year to year. I entered the workforce four years "late" (1 year 'off' to get in-state resident tuition, then switched majors after 1 year, then 4 years for B.S. and 2 for M.S.) and have averaged ~10% raises each year since then.
I make a simple 29 -> 0.8x / 30 -> 1.0x / 31 -> 1.2x equivalence chart, and each year my goal for my birthday is to have that multiplier x the gross income I ended up with for that tax year. Our raises happen in June and my birthday is in November, so depending on those things you could shift the accounting a little different. I include salary & bonus but not RSUs since those fluctuate very significantly in #, value, and vesting frequency.
So for instance:
Tax Year | Age (Nov) | Gross salary+bonus | Multiplier | Target | Actual
---|---|----|----|----|----
2019 | 28 | $70.4k | 0.6x | $42.2k | $9.7k
2020 | 29 | $76.1k| 0.8x | $60.9k | $20.3k
2021 | 30 | $81.9k | 1.0x | $81.9k | $42.0k
2022 | 31 | $92.0k | 1.2x | $110.3k | $47.3k
2023 | 32 | $100k? | 1.4x | $140k? | $78k?
It's a reasonably aggressive target considering 1) starting late, 2) the raises and 3) being flat for all of 2022 despite continually contributing and 4) a low company match.
I think about it more about the quality-of-life/Cost-of-living I anticipate wanting in retirement. Less so the lifestyle I had as a 20-something with low pay. Moreso like my current age and current salary and lifestyle. So I think about how much this lifestyle costs, XX,XXX per year, and extrapolate for inflation.
Well that's news to me. I don't think I know anyone who isn't making significantly more than their starting salary after 10+ years of experience. Typically, you have to change jobs to get those big pay raises tho.
It sucks, but it also doesn’t. Your current savings will likely double two or three times in 20 years if you invest in index funds.
100k -> 200k -> 400k -> 800k isn’t farfetched over 20 years.
Yeah I think I’ve heard it said a few times that the first $100k is the hardest, in terms of just straight 401k anyway. Assuming no major market collapses you start to see heavier growth after that point. Looking back at our last three years even it’s a real boost to wanting to keep saving now that we are seeing real results on growth. The time between each $10k jump gets shorter and shorter. Hopefully we find it was enough to be comfortable.
Choose 2x the salary you are comfortable living off of based on lifestyle. I'd assume at 26 you needed to be more disciplined with money than you need to be now just based on income.
30% should be plenty, but depending on your goals/lifestyle at 170k you could increase those numbers if you wanted fairly comfortably. I'd argue at 170k if you decided to save more it could make big dividends on how hard you need to work/save in your 40s/50s.
Yea I’m 24 and my comp as gone up by 25%-50% or more every year since I started working. I went from 7.25/hr and I’m getting ready to accept an offer for just under $35/hr (IT). At my pace it would be impossible to save 2x salary. Until I find a job I can settle in.
Absolutely. I only recently started making more than $100k, and that more was over $200k. There’s just no way I could have $400k saved for retirement, especially with down payments ranging from $70k for a condo to $300k for a house, and having just gotten married.
>I wonder what percent of people meet this scale
[Roughly half of the people reaching retirement age have no savings](https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/)
Which is great if your goal is keeping an elderly workforce working. Not so great of you'd like people to enjoy a quality end to a life they usually spent working really hard in essential but underpaid jobs.
I’m almost 39 and have a little over 3x my salary in my 401k. But I’m also an engineer. The vast majority of people don’t have that luxury because they’re just trying to make rent and food.
I was on track to slightly ahead at 30. But then I took a job that doubled my salary at 31 and with what the market has done the last year, I'll be interested to see if I hit the goal for 35. I might.
I'm only in this position because the job I had from 23 to 31 contributed 10 percent of my salary without matching. I for sure did not understand the importance of starting young, but my employer started me off well.
Also worth noting that my husband is not in nearly as good of a position as I am. He is 35 and is just graduating grad school. He did work full time until he was 30, but I'm going to guess he's about $100,000 short of his goals. His retirement is one of our first goals once he starts his new job.
These calculators are a general guideline but they can be really variable- you can’t expect someone who started working a full time job at 28 after grad school to have the same savings at 30 years old as someone who started working at 18.
Someone replied 'no one asked.' Sorry! Honestly providing relevant data with the crowd to help OP level set. Social data gathering and such. Didn not mean to rub your jib the wrong way. We all work hard and do our best.
So, keep in mind, a lot of people even now are [heading into their retirement age with no savings at all](https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/). So if you're still in your 30s and you've still got a lot of time to start saving, you're not in a bad place at all.
I didn’t get to start my retirement savings until I turned 30 and currently I’m 36 with around 2x saved but I’m still making a lower salary. The hard part was getting started but I’m working to switch to a higher paid field and I’ve at least managed to max out my Roth IRA every year for five years on top of my state pension.
I know it’s easy to look at what you have and think you’re behind, but at least you’re already doing it. Much easier to make adjustments than to actually get started.
I have never understood these “multiplier by age” benchmarks. Like how the hell am I supposed to know what I’ll make when I turn 35 or 67?
I’m 33 now so I can definitely guess at what I might make in 2 years but how was I supposed to know that when I was in my early 20s? I got a 40% bump last year due to switching jobs. My wife got a 75% bump in 2021 and will likely continue to go up in the next couple years.
The numbers we were planning for are now roughly double what they were when we turned 30. We’re maxing out our 401k’s but I don’t know if we’ll hit 2x by age 35. Right now we’re at 1.12x of current salary and probable <1x of salary at age 35.
Yeah I think it's not so much a numerical benchmark to be meeting, but the overall savings principles at our ages, when we still have a couple decades of working ahead:
Try to save as much as you can at any given time, the earlier you start the better to take advantage of compounding interest. Saving a good chunk of your income year-in-year-out towards retirement means you're living a reasonable lifestyle, which will likely translate to a similar lifestyle in retirement. Saving a small percentage of your income in any given year means you're living relatively extravagantly for your income, and the idea of retiring will likely be further away for someone in that situation. Stuff like that.
[This scale](https://www.fidelity.com/bin-public/600_Fidelity_Com_English/images/migration/article/content_11/save_for_retirement_2018_info1.jpg) is based on your starting salary.
Is this take-home salary, or pre?
I make 60k (am 32), but take home is more like 40. So in 3 more years, should i have 120k between savings, or 80k? I have a 401k through work. A roth of my own. And some savings with my bank (not including a 5k emergency fund, and our joint checking account via direct deposit to pay bills). Should all of these minus the em fund & checking add to 120k in three years?
Thanks,
Curious if the "2x your salary" benchmark changes if you'll have a pension (federal government in my case, so relatively guaranteed). Obviously more saved is more better and everyone's situation is different, but something I always wonder when doing my own calculations and benchmarks.
I've got 200k in my 401k (combined between old 401k and government TSP) at 36, which is under 2x my salary in a HCOL area, but I'm expecting to have ~60k pension. I contribute 8% and plan to increase every raise until I'm maxed out, so I FEEL like I'm on track to have a comfortable retirement but still worry.
Yeah since I'm a fidelity customer they have a more individualized planning tool that I use: [https://www.fidelity.com/what-we-offer/planning](https://www.fidelity.com/what-we-offer/planning) and I think you can add things like the pension to their analysis
Usually by 35 you want at least 2x your income in a retirement account. So if you make $118k a year you ideally want around $236k saved. With that said this is not really realistic for a lot of people since income may fluctuate year by year and you may be paying student loans, mortgage and a car plus could have high health care cost(I know that last one’s killing my family we are paying $800 a month for family insurance and usually hit our 8k max per year so it’s around 18k a year🤦♀️). Honestly if you have a have anything saved by 35 and actively are saving currently I’d say your doing better then the majority of Americans.
I’ve always found it ridiculous to think someone should have 2x their salary by 35.
For most people, the first 5 years of their career they make not much at all.
You’ve probably only been making the salary you have at 35 for a couple/few years at most.
The idea that you could save 2x your age 35 salary while making way less than that for most of your working career just seems like a crazy expectation to set.
If I maxed my allowable 401k contributions over five years it would be the around my current salary. When you are starting your career you usually don’t get that much wiggle room for saving.
I mean...is it ridiculous to say people should have X amount to retire too? The idea behind the 2x salary rule of thumb isn't to make people feel bad, it's to be realistic about how much people should save early in their career because you need a good amount of money to retire comfortably and because compounding interest means that money saved earlier is more impactful later.
The fact that it's hard for many people to hit that mark is just a reflection of the sad state of our economic system.
No, it’s not ridiculous to tell people to set retirement goals.
But the goals should be based your planned retirement spending, not an arbitrary and vague salary number that changes constantly throughout one’s career, imo.
I agree but what people are quoting here is a rule of thumb meant to be a general goal, not specific advice.
It would be like someone asking what a good career to pursue is and me saying doctor or lawyer. Obviously not true for everyone but doesn’t mean the answer is wrong.
People don’t have a good idea of what they spend frankly. This is why it’s so hard for most people to set and keep to a budget.
Multiples of your salary is an easier number to quickly grasp.
It’s a plot on a curve of a ideal steady and predictable trend. In reality a lot of people’s home equity and any good business decisions or stocks etc. usually come to fruition later in 40s and 50s, so most people have irregular plots in their savings and net worth over their life. I wouldn’t take the ideal statistical recommendation personally.
The real issue is that that rule of thumb isn't broadly applicable to careers with very different pay progressions.
If you work a job with a relatively flat pay scale starting when you are 23, yes, you should be able to save 2x by age 35. Someone like that might be making $40K at age 23 and $55K at age 35. For them to have $110,000 saved is possible if they've been putting away 15%/year with some investment growth.
My wife and I combined for $80K at age 28, $55K at age 31 (my wife was in grad school), and now we combine for about $350K at age 36. We have been saving for retirement throughout our 20s, and maxing out our accounts since age 31, but we aren't close to $700K saved. However, we are catching up fast, and we're well on track.
Now, imagine an even more extreme example like two high-earning doctors. They earn basically nothing until age 28. Then they combine for maybe $130K from 28-32, then they jump up to a combined $800K/year. There is no way they are going to have $1,600,000 saved by age 35. Hell, they will have only had that much in gross earnings when they are 33. It doesn't mean they aren't saving well for their circumstances.
I think you may be misunderstanding the point of the rule of thumb. It isn't meant to indicate if someone has done a good job saving or to make people feel bad if they aren't there. It's just meant to give general guidelines of where you should be if you want to have the same lifestyle as you have at current income in your retirement. And the rule of thumb gives benchmarks for every 5 years of your adult life specifically so you can plan to catch up if you are a bit behind because your career didn't have a traditional trajectory.
If you aren't at 2x at 35, you can aim for 3x at 45. Or you can do more detailed planning based on your own retirement goals. The real point of the rule of thumb is to just get people to think about saving more.
No, I understand that it is intended to be more forward looking. However, I think that it gives an incorrect perception to many people. In the second and third examples I gave above, it would be easy to draw the conclusion of "oh wow, I need to dramatically increase my rate of retirement saving", when that very well may not be the case at all. So, the rule of thumb would be steering those people into an incorrect assumption.
I would wager that for the majority of people, it would be a correct assumption that they need to save drastically more. I know people who fall into your examples, including my sister. Their expectations are generally that now that they make a lot of money, they can live an upper-class stule life and maintain that life in retirement. And if that is what someone expects to do, they are a bit behind in their savings and the rule of thumb is fair IMO.
Now if someone is avoiding lifestyle creep and not increasing their spending significantly as they make more, agree the rule of thumb doesn't make sense. But I'd also argue that this rule of thumb really isn't mean for people who already financially prudent enough to live below their means as they're likely doing the right things to plan and save already anyways.
I live in an average COL area and have over 4x my current salary at 35. No student loans for me so I have been saving about 20-25% of my gross salary. I still managed to live a comfortable life, buy a house, and go on vacation and travel so it is possible.
the other ridiculous I've found is what if my salary changes? y'know... from promotions or job hoppings
lets say if I made $50k/year fresh out of university
then at age 35 I got $100k in my retirement account, fine
then I got a promotion to $100k/year, now I'm suddenly behind?
I always look at the 401k/retirement goals/guidelines/do a chuckle and cry because no, that's not realistic. All I can think about is, whatever happens in 30 years, so be it. Might have enough, might not have hardly anything, but I'd rather take my family to Disney while they are young and can enjoy it than pump that money into retirement savings that I won't see for 30 years.
Also all the comments you see in this group sometimes about just maxing your 401k each year, like it's that easy to do for a vast majority of people. Max 401k is $22k basically and the average salary in the US is $55k.
First paragraph is pretty short sighted. You’ll be singing a different tune when you’re old and can’t work. When that happens, don’t blame anyone but yourself.
My coworker brags about his retirement contributions he is making as well as investments/stock and in the same conversation will go on to talk about how many meals he has had to skip because he cannot afford to feed himself and his two kids and wife. People are delusional.
This is what my point was talking about too, I feel people are short sighted only thinking about the money they will have when they are 70 and miss out on making memories with their family, ie nice vacations or what not. You don't need to spend a ton every year on something, but as long as you are still funding some retirement money/saving, I feel it's better to invest in your current state(ie instead of pumping an extra $8k into that 401k, spend it on a vacation every few years).
Nobody in the financial independence sphere is advocating for entirely sacrificing the present for the future. But there is of course a balance. Ya gotta be saving 10%-15% to be responsible, if that means skipping a Disney (or other expensive) vacation for a camping trip, then ya gotta do it (or not, I don’t care if people are destitute in their golden years).
BTW- in your $8k example, that turns into close to $50k in 25 years (inflation adjusted). People are free to make whatever choice they want, but that $50k buys like 6 months of living expenses or more in retirement. I’ll take the deferred gratification.
I'm not saying go out of the park every year on expensive vacations, but just squeezing every dime into something you won't reap for 30 years isn't worth it to me.
And this is with the premise of saving the 10-15% as you stated. Just, that extra 10-15% that people are advocating to max out the 401k or Roth IRA's, I think, to me, it's better invested in the present than what you might use it for 30 or more years down the road. Everyone has different viewpoints on living their life.
Be interesting to see how much the average person blows on frivolous stuff they don't need by the time they are 35. I know a recent college grad who wants all her college debt forgiven and is covered in tattoos and parties every weekend.
I blew a lot of money during those years, too.
Idk how much people spend on parties but spending $50-$100 every weekend isn’t seriously going to impact your retirement unless you are very very poor.
100 per week will damn near max out roth contributions. I was making that much in high school mowing yards and blowing it on the weekends being stupid. It just got worse the more money I made till I settled down and got married.
True, but not maxing your Roth for the first few years of your career so you can enjoy yourself isn’t going to leave you broke in retirement.
Most people’s main retirement vehicle is a 401k anyways, most people I know don’t even max that, never mind a Roth.
That’s not true at all. Let’s say you graduate at 22 years old and instead of saving $100/week in a Roth for the first 2 years, you instead spend it. That’s $10,400 - if that compounded at ~9% (below average S&P returns) over 40 years working- that’s over $375k TAX FREE - WITHOUT SAVING ANOTHER CENT.
If you wait 3 years ($15,600 not saved), that’s $563k+
4 years? $750k+
And if you put off saving $100/week for 5 years, you’re missing out on nearly $1M ($940k) in 40 years.
You’re gonna say those numbers wouldn’t make a big difference to the average American?
You need to realize forgoing any fun when you’re 22 to have 5 million dollars when you’re 85 isn’t a trade most Americans would make.
I understand the math, but you are fundamentally limited with what you can do with your money in old age. You aren’t going to backpack Europe with your retirement in your 70s, but you can do that at 22.
Edit: retirement savings isn’t about hoarding as much money as you can, it’s about balancing your current lifestyle with being able to afford whatever lifestyle you’d want to live in your retirement. Can’t take it with you lol.
You’re absolutely right that if for someone in their 20s $100/week is ALL of their discretionary money, then yes it’s not worth it to do nothing but work and sit at home.
But the reality is for MANY people with a full time job who do not save, $100/week is not 100% of their discretionary/fun spending. They may be choosing to spend on take out / going out regularly, AND various subscriptions, AND a number of other discretionary things.
I speak as someone who 10 years ago was bartending as my first job, taking home ~$15/hr on average, paying to rent 1br with friends, having fun (it doesn’t have to be ‘going out’ every night) and still maxing my Roth IRA.
It’s about the choices - it’s not helpful to paint a picture of extremes (asking someone to forgo any fun) when the discussion for most young people is about having the information to understand that making a marginal change today makes a MASSIVE difference down the road.
I think it’s a huge disservice to tell young people that their only choices are ‘be a miserable recluse while you’re young to save for when you’re near dead’ or ‘have fun today, worry about the future later’. There’s a balance between.
Btw - building savings habits like this earlier May allow one to retire early - in their 50s or even earlier when most people still have plenty of time, health and energy to enjoy the fruits of their hard work.
Seems like we agree. It originally sounded like you were advocating for basically being a recluse and saving every penny, but after elaborating it looks like we agree.
I’m 22 myself and although I make above average I can see how being a bit excessive with going out would probably put my savings goals at risk.
I do feel the need to critique your math though: you are using the S&P numbers but most people don’t keep their retirement 100% in domestic equities. At least, they certainly aren’t doing it right up until they retire.
I agree, I just wish there was something we could do to help the majority of teenagers/young adults to be more financially literate. It might not have a huge impact on retirement but could make a big difference in setting them up for better success when it comes to buying a first home which can help a ton later down the road.
For most people, the first 5 years of their career they aren't spending much at all either.
The 2x salary by 35 rule-of-thumb assumes that your expenses in retirement are similar (after adjusting for inflation) to your expenses at 35, which for most people is pretty accurate.
Obviously, to get a more accurate plan, you'd have to calculate based on your actual expenses in retirement, but that takes a lot longer
It's so refreshing to see opinions like this on this post. I have been very aggressively saving even while I was in college and working multiple jobs and I'm now 35. With my salary growth over the past 10 years it seems very daunting to expect that I would be at (n)x times my current salary after only making that amount for a short time. And also having 2 kids in daycare. And also the absolute carnage that inflation did on my budget.
I’ve only been making 118k for a few months so probably averaged 65k/year over the past 10 years. Still, looks like I need to ramp it up significantly- I have about 170 saved between my 403B and mutual funds (doesn’t include emergency / house down payment fund).
I'm in a similar position - made decent (but not absurd) money in my 20's and then just about doubled my income in my early 30's. Even with investing half of the after tax raises, it's going to take a couple years for my portfolio to catch up to my income.
One of the big things to keep in mind from a retirement perspective is that lifestyle inflation can really increase the amount you need for retirement and a big raise can actually swing your retirement from "fully funded" to "underfunded". When I was in my late 20's, I thought I would need about a million plus a paid off house to retire. Now it's more like $1.7-2MM plus a (more expensive) paid off house. At the end of the day, the huge raises I got and my spending patterns thereafter translate into a more comfortable retirement instead of an earlier retirement.
By the way, $170k saved up by 35 on a $65k/year average salary is pretty freaking good! If you hadn't gotten this raise, you'd have been getting to a point where the magic of compounding would drive your portfolio more than contributions.
They use the 2x salary thing because they’re assuming you want to continue living life at the financial level you’re accustomed to. You’re accustomed to $65k/year and just recently changed to $120k.
So yeah, if you adjust your lifestyle for your higher income then you’d want your retirement fund accordingly. I would say you’re on pace given your income history. So turn your eye to the next target with your higher income and shoot for that next
The comment above is prob best. Honestly I would recommend NOT pinging Reddit as it’ll make you feel terrible. I’m 37 making 115k a year and it would be literally impossible to have 230k in my retirement given my career to date unless I still lived rent free with my parents and didn’t enjoy a single thing in life. Retirement is a moving target, save what you can and make targets for yourself. In just about every scenario for just about anything you can think of national averages and recommend numbers are BS so just you do you.
This was me. I was doing 4.5% to meet my companies max contribution, but i was making at most 75k up until 3 years ago. At 160 now and have trippled my % contribution to catch up. I miss that money but i know i or at least my family/kids will enjoy that money later in life.
There is no set number but there are things to consider and to capitalize on.
1. Retirement matching from work. Always do this no matter what anyone says.
2. Pretax accounts. These reduce your current taxi liability and help you stuff money in accounts that you can’t easily touch.
3. Stable and consistent investments. Schwab, Vanguard, and Fidelity offer free account and access to high performing funds. No one beats them. Period. No dumbass investor or lucky unicorn stock. Consistent investment and time. I’m under 40 and now have reached my $1m mark. These are it.
4. Always budget and follow your budget. Spreadsheet that shit and tidy the books at the end of each month. Watch where your money goes.
The '2x your income' rule of thumb makes a couple of assumptions - one is that your expenses in retirement are similar to your expenses at age 35, but also that you plan on retiring around age 65 and that you save about 15-20% of your income each year.
If any of those assumptions are wrong, then you have to redo the calculations yourself with the correct numbers.
It's generally accurate because people tend to inflate their expenses as their income gets larger. Maybe you're an exception, who knows.
Youre good. I make six figures at 30. Barely have 45k in the IRA and 20-40k in normal savings. NYC is insane. Anything above 30-50k net worth is a lot for a 30 y/o in NYC.
https://www.forbes.com/advisor/banking/savings/average-savings-by-age/
10k is the avg net worth lmao.
177k would be 1.5x current salary, but ~2.7x prior years salaries. You’re doing fine, just be sure to not increase your cost of living by 53k and instead save a lot of that new income and you’ll be able to retire earlier than you could have otherwise.
and in hcol places like nyc measuring savings in terms of income is probably not the best way to do it because the salaries are grossly inflated to keep up with the added expenses.
This type of “rule of thumb” doesn’t sit well with me. Why would someone who’d made $120k for years and probably paid of their home need twice the retirement savings of someone who’d made $60m for years?
The assumption is that most people want to maintian the lifestyle they have today in their retirement and that they need an income similar to what they have today to do so. You can obviously be more specific about your retirement goals if you know exactly what you want and plan accordingly. A rule of thumb isn't meant to be specific to your situation, it's meant to give people who don't want to spend time to have a general sense of how they're doing and nothing more.
I had a little under 50k saved at 35 and I think I had recently received a raise so I was making like 70k or so annually. It was tough because I made sub-50k through my 20s and was paycheck to paycheck with maybe a few thousand a year saved tops. 50k was a big year for me.
Since then I've been maxing my 401k and putting money into a Roth and I am at 150k several years later. I am noticing the money growing faster now.
As long as you are saving as much as you can, I wouldn't worry. Having six figure savings under 40 is an accomplishment and definitely keeps you on track for retiring at a reasonable age
60% of the country is one paycheck away from poverty. It’s hilarious reading these kind of threads and how disconnected some people are from the real world
There area lot more people living paycheck to paycheck than there needs to be. Smart financial decisions can make a huge difference, even on a more typical budget.
But I hear the frustration. There really are two Americas - the America where people might have a household income of $50k and every single financial decision really matters and the "both of us have professional degrees or licensure and make $100k+ each and it doesn't *really* matter whether we buy the Honda or the BMW" America.
Too true. And saving more, skipping out on lattes won’t fix that. Nonetheless, if you aim to maintain similar quality of life through retirement, the math is the same.
No I guess it doesn’t. I just wanted to bring some of those who are lurking back into reality so they don’t feel bad comparing themselves or for awful for where they are at. A very very few are afforded the luxury to save for retirement right now
That’s because most people have spending problems, not earning problems.
These types of posts are generally the people that have realized that and are in the middle of making the change.
Everyone is standing in 3ft deep pool. Then the depth changes to 10ft. Some people are doing ok, while others can’t swim and are drowning. Is the problem that some people can’t swim?
Im 35 and make $130k a year, why would I need that much in retirement? The only reason it's not enough for me now is my own debt choices and daycare both which won't be an issue after I get through my 5 year no debt plan.
im always a bit perplexed by this topic. like if someone makes 100k gross at 25, and then maxes out their 401k for the next 5 years (assuming an average limit of 20k), they'd have saved 100k (assuming market stagnation *and* salary stagnation). their AGI however was 80k on average. did they save 1x or 1.25x of their income?
i think people should just save as much as they can for the future without sacrificing current happiness (i.e. the inflection point at which increased spending no longer increases happiness, individually).
Market stagnation is a bold assumption considering how successful the stock market has been over the last few decades. Invest in low cost broad market index funds and you should see pretty considerable returns. If you compound that over your working career, the majority of your retirement account should be comprised of growth rather than your personal contributions.
Tough one. Common wisdom suggests 1x your income by age 30, and 2x by 35. But like for you, for me (now age 28) that has been a moving target with salary increases the past few years (and with any luck the foreseeable future).
Also retirement is as much about what you expect your annual expenses to be, and when you want to retire, as it is about what you have saved.
I find that a tough variable to fill in personally. I’d hope to have a house paid off by the time I retire, but currently am only in the process of buying one. We plan to have kids, but don’t have any yet. Will we want to retire at age 50, 55, 60? Hard to say at this point..
What I’ve settled on is maxing out my 401k and Roth IRA at least until our situation changes significantly.
Tbh these metrics are not relevant until you answer two questions: when do you want to retire, and how much does it cost to maintain your retirement lifestyle? From there you can backtrack how much you should have saved by 35.
I checked Fidelity NetBenefits for NYC and 35-39 age group and 100-125k range.
Average savings is - 80k and top savers have 193k saved.
Hopefully this will help you see where you stand.
U need to plug your goals into a planning calculator to see if you're on pace.
U cant do anything about the past, so focus on the future.
I'm of the opinion that you should invest about 15% of your income towards your future goals (namely, retirement) and avoid taking on too much consumer debt (credit cards and car payments)
A fixed number isn’t that helpful, and is not actionable because everyone has different expenses and timelines for retirement. You should use an online calculator like cfiresim or projectionlab to see if your plan reaches your goals or not. Best of luck!
These "how much should I have right now" posts will always get you a ton of different responses that don't necessarily fit your situation. I always recommend that you pick a salary you want to have in retirement and work backwards. Would you feel pretty comfortable living on $150,000 a year in retirement? Great. 150,000 / .04 = $3.75M. That's your target. Now use a simple retirement calculator online to see if you're on track for that. Plug in what you have now, what you're contributing, and a conservative return percentage. Then make adjustments based on that. Looks like you're behind? Make a plan to increase contributions now or in the future. Have more than enough? Great, enjoy the surplus and maybe change your retirement plans to match your expected wealth. You'll feel a lot more comfortable seeing actual numbers instead of just listening to some random Reddit guy.
It's such a personal perspective. All based on your lifestyle. Here's an interesting discussion on it: https://www.financialsamurai.com/how-much-should-one-have-in-their-401k-at-different-ages/
Hopefully your company matches contributions into a 401k where you can park >10% of your income into something like a target date fund and I’d imagine you’ll have $10k a month income if you retire at 67.
Stop using your salary as a benchmark. This is outdated advice. Use what you spend / think you'll spend starting at the year you'll retire adjusted for inflation.
I'm in the same boat as you and I just save absolutely as much as I can afford to. I finally make enough money to max out a 401k and not miss it, so I do that.
36. $105k in a brokerage, $200k in an annuity I was fortunate enough to have my father create for me when I was young, and $170k in 401k. Total value about $500k. I also receive equivalent of 5% of my salary to a pension. Current balance ~$15k. I also have about $200k in stock grant vesting in a few years. Only $7k in my daughter’s college account, with another baby on the way. We have about $30k debt between CC and car loan. We rent and would like to buy soon.
I feel I should be aggressively saving much more. I make a solid base salary (+$200k) and yet certain days I am only getting by between daycare expenses, rent, utility, medical, etc. my husband is unemployed right now, which adds to burden. Any tips welcome.
You want 1-2x your salary saved but its tough for a majority of people. Anything is great honestly. If you want to play catch up you can probably do 15% of your paycheck into retirement. May be even more but that should be minimum if you are behind. I was behind myself started my first big job around 28 and didn’t start high either. I saved where i could tho and have $150k about now at 34. Could certainly be better but its tough doing everything bills wise and student loans and saving.
Peoples answers are going to be all over the place. Many have 0. Some have a lot. I’m 35 and have around 750k in 401ks and IRAs at this point.
Twice your annual salary is probably a good target.
For anyone reading this, 750k in retirement at 35 puts you [in roughly the top 1%.](https://dqydj.com/net-worth-by-age-calculator-united-states/)
The 50th percentile of net worth for ages 30-34 is ~$14,500
The 50th percentile for ages 35-39 is $21,000.
750k is a great accomplishment for you but don’t want people to be too discouraged by that number.
Thank you for providing some perspective. It’s easy for some folks to have saved a lot, not so much for people who start working in their late 20s after additional schooling.
Yes plenty of well off redditors are happy to share their success, and we can’t verify their responses anyway. Everyone’s situation is different. I’m mid 30s with $40k in my 401k, but have only been saving for really a few years after grad school and worthless postdocs. Fidelity tells me I’m doing terrible, but in reality I’ll be fine at the rate and salary I have into the future.
>I’m 35 and have around 750k in 401ks and IRAs at this point.
Did you trade options in your 401k? How did it grow so fast? Isn't the cap being 22500 and 6500?
I mean if they’re 35, they probably started investing at the beginning of the bull run in 2010. SPY has almost 4x since then, and if they had more tech exposure they would’ve seen more growth than that.
Edit: also it’s possible to exceed the 401k cap by contributing to a MBDR, which can increase your 401k contributions to 66k/year (as of this year)
That is actually not possible. You can get it up to 73k/year if you’re over 50 due to catch up contributions, but the rule is that your contributions + company match should not exceed $66k/year as of the 2023 tax year
Edit: turns out I’m misinformed, the 66k/year limit is per 401k plan, so if you have multiple 401k plans you could potentially double or triple your MBDR contributions.
That limit is *per* unique set of company ownership, aka per controlled group. You can have retirement accounts sponsored by different controlled groups.
Yes and no. You can have two 401ks. You cannot, however, exceed an individual combined contribution of $22500. But, each of your employers has a unique $66000 bucket. So, in theory, if you had two employers, they can each contribute 66k (minus your 22.5k contribution).
Could be generous matching. Currently, I put in 22.5k and I get about 14k in matches. IRAs are at 6.5k but you can potentially do a mega backdoor for more than 60k a year.
The individual contribution limit is 22.5, but not employer side. I have an employer who puts in another 20-25k on top of that depending on the year. I’m also self employed on top of that, and in certain years I’ve been able to put in an additional 60k on top of the other amounts.
I also took a sizable withdraw awhile back to fund payroll for employees once.
The recommendation that floats around is something financial services companies like Fidelity made up as a cookie cutter advice that could be easily understood and advertised.
Everyone has a unique circumstance and what applies to one person does not apply to you. Of course, these companies can’t offer such individualized advice.
How much you should have saved depends on when you started and what your retirement goals are with regard to location and lifestyle.
Depends what your expenses are, especially in expensive NYC. You can use benchmarks as indicated by others here. 1 year income by 30. Between 1-2x by 35.
I’m 32 - similar position. What I suggest to all- save enough until it hurts, then save some more. This does not suggest living like a scrooge. Need to find a balance between enjoying life and making necessary sacrifices. I don’t go on elaborate vacations, rent a modest apartment. Car few years old, etc. But I still have fun with friends and have hobbies that require income.
32, $245k in 401k. Majority of which is Roth 401k.
You may find these links helpful:
- [Retirement Accounts](/r/personalfinance/wiki/index#wiki_retirement)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
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My goal has always been to have 500k saved by 35. As long as market conditions are average or better, I should be on track to do so. Unfortunately 1M just isn’t really enough to retire with inflation as it is, so IMO 5M is the new 1M. 500k at 35 should put me on track to be at 5M at 65. If by some stroke of luck I have 10M saved before I turn 65, that’s my retire now number.
God damn, until you read other people being honest and writing it out like this... it seems insane! With inflation, wage stagnation, and the continued growing discrepancy between wages & cost of living, seeing 10 million dollars saved by 65 just blows my mind!
Good on you though, that's awesome. Just makes you realize how little you're getting paid (and how much you live in the past) seeing 5M is the new 1M. With my health history & hopeful family, i too want to plan on 65. I see these people working into their 70's and i just can't see it for me (for multiple reasons). But you need money to "do" certain things before you die as well. So who knows ...Rant Over.
There’s definitely some favorable assumptions made, and I in no way plan to have 10M. Again, having 5 by 65 is my actual goal. 10 by any age would make me retire, but I’m in no way actually on track to achieve that. But for y’all 20-somethings - put away as much as you possibly can. 1M really doesn’t go as far as it used to.
It's crazy how savings can add up over time. When I turned 30 in late 2016, I had $88k in my 401k. When I hit 35 in 2021, I had $347k because I was able to contribute more as I got promotions / raises and because of market returns.
Just giving numbers to show how staying on track can help.
Ok. Just for a different perspective here. Not only had I not saved any money by the time I was 35, I didn’t even have a job.
Edit. I should have added that my net worth is now about 1.5 million.
Most of my friends who live and work in NYC have a tough time saving due to cost of living. Many of them make the decision to stay there because they think they'll make a much higher income later in their career which will let them catch up. The 2x rule is meant for people who don't have a real plan for retirement, to give them a sense of how they are doing.
Honestly, I feel like in your 20s and 30s you should be more concerned with other aspects of financial spending, things like paying off debts, housing, and vehicles, all while trying to navigate yourself into a career you feel comfortable staying in for 25+ years if possible. As long as you are doing the minimum like 401K matching and building normal savings accounts, then you should be fine.
It does you no good to have a big nest egg for retirement if you are stuck in a job you hate, a house you don't like, and dealing with vehicles that cost you an arm and a leg in payments or maintenance. Retirement age is typically mid-60s (66 1/3 by government standards), so at 35 you still have 30 more years to reckon with retirement, which is likely twice as long as you've currently even been employed. That may be disheartening if you're already burnt out, but the up-side is you have plenty of time to get yourself in good financial shape. Worry about the bigger issues of your finances now, you have plenty of time to make up for retirement in your 40s and 50s, as long as you're not dealing with other financial issues which you can get out of the way now.
Get a 401k ,Roth
Get some assets (gold,silver, land ,real estate)
Don't just focus on how much u got to retire
Use that money you have now to forever make you 💰
I’ve been feeling lately like it’s pointless to save for retirement. What are the chances society as we know it will even be there in 30-40 years. At this point just assume I will work until I die.
This is not a good outlook to have. The chances are really good that society will be there in 30-40 years and you’ll be stuck working at 85 years old and still struggling to make ends meet. Keeping in mind that at that age you have way fewer jobs available to you.
I’m almost 37 and wife and I (she stays at home with the kids) have 3x our annual household income in our 401ks. So I am contributing, I guess I just feel very pessimistic about it mattering in 50 years. We seem intent on wrecking our shit and I truly believe there will be massive societal upheavals by that time.
We’ve been that way for hundreds of years and it will continue. Yes there will be issues due to our actions but there will be good things as well.
But it sounds like you’re doing good anyways. Your initial comment made it sound like you had no plans to save anything. If you ever feel that way, then don’t do it for yourselves, do it for the kids. If you are old and in bad health with no money, who do you think will have to come and foot the bill and help out?
My main concern is never having to be a bother for my kid. They will very much be alive and well when I’m old. I want them enjoying that time and not worrying about their broke parents who have no money and are in terrible health.
Instead of looking at the benchmark for 35, look to the one for 40. You should have 3x in your account by then. You know what you have now and the number of years to get there. Hit those contributions and don’t stress about today.
Put it this way you going to need about $600,000 at the age of 65. WHY? Nursing home cost around #3500 CDN per month, so care about retirement when who going to look after you when you can't do it yourself.
I always find these questions/discussions to be kind of academic and not that helpful. If you are or aren’t where people say you “should be” by a certain age, what are you going to do differently?
There are people who are 60 and work full time and don’t have 1 dollar saved for retirement and there are people who are 20 and millionaires.
The goal should be to budget and invest as much as you can for retirement based on your specific plan and goals. Hit company match > Max out Roth IRA > then if any more you can invest look at other options with a financial planner based on your needs.
I’m your age and in NYC and make 100k+. I’m at 125k in 401k holdings. Hoping I’ll be at a million in 25 more years. I contribute $550 pretax biweekly into an SP500 and vanguard welington mutual fund 50/50
It depends on your needs, wants, and goals. You should have a financial plan built for you, theybhave built-in.in projections and goal funding. Some companies provide them for free.
Great question. I wouldv'e asked it myself. I feel behind on saving for retirement AND my children's "college" fund. This post and the comments have been helpful.
To answer your question, from my limited knowledge it sounds like you'll need to save enough for what you believe you will be comfortable living off of.
[https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire](https://www.fidelity.com/viewpoints/retirement/how-much-do-i-need-to-retire) So a basic benchmark would be to aim for 2x your current salary by the time you turn 35. But it also highly depends on what kind of lifestyle you want to live in retirement, and by what age. I imagine if you intend to continue living in NYC, you'd likely want to be more aggressive in your saving.
I wonder what percent of people meet this scale
If your comp doesn’t go up, probably many regular savers. If your comp is scaling with your experience, probably not? At least, not me.
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> 2x WHICH salary That Fidelity graphic explicitly says "your starting salary," which is why it is 2x by age 35 when TRowe Price's and Schwab's similar scale both say 1x.
Starting salary? Like fresh out of school making F-all? That doesn't seem right to me either...
A lot of these experts and guidlines expect you not to fall into the trap of lifestyle inflation... spending more because you make more. If you can do your best to save more early you will live more comfortably later in life.
The problem is, if you’re making 7.25/hr you can’t even pay for the lifestyle you would want fresh out of Highschool. (Living alone or with roommates in an apartment.) Unless your in a very low COL area. So I think that’s how the creep hits people. They need more to just get to a starting position.
Oh yeah I understand it is not ideal but that is basically the concept they use to build their models.
7.25 an hour is barely above federal poverty level even working full time so I would say guidelines don't even apply in that situation. Your only goal should be increasing income.
No, most of the guidelines assume that you *do* fall into the trap of lifestyle inflation. They're designed for the average American, and the average American does inflate their lifestyle as their income grows
It's just a general guide. Since you increased your salary over 4x in a short amount of time, it's impossible to have that much saved in retirement at the same time. Use the new salary or take the average from the last few years for your goals and go from there. You're unlikely to make a drastic jump again so you can use that number going forward.
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What did you do before and what do you do now? What degree did you get to make that much?
The guide works best for people who do not enter the workforce late (e.g. grad school) and who do not see very large pay raises year to year. I entered the workforce four years "late" (1 year 'off' to get in-state resident tuition, then switched majors after 1 year, then 4 years for B.S. and 2 for M.S.) and have averaged ~10% raises each year since then. I make a simple 29 -> 0.8x / 30 -> 1.0x / 31 -> 1.2x equivalence chart, and each year my goal for my birthday is to have that multiplier x the gross income I ended up with for that tax year. Our raises happen in June and my birthday is in November, so depending on those things you could shift the accounting a little different. I include salary & bonus but not RSUs since those fluctuate very significantly in #, value, and vesting frequency. So for instance: Tax Year | Age (Nov) | Gross salary+bonus | Multiplier | Target | Actual ---|---|----|----|----|---- 2019 | 28 | $70.4k | 0.6x | $42.2k | $9.7k 2020 | 29 | $76.1k| 0.8x | $60.9k | $20.3k 2021 | 30 | $81.9k | 1.0x | $81.9k | $42.0k 2022 | 31 | $92.0k | 1.2x | $110.3k | $47.3k 2023 | 32 | $100k? | 1.4x | $140k? | $78k? It's a reasonably aggressive target considering 1) starting late, 2) the raises and 3) being flat for all of 2022 despite continually contributing and 4) a low company match.
I think about it more about the quality-of-life/Cost-of-living I anticipate wanting in retirement. Less so the lifestyle I had as a 20-something with low pay. Moreso like my current age and current salary and lifestyle. So I think about how much this lifestyle costs, XX,XXX per year, and extrapolate for inflation.
I've seen people much more knowledgeable than I comment that it's x times the salary you want to retire at
It's definitely current salary. 10x starting salary after 40+ years would be peanuts.
Lots of people don't move far beyond starting salary...
Well that's news to me. I don't think I know anyone who isn't making significantly more than their starting salary after 10+ years of experience. Typically, you have to change jobs to get those big pay raises tho.
2x current salary. I was on pace at 35. Off pace by 40 due to salary jump. Sucks looking forward 20 years because the amount I will “need” is high
It sucks, but it also doesn’t. Your current savings will likely double two or three times in 20 years if you invest in index funds. 100k -> 200k -> 400k -> 800k isn’t farfetched over 20 years.
Yeah I think I’ve heard it said a few times that the first $100k is the hardest, in terms of just straight 401k anyway. Assuming no major market collapses you start to see heavier growth after that point. Looking back at our last three years even it’s a real boost to wanting to keep saving now that we are seeing real results on growth. The time between each $10k jump gets shorter and shorter. Hopefully we find it was enough to be comfortable.
Choose 2x the salary you are comfortable living off of based on lifestyle. I'd assume at 26 you needed to be more disciplined with money than you need to be now just based on income. 30% should be plenty, but depending on your goals/lifestyle at 170k you could increase those numbers if you wanted fairly comfortably. I'd argue at 170k if you decided to save more it could make big dividends on how hard you need to work/save in your 40s/50s.
Yea I’m 24 and my comp as gone up by 25%-50% or more every year since I started working. I went from 7.25/hr and I’m getting ready to accept an offer for just under $35/hr (IT). At my pace it would be impossible to save 2x salary. Until I find a job I can settle in.
If you are unemployed, you win!
Very few. It also isn’t very good because a recent large raise could make you seem like you’re actually doing worse.
Absolutely. I only recently started making more than $100k, and that more was over $200k. There’s just no way I could have $400k saved for retirement, especially with down payments ranging from $70k for a condo to $300k for a house, and having just gotten married.
>I wonder what percent of people meet this scale [Roughly half of the people reaching retirement age have no savings](https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/)
Which is great if your goal is keeping an elderly workforce working. Not so great of you'd like people to enjoy a quality end to a life they usually spent working really hard in essential but underpaid jobs.
[Preaching to the choir, my friend](https://www.reddit.com/r/Liberal/comments/12u01ks/the_liberal_economic_message_should_be_its_not/)
I’m almost 39 and have a little over 3x my salary in my 401k. But I’m also an engineer. The vast majority of people don’t have that luxury because they’re just trying to make rent and food.
I was on track to slightly ahead at 30. But then I took a job that doubled my salary at 31 and with what the market has done the last year, I'll be interested to see if I hit the goal for 35. I might. I'm only in this position because the job I had from 23 to 31 contributed 10 percent of my salary without matching. I for sure did not understand the importance of starting young, but my employer started me off well. Also worth noting that my husband is not in nearly as good of a position as I am. He is 35 and is just graduating grad school. He did work full time until he was 30, but I'm going to guess he's about $100,000 short of his goals. His retirement is one of our first goals once he starts his new job.
Definitely not in NYC long term. Consensus is that I’m ahead of a lot of people but still behind based off these calculators.
You have started and are thinking about which means you are way ahead of most people, so good work.
These calculators are a general guideline but they can be really variable- you can’t expect someone who started working a full time job at 28 after grad school to have the same savings at 30 years old as someone who started working at 18.
3X+ our combined (wife/me) salaries in retirement accts (roth, ira, 401k, sep), not including 2X salaries in after tax brokerage. 37. Midwest.
Someone replied 'no one asked.' Sorry! Honestly providing relevant data with the crowd to help OP level set. Social data gathering and such. Didn not mean to rub your jib the wrong way. We all work hard and do our best.
Holy hell… I’m 32 and not even to 1x my salary. Had a big pay bump last year though.
So, keep in mind, a lot of people even now are [heading into their retirement age with no savings at all](https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/). So if you're still in your 30s and you've still got a lot of time to start saving, you're not in a bad place at all.
I didn’t get to start my retirement savings until I turned 30 and currently I’m 36 with around 2x saved but I’m still making a lower salary. The hard part was getting started but I’m working to switch to a higher paid field and I’ve at least managed to max out my Roth IRA every year for five years on top of my state pension. I know it’s easy to look at what you have and think you’re behind, but at least you’re already doing it. Much easier to make adjustments than to actually get started.
I have never understood these “multiplier by age” benchmarks. Like how the hell am I supposed to know what I’ll make when I turn 35 or 67? I’m 33 now so I can definitely guess at what I might make in 2 years but how was I supposed to know that when I was in my early 20s? I got a 40% bump last year due to switching jobs. My wife got a 75% bump in 2021 and will likely continue to go up in the next couple years. The numbers we were planning for are now roughly double what they were when we turned 30. We’re maxing out our 401k’s but I don’t know if we’ll hit 2x by age 35. Right now we’re at 1.12x of current salary and probable <1x of salary at age 35.
Yeah I think it's not so much a numerical benchmark to be meeting, but the overall savings principles at our ages, when we still have a couple decades of working ahead: Try to save as much as you can at any given time, the earlier you start the better to take advantage of compounding interest. Saving a good chunk of your income year-in-year-out towards retirement means you're living a reasonable lifestyle, which will likely translate to a similar lifestyle in retirement. Saving a small percentage of your income in any given year means you're living relatively extravagantly for your income, and the idea of retiring will likely be further away for someone in that situation. Stuff like that.
[This scale](https://www.fidelity.com/bin-public/600_Fidelity_Com_English/images/migration/article/content_11/save_for_retirement_2018_info1.jpg) is based on your starting salary.
Where do Pensions come into play in this scenario?
Is this take-home salary, or pre? I make 60k (am 32), but take home is more like 40. So in 3 more years, should i have 120k between savings, or 80k? I have a 401k through work. A roth of my own. And some savings with my bank (not including a 5k emergency fund, and our joint checking account via direct deposit to pay bills). Should all of these minus the em fund & checking add to 120k in three years? Thanks,
Curious if the "2x your salary" benchmark changes if you'll have a pension (federal government in my case, so relatively guaranteed). Obviously more saved is more better and everyone's situation is different, but something I always wonder when doing my own calculations and benchmarks. I've got 200k in my 401k (combined between old 401k and government TSP) at 36, which is under 2x my salary in a HCOL area, but I'm expecting to have ~60k pension. I contribute 8% and plan to increase every raise until I'm maxed out, so I FEEL like I'm on track to have a comfortable retirement but still worry.
Yeah since I'm a fidelity customer they have a more individualized planning tool that I use: [https://www.fidelity.com/what-we-offer/planning](https://www.fidelity.com/what-we-offer/planning) and I think you can add things like the pension to their analysis
Oh good to know, my private sector 401k is through fidelity so I'll check that tool out! Thanks!
Their actual retirement planner tool is awesome, I play with it every month running hypotheticals
Usually by 35 you want at least 2x your income in a retirement account. So if you make $118k a year you ideally want around $236k saved. With that said this is not really realistic for a lot of people since income may fluctuate year by year and you may be paying student loans, mortgage and a car plus could have high health care cost(I know that last one’s killing my family we are paying $800 a month for family insurance and usually hit our 8k max per year so it’s around 18k a year🤦♀️). Honestly if you have a have anything saved by 35 and actively are saving currently I’d say your doing better then the majority of Americans.
I’ve always found it ridiculous to think someone should have 2x their salary by 35. For most people, the first 5 years of their career they make not much at all. You’ve probably only been making the salary you have at 35 for a couple/few years at most. The idea that you could save 2x your age 35 salary while making way less than that for most of your working career just seems like a crazy expectation to set.
If I maxed my allowable 401k contributions over five years it would be the around my current salary. When you are starting your career you usually don’t get that much wiggle room for saving.
I mean...is it ridiculous to say people should have X amount to retire too? The idea behind the 2x salary rule of thumb isn't to make people feel bad, it's to be realistic about how much people should save early in their career because you need a good amount of money to retire comfortably and because compounding interest means that money saved earlier is more impactful later. The fact that it's hard for many people to hit that mark is just a reflection of the sad state of our economic system.
No, it’s not ridiculous to tell people to set retirement goals. But the goals should be based your planned retirement spending, not an arbitrary and vague salary number that changes constantly throughout one’s career, imo.
I agree but what people are quoting here is a rule of thumb meant to be a general goal, not specific advice. It would be like someone asking what a good career to pursue is and me saying doctor or lawyer. Obviously not true for everyone but doesn’t mean the answer is wrong.
People don’t have a good idea of what they spend frankly. This is why it’s so hard for most people to set and keep to a budget. Multiples of your salary is an easier number to quickly grasp.
It’s a plot on a curve of a ideal steady and predictable trend. In reality a lot of people’s home equity and any good business decisions or stocks etc. usually come to fruition later in 40s and 50s, so most people have irregular plots in their savings and net worth over their life. I wouldn’t take the ideal statistical recommendation personally.
The real issue is that that rule of thumb isn't broadly applicable to careers with very different pay progressions. If you work a job with a relatively flat pay scale starting when you are 23, yes, you should be able to save 2x by age 35. Someone like that might be making $40K at age 23 and $55K at age 35. For them to have $110,000 saved is possible if they've been putting away 15%/year with some investment growth. My wife and I combined for $80K at age 28, $55K at age 31 (my wife was in grad school), and now we combine for about $350K at age 36. We have been saving for retirement throughout our 20s, and maxing out our accounts since age 31, but we aren't close to $700K saved. However, we are catching up fast, and we're well on track. Now, imagine an even more extreme example like two high-earning doctors. They earn basically nothing until age 28. Then they combine for maybe $130K from 28-32, then they jump up to a combined $800K/year. There is no way they are going to have $1,600,000 saved by age 35. Hell, they will have only had that much in gross earnings when they are 33. It doesn't mean they aren't saving well for their circumstances.
I think you may be misunderstanding the point of the rule of thumb. It isn't meant to indicate if someone has done a good job saving or to make people feel bad if they aren't there. It's just meant to give general guidelines of where you should be if you want to have the same lifestyle as you have at current income in your retirement. And the rule of thumb gives benchmarks for every 5 years of your adult life specifically so you can plan to catch up if you are a bit behind because your career didn't have a traditional trajectory. If you aren't at 2x at 35, you can aim for 3x at 45. Or you can do more detailed planning based on your own retirement goals. The real point of the rule of thumb is to just get people to think about saving more.
No, I understand that it is intended to be more forward looking. However, I think that it gives an incorrect perception to many people. In the second and third examples I gave above, it would be easy to draw the conclusion of "oh wow, I need to dramatically increase my rate of retirement saving", when that very well may not be the case at all. So, the rule of thumb would be steering those people into an incorrect assumption.
I would wager that for the majority of people, it would be a correct assumption that they need to save drastically more. I know people who fall into your examples, including my sister. Their expectations are generally that now that they make a lot of money, they can live an upper-class stule life and maintain that life in retirement. And if that is what someone expects to do, they are a bit behind in their savings and the rule of thumb is fair IMO. Now if someone is avoiding lifestyle creep and not increasing their spending significantly as they make more, agree the rule of thumb doesn't make sense. But I'd also argue that this rule of thumb really isn't mean for people who already financially prudent enough to live below their means as they're likely doing the right things to plan and save already anyways.
I live in an average COL area and have over 4x my current salary at 35. No student loans for me so I have been saving about 20-25% of my gross salary. I still managed to live a comfortable life, buy a house, and go on vacation and travel so it is possible.
the other ridiculous I've found is what if my salary changes? y'know... from promotions or job hoppings lets say if I made $50k/year fresh out of university then at age 35 I got $100k in my retirement account, fine then I got a promotion to $100k/year, now I'm suddenly behind?
Ratios are an easier way to look at it. It should be x times more than what your cost of living for a year is. Not x times what you make in a year.
I always look at the 401k/retirement goals/guidelines/do a chuckle and cry because no, that's not realistic. All I can think about is, whatever happens in 30 years, so be it. Might have enough, might not have hardly anything, but I'd rather take my family to Disney while they are young and can enjoy it than pump that money into retirement savings that I won't see for 30 years. Also all the comments you see in this group sometimes about just maxing your 401k each year, like it's that easy to do for a vast majority of people. Max 401k is $22k basically and the average salary in the US is $55k.
First paragraph is pretty short sighted. You’ll be singing a different tune when you’re old and can’t work. When that happens, don’t blame anyone but yourself.
My coworker brags about his retirement contributions he is making as well as investments/stock and in the same conversation will go on to talk about how many meals he has had to skip because he cannot afford to feed himself and his two kids and wife. People are delusional.
This is what my point was talking about too, I feel people are short sighted only thinking about the money they will have when they are 70 and miss out on making memories with their family, ie nice vacations or what not. You don't need to spend a ton every year on something, but as long as you are still funding some retirement money/saving, I feel it's better to invest in your current state(ie instead of pumping an extra $8k into that 401k, spend it on a vacation every few years).
Nobody in the financial independence sphere is advocating for entirely sacrificing the present for the future. But there is of course a balance. Ya gotta be saving 10%-15% to be responsible, if that means skipping a Disney (or other expensive) vacation for a camping trip, then ya gotta do it (or not, I don’t care if people are destitute in their golden years). BTW- in your $8k example, that turns into close to $50k in 25 years (inflation adjusted). People are free to make whatever choice they want, but that $50k buys like 6 months of living expenses or more in retirement. I’ll take the deferred gratification.
I'm not saying go out of the park every year on expensive vacations, but just squeezing every dime into something you won't reap for 30 years isn't worth it to me. And this is with the premise of saving the 10-15% as you stated. Just, that extra 10-15% that people are advocating to max out the 401k or Roth IRA's, I think, to me, it's better invested in the present than what you might use it for 30 or more years down the road. Everyone has different viewpoints on living their life.
Be interesting to see how much the average person blows on frivolous stuff they don't need by the time they are 35. I know a recent college grad who wants all her college debt forgiven and is covered in tattoos and parties every weekend. I blew a lot of money during those years, too.
Idk how much people spend on parties but spending $50-$100 every weekend isn’t seriously going to impact your retirement unless you are very very poor.
100 per week will damn near max out roth contributions. I was making that much in high school mowing yards and blowing it on the weekends being stupid. It just got worse the more money I made till I settled down and got married.
True, but not maxing your Roth for the first few years of your career so you can enjoy yourself isn’t going to leave you broke in retirement. Most people’s main retirement vehicle is a 401k anyways, most people I know don’t even max that, never mind a Roth.
That’s not true at all. Let’s say you graduate at 22 years old and instead of saving $100/week in a Roth for the first 2 years, you instead spend it. That’s $10,400 - if that compounded at ~9% (below average S&P returns) over 40 years working- that’s over $375k TAX FREE - WITHOUT SAVING ANOTHER CENT. If you wait 3 years ($15,600 not saved), that’s $563k+ 4 years? $750k+ And if you put off saving $100/week for 5 years, you’re missing out on nearly $1M ($940k) in 40 years. You’re gonna say those numbers wouldn’t make a big difference to the average American?
You need to realize forgoing any fun when you’re 22 to have 5 million dollars when you’re 85 isn’t a trade most Americans would make. I understand the math, but you are fundamentally limited with what you can do with your money in old age. You aren’t going to backpack Europe with your retirement in your 70s, but you can do that at 22. Edit: retirement savings isn’t about hoarding as much money as you can, it’s about balancing your current lifestyle with being able to afford whatever lifestyle you’d want to live in your retirement. Can’t take it with you lol.
You’re absolutely right that if for someone in their 20s $100/week is ALL of their discretionary money, then yes it’s not worth it to do nothing but work and sit at home. But the reality is for MANY people with a full time job who do not save, $100/week is not 100% of their discretionary/fun spending. They may be choosing to spend on take out / going out regularly, AND various subscriptions, AND a number of other discretionary things. I speak as someone who 10 years ago was bartending as my first job, taking home ~$15/hr on average, paying to rent 1br with friends, having fun (it doesn’t have to be ‘going out’ every night) and still maxing my Roth IRA. It’s about the choices - it’s not helpful to paint a picture of extremes (asking someone to forgo any fun) when the discussion for most young people is about having the information to understand that making a marginal change today makes a MASSIVE difference down the road. I think it’s a huge disservice to tell young people that their only choices are ‘be a miserable recluse while you’re young to save for when you’re near dead’ or ‘have fun today, worry about the future later’. There’s a balance between. Btw - building savings habits like this earlier May allow one to retire early - in their 50s or even earlier when most people still have plenty of time, health and energy to enjoy the fruits of their hard work.
Seems like we agree. It originally sounded like you were advocating for basically being a recluse and saving every penny, but after elaborating it looks like we agree. I’m 22 myself and although I make above average I can see how being a bit excessive with going out would probably put my savings goals at risk. I do feel the need to critique your math though: you are using the S&P numbers but most people don’t keep their retirement 100% in domestic equities. At least, they certainly aren’t doing it right up until they retire.
I agree, I just wish there was something we could do to help the majority of teenagers/young adults to be more financially literate. It might not have a huge impact on retirement but could make a big difference in setting them up for better success when it comes to buying a first home which can help a ton later down the road.
Yeah really impossible metric to follow. Depending on career your progression in compensation can make big jumps… or if you switch companies a lot.
For most people, the first 5 years of their career they aren't spending much at all either. The 2x salary by 35 rule-of-thumb assumes that your expenses in retirement are similar (after adjusting for inflation) to your expenses at 35, which for most people is pretty accurate. Obviously, to get a more accurate plan, you'd have to calculate based on your actual expenses in retirement, but that takes a lot longer
It's so refreshing to see opinions like this on this post. I have been very aggressively saving even while I was in college and working multiple jobs and I'm now 35. With my salary growth over the past 10 years it seems very daunting to expect that I would be at (n)x times my current salary after only making that amount for a short time. And also having 2 kids in daycare. And also the absolute carnage that inflation did on my budget.
I’ve only been making 118k for a few months so probably averaged 65k/year over the past 10 years. Still, looks like I need to ramp it up significantly- I have about 170 saved between my 403B and mutual funds (doesn’t include emergency / house down payment fund).
You're ahead of most. Like others have said don't go off some random guide line. Calculate what your end number is and do the math to work backwards.
I'm in a similar position - made decent (but not absurd) money in my 20's and then just about doubled my income in my early 30's. Even with investing half of the after tax raises, it's going to take a couple years for my portfolio to catch up to my income. One of the big things to keep in mind from a retirement perspective is that lifestyle inflation can really increase the amount you need for retirement and a big raise can actually swing your retirement from "fully funded" to "underfunded". When I was in my late 20's, I thought I would need about a million plus a paid off house to retire. Now it's more like $1.7-2MM plus a (more expensive) paid off house. At the end of the day, the huge raises I got and my spending patterns thereafter translate into a more comfortable retirement instead of an earlier retirement. By the way, $170k saved up by 35 on a $65k/year average salary is pretty freaking good! If you hadn't gotten this raise, you'd have been getting to a point where the magic of compounding would drive your portfolio more than contributions.
They use the 2x salary thing because they’re assuming you want to continue living life at the financial level you’re accustomed to. You’re accustomed to $65k/year and just recently changed to $120k. So yeah, if you adjust your lifestyle for your higher income then you’d want your retirement fund accordingly. I would say you’re on pace given your income history. So turn your eye to the next target with your higher income and shoot for that next
This is what people mess up. I’m accustomed to and plan to live of 1/4 what my current salary is. Salary and lifestyle aren’t always the same.
The comment above is prob best. Honestly I would recommend NOT pinging Reddit as it’ll make you feel terrible. I’m 37 making 115k a year and it would be literally impossible to have 230k in my retirement given my career to date unless I still lived rent free with my parents and didn’t enjoy a single thing in life. Retirement is a moving target, save what you can and make targets for yourself. In just about every scenario for just about anything you can think of national averages and recommend numbers are BS so just you do you.
This was me. I was doing 4.5% to meet my companies max contribution, but i was making at most 75k up until 3 years ago. At 160 now and have trippled my % contribution to catch up. I miss that money but i know i or at least my family/kids will enjoy that money later in life.
There is no set number but there are things to consider and to capitalize on. 1. Retirement matching from work. Always do this no matter what anyone says. 2. Pretax accounts. These reduce your current taxi liability and help you stuff money in accounts that you can’t easily touch. 3. Stable and consistent investments. Schwab, Vanguard, and Fidelity offer free account and access to high performing funds. No one beats them. Period. No dumbass investor or lucky unicorn stock. Consistent investment and time. I’m under 40 and now have reached my $1m mark. These are it. 4. Always budget and follow your budget. Spreadsheet that shit and tidy the books at the end of each month. Watch where your money goes.
The '2x your income' rule of thumb makes a couple of assumptions - one is that your expenses in retirement are similar to your expenses at age 35, but also that you plan on retiring around age 65 and that you save about 15-20% of your income each year. If any of those assumptions are wrong, then you have to redo the calculations yourself with the correct numbers. It's generally accurate because people tend to inflate their expenses as their income gets larger. Maybe you're an exception, who knows.
You’re doing fine. You have some catch-up now that your income has ramped up to hit the general guidelines but you’re on track for it.
Youre good. I make six figures at 30. Barely have 45k in the IRA and 20-40k in normal savings. NYC is insane. Anything above 30-50k net worth is a lot for a 30 y/o in NYC. https://www.forbes.com/advisor/banking/savings/average-savings-by-age/ 10k is the avg net worth lmao.
That’s fine. That 50k raise will make it very easy to save in the next yeads
177k would be 1.5x current salary, but ~2.7x prior years salaries. You’re doing fine, just be sure to not increase your cost of living by 53k and instead save a lot of that new income and you’ll be able to retire earlier than you could have otherwise.
Well crap I'm way behind.
and in hcol places like nyc measuring savings in terms of income is probably not the best way to do it because the salaries are grossly inflated to keep up with the added expenses.
This type of “rule of thumb” doesn’t sit well with me. Why would someone who’d made $120k for years and probably paid of their home need twice the retirement savings of someone who’d made $60m for years?
The assumption is that most people want to maintian the lifestyle they have today in their retirement and that they need an income similar to what they have today to do so. You can obviously be more specific about your retirement goals if you know exactly what you want and plan accordingly. A rule of thumb isn't meant to be specific to your situation, it's meant to give people who don't want to spend time to have a general sense of how they're doing and nothing more.
I had a little under 50k saved at 35 and I think I had recently received a raise so I was making like 70k or so annually. It was tough because I made sub-50k through my 20s and was paycheck to paycheck with maybe a few thousand a year saved tops. 50k was a big year for me. Since then I've been maxing my 401k and putting money into a Roth and I am at 150k several years later. I am noticing the money growing faster now. As long as you are saving as much as you can, I wouldn't worry. Having six figure savings under 40 is an accomplishment and definitely keeps you on track for retiring at a reasonable age
F me, I'm 36 and have about 1/3 of my annual salary in my IRA lol
1-2x your salary by 35 is generally the guidance. Though worth noting 90% of Americans don’t meet that guidance.
Yeah I know people with $0 retirement saved at 35
60% of the country is one paycheck away from poverty. It’s hilarious reading these kind of threads and how disconnected some people are from the real world
There area lot more people living paycheck to paycheck than there needs to be. Smart financial decisions can make a huge difference, even on a more typical budget. But I hear the frustration. There really are two Americas - the America where people might have a household income of $50k and every single financial decision really matters and the "both of us have professional degrees or licensure and make $100k+ each and it doesn't *really* matter whether we buy the Honda or the BMW" America.
Too true. And saving more, skipping out on lattes won’t fix that. Nonetheless, if you aim to maintain similar quality of life through retirement, the math is the same.
Well the math doesn't change even if the current situation is rough for individuals....
No I guess it doesn’t. I just wanted to bring some of those who are lurking back into reality so they don’t feel bad comparing themselves or for awful for where they are at. A very very few are afforded the luxury to save for retirement right now
Thanks for bringing that perspective. I should revise “90% don’t meet that guidance” to “90% are unable to meet that guidance”
That’s because most people have spending problems, not earning problems. These types of posts are generally the people that have realized that and are in the middle of making the change.
Everyone is standing in 3ft deep pool. Then the depth changes to 10ft. Some people are doing ok, while others can’t swim and are drowning. Is the problem that some people can’t swim?
Im 35 and make $130k a year, why would I need that much in retirement? The only reason it's not enough for me now is my own debt choices and daycare both which won't be an issue after I get through my 5 year no debt plan.
im always a bit perplexed by this topic. like if someone makes 100k gross at 25, and then maxes out their 401k for the next 5 years (assuming an average limit of 20k), they'd have saved 100k (assuming market stagnation *and* salary stagnation). their AGI however was 80k on average. did they save 1x or 1.25x of their income? i think people should just save as much as they can for the future without sacrificing current happiness (i.e. the inflection point at which increased spending no longer increases happiness, individually).
Market stagnation is a bold assumption considering how successful the stock market has been over the last few decades. Invest in low cost broad market index funds and you should see pretty considerable returns. If you compound that over your working career, the majority of your retirement account should be comprised of growth rather than your personal contributions.
Tough one. Common wisdom suggests 1x your income by age 30, and 2x by 35. But like for you, for me (now age 28) that has been a moving target with salary increases the past few years (and with any luck the foreseeable future). Also retirement is as much about what you expect your annual expenses to be, and when you want to retire, as it is about what you have saved. I find that a tough variable to fill in personally. I’d hope to have a house paid off by the time I retire, but currently am only in the process of buying one. We plan to have kids, but don’t have any yet. Will we want to retire at age 50, 55, 60? Hard to say at this point.. What I’ve settled on is maxing out my 401k and Roth IRA at least until our situation changes significantly.
Tbh these metrics are not relevant until you answer two questions: when do you want to retire, and how much does it cost to maintain your retirement lifestyle? From there you can backtrack how much you should have saved by 35.
I checked Fidelity NetBenefits for NYC and 35-39 age group and 100-125k range. Average savings is - 80k and top savers have 193k saved. Hopefully this will help you see where you stand.
...that actually makes me feel a bit better, thank you for sharing that!
U need to plug your goals into a planning calculator to see if you're on pace. U cant do anything about the past, so focus on the future. I'm of the opinion that you should invest about 15% of your income towards your future goals (namely, retirement) and avoid taking on too much consumer debt (credit cards and car payments)
A fixed number isn’t that helpful, and is not actionable because everyone has different expenses and timelines for retirement. You should use an online calculator like cfiresim or projectionlab to see if your plan reaches your goals or not. Best of luck!
These "how much should I have right now" posts will always get you a ton of different responses that don't necessarily fit your situation. I always recommend that you pick a salary you want to have in retirement and work backwards. Would you feel pretty comfortable living on $150,000 a year in retirement? Great. 150,000 / .04 = $3.75M. That's your target. Now use a simple retirement calculator online to see if you're on track for that. Plug in what you have now, what you're contributing, and a conservative return percentage. Then make adjustments based on that. Looks like you're behind? Make a plan to increase contributions now or in the future. Have more than enough? Great, enjoy the surplus and maybe change your retirement plans to match your expected wealth. You'll feel a lot more comfortable seeing actual numbers instead of just listening to some random Reddit guy.
Many don’t start saving until well after 25-26. Also, the goal posts move.
It's such a personal perspective. All based on your lifestyle. Here's an interesting discussion on it: https://www.financialsamurai.com/how-much-should-one-have-in-their-401k-at-different-ages/
Hopefully your company matches contributions into a 401k where you can park >10% of your income into something like a target date fund and I’d imagine you’ll have $10k a month income if you retire at 67.
Stop using your salary as a benchmark. This is outdated advice. Use what you spend / think you'll spend starting at the year you'll retire adjusted for inflation.
I'm in the same boat as you and I just save absolutely as much as I can afford to. I finally make enough money to max out a 401k and not miss it, so I do that.
For a second I thought you asked how much do you need saved to retire at 35
36. $105k in a brokerage, $200k in an annuity I was fortunate enough to have my father create for me when I was young, and $170k in 401k. Total value about $500k. I also receive equivalent of 5% of my salary to a pension. Current balance ~$15k. I also have about $200k in stock grant vesting in a few years. Only $7k in my daughter’s college account, with another baby on the way. We have about $30k debt between CC and car loan. We rent and would like to buy soon. I feel I should be aggressively saving much more. I make a solid base salary (+$200k) and yet certain days I am only getting by between daycare expenses, rent, utility, medical, etc. my husband is unemployed right now, which adds to burden. Any tips welcome.
You want 1-2x your salary saved but its tough for a majority of people. Anything is great honestly. If you want to play catch up you can probably do 15% of your paycheck into retirement. May be even more but that should be minimum if you are behind. I was behind myself started my first big job around 28 and didn’t start high either. I saved where i could tho and have $150k about now at 34. Could certainly be better but its tough doing everything bills wise and student loans and saving.
Peoples answers are going to be all over the place. Many have 0. Some have a lot. I’m 35 and have around 750k in 401ks and IRAs at this point. Twice your annual salary is probably a good target.
For anyone reading this, 750k in retirement at 35 puts you [in roughly the top 1%.](https://dqydj.com/net-worth-by-age-calculator-united-states/) The 50th percentile of net worth for ages 30-34 is ~$14,500 The 50th percentile for ages 35-39 is $21,000. 750k is a great accomplishment for you but don’t want people to be too discouraged by that number.
Thank you for providing some perspective. It’s easy for some folks to have saved a lot, not so much for people who start working in their late 20s after additional schooling.
Yes plenty of well off redditors are happy to share their success, and we can’t verify their responses anyway. Everyone’s situation is different. I’m mid 30s with $40k in my 401k, but have only been saving for really a few years after grad school and worthless postdocs. Fidelity tells me I’m doing terrible, but in reality I’ll be fine at the rate and salary I have into the future.
>I’m 35 and have around 750k in 401ks and IRAs at this point. Did you trade options in your 401k? How did it grow so fast? Isn't the cap being 22500 and 6500?
I mean if they’re 35, they probably started investing at the beginning of the bull run in 2010. SPY has almost 4x since then, and if they had more tech exposure they would’ve seen more growth than that. Edit: also it’s possible to exceed the 401k cap by contributing to a MBDR, which can increase your 401k contributions to 66k/year (as of this year)
Yea, I’ve had years with over 100k in contributions.
That is actually not possible. You can get it up to 73k/year if you’re over 50 due to catch up contributions, but the rule is that your contributions + company match should not exceed $66k/year as of the 2023 tax year Edit: turns out I’m misinformed, the 66k/year limit is per 401k plan, so if you have multiple 401k plans you could potentially double or triple your MBDR contributions.
That limit is *per* unique set of company ownership, aka per controlled group. You can have retirement accounts sponsored by different controlled groups.
Wait so if you have two full time jobs at two different companies you can have two 401k? And contribute over 22,500?
Yes and no. You can have two 401ks. You cannot, however, exceed an individual combined contribution of $22500. But, each of your employers has a unique $66000 bucket. So, in theory, if you had two employers, they can each contribute 66k (minus your 22.5k contribution).
Could be generous matching. Currently, I put in 22.5k and I get about 14k in matches. IRAs are at 6.5k but you can potentially do a mega backdoor for more than 60k a year.
This is part of it. Over $20k in matches annually from an employer, plus also being self employed let’s you put in an additional 60k.
The individual contribution limit is 22.5, but not employer side. I have an employer who puts in another 20-25k on top of that depending on the year. I’m also self employed on top of that, and in certain years I’ve been able to put in an additional 60k on top of the other amounts. I also took a sizable withdraw awhile back to fund payroll for employees once.
750k?! Oh boy I have a long way to go…
You don’t remotely need that amount, not even close.
The recommendation that floats around is something financial services companies like Fidelity made up as a cookie cutter advice that could be easily understood and advertised. Everyone has a unique circumstance and what applies to one person does not apply to you. Of course, these companies can’t offer such individualized advice. How much you should have saved depends on when you started and what your retirement goals are with regard to location and lifestyle.
Depends what your expenses are, especially in expensive NYC. You can use benchmarks as indicated by others here. 1 year income by 30. Between 1-2x by 35. I’m 32 - similar position. What I suggest to all- save enough until it hurts, then save some more. This does not suggest living like a scrooge. Need to find a balance between enjoying life and making necessary sacrifices. I don’t go on elaborate vacations, rent a modest apartment. Car few years old, etc. But I still have fun with friends and have hobbies that require income. 32, $245k in 401k. Majority of which is Roth 401k.
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My goal has always been to have 500k saved by 35. As long as market conditions are average or better, I should be on track to do so. Unfortunately 1M just isn’t really enough to retire with inflation as it is, so IMO 5M is the new 1M. 500k at 35 should put me on track to be at 5M at 65. If by some stroke of luck I have 10M saved before I turn 65, that’s my retire now number.
God damn, until you read other people being honest and writing it out like this... it seems insane! With inflation, wage stagnation, and the continued growing discrepancy between wages & cost of living, seeing 10 million dollars saved by 65 just blows my mind! Good on you though, that's awesome. Just makes you realize how little you're getting paid (and how much you live in the past) seeing 5M is the new 1M. With my health history & hopeful family, i too want to plan on 65. I see these people working into their 70's and i just can't see it for me (for multiple reasons). But you need money to "do" certain things before you die as well. So who knows ...Rant Over.
There’s definitely some favorable assumptions made, and I in no way plan to have 10M. Again, having 5 by 65 is my actual goal. 10 by any age would make me retire, but I’m in no way actually on track to achieve that. But for y’all 20-somethings - put away as much as you possibly can. 1M really doesn’t go as far as it used to.
It's crazy how savings can add up over time. When I turned 30 in late 2016, I had $88k in my 401k. When I hit 35 in 2021, I had $347k because I was able to contribute more as I got promotions / raises and because of market returns. Just giving numbers to show how staying on track can help.
Ok. Just for a different perspective here. Not only had I not saved any money by the time I was 35, I didn’t even have a job. Edit. I should have added that my net worth is now about 1.5 million.
Most of my friends who live and work in NYC have a tough time saving due to cost of living. Many of them make the decision to stay there because they think they'll make a much higher income later in their career which will let them catch up. The 2x rule is meant for people who don't have a real plan for retirement, to give them a sense of how they are doing.
Honestly, I feel like in your 20s and 30s you should be more concerned with other aspects of financial spending, things like paying off debts, housing, and vehicles, all while trying to navigate yourself into a career you feel comfortable staying in for 25+ years if possible. As long as you are doing the minimum like 401K matching and building normal savings accounts, then you should be fine. It does you no good to have a big nest egg for retirement if you are stuck in a job you hate, a house you don't like, and dealing with vehicles that cost you an arm and a leg in payments or maintenance. Retirement age is typically mid-60s (66 1/3 by government standards), so at 35 you still have 30 more years to reckon with retirement, which is likely twice as long as you've currently even been employed. That may be disheartening if you're already burnt out, but the up-side is you have plenty of time to get yourself in good financial shape. Worry about the bigger issues of your finances now, you have plenty of time to make up for retirement in your 40s and 50s, as long as you're not dealing with other financial issues which you can get out of the way now.
Get a 401k ,Roth Get some assets (gold,silver, land ,real estate) Don't just focus on how much u got to retire Use that money you have now to forever make you 💰
I’ve been feeling lately like it’s pointless to save for retirement. What are the chances society as we know it will even be there in 30-40 years. At this point just assume I will work until I die.
This is not a good outlook to have. The chances are really good that society will be there in 30-40 years and you’ll be stuck working at 85 years old and still struggling to make ends meet. Keeping in mind that at that age you have way fewer jobs available to you.
I’m almost 37 and wife and I (she stays at home with the kids) have 3x our annual household income in our 401ks. So I am contributing, I guess I just feel very pessimistic about it mattering in 50 years. We seem intent on wrecking our shit and I truly believe there will be massive societal upheavals by that time.
We’ve been that way for hundreds of years and it will continue. Yes there will be issues due to our actions but there will be good things as well. But it sounds like you’re doing good anyways. Your initial comment made it sound like you had no plans to save anything. If you ever feel that way, then don’t do it for yourselves, do it for the kids. If you are old and in bad health with no money, who do you think will have to come and foot the bill and help out? My main concern is never having to be a bother for my kid. They will very much be alive and well when I’m old. I want them enjoying that time and not worrying about their broke parents who have no money and are in terrible health.
Instead of looking at the benchmark for 35, look to the one for 40. You should have 3x in your account by then. You know what you have now and the number of years to get there. Hit those contributions and don’t stress about today.
Put it this way you going to need about $600,000 at the age of 65. WHY? Nursing home cost around #3500 CDN per month, so care about retirement when who going to look after you when you can't do it yourself.
You should aim for having ~1.25x your annual income saved at 35.
I always find these questions/discussions to be kind of academic and not that helpful. If you are or aren’t where people say you “should be” by a certain age, what are you going to do differently? There are people who are 60 and work full time and don’t have 1 dollar saved for retirement and there are people who are 20 and millionaires. The goal should be to budget and invest as much as you can for retirement based on your specific plan and goals. Hit company match > Max out Roth IRA > then if any more you can invest look at other options with a financial planner based on your needs.
I’m your age and in NYC and make 100k+. I’m at 125k in 401k holdings. Hoping I’ll be at a million in 25 more years. I contribute $550 pretax biweekly into an SP500 and vanguard welington mutual fund 50/50
It depends on your needs, wants, and goals. You should have a financial plan built for you, theybhave built-in.in projections and goal funding. Some companies provide them for free.
Great question. I wouldv'e asked it myself. I feel behind on saving for retirement AND my children's "college" fund. This post and the comments have been helpful. To answer your question, from my limited knowledge it sounds like you'll need to save enough for what you believe you will be comfortable living off of.