When I was starting in my career, it wasn’t clear to me how much we should have saved in our twenties & thirties. This was before the Internet and there was a real dearth of useful information available.
Recently, my former MegaCorp Boss sent me an interesting article from Quicken that shared the median retirement savings and savings goals decade by decade for Americans.
I have to admit that I was a bit underwhelmed by the figures they shared.
First, here is what they shared for Median Savings by decade:
⁃ Twenties: $16K
⁃ Thirties: $45K
⁃ Forties: $63K
⁃ Fifties: $117K
⁃ Sixties: $176K
And here are their Savings Goals vs Annual Salary by decade:
⁃ Twenties: 10-15%
⁃ Thirties: 1-2x
⁃ Forties: 3-4x
⁃ Fifties: 6-7x
⁃ Sixties: 8-10x
I’m surprised how relatively LOW both the medians (actuals) and savings goals (aspirations) are. I understand that early in your career, saving is difficult, but to only have $176K saved by your 60s seems really pathetic.
Additionally, even the goals they share aren’t very compelling to me. To only have 8-10x of your annual salary by the time you retire? It feels like that number should be 20-25x, doesn’t it (for a 4-5% withdrawal rate)?
As usual, I’m taken aback by what poor savers we are as a nation. In a country with nice cars, the latest gadgets, and wonderful travel opportunities – as nice as anyplace in the world – few are saving what they need to live comfortably in retirement, let alone retire early.
My wife & I were aggressive, early savers and I think we had $100K in our 401Ks before we were 30 years old. And, that is despite finishing college with a heavy dose of student loans and credit card debt. We met with my Dad’s financial planner about the time we turned 3@ and I remember him saying we were “probably in the top half a percent of savers” at that point.
Importantly, we didn’t have great, high-paying jobs. But, we were quick to learn that ‘DEBT’ was a 4-letter word and were already living well below our means. We didn’t have the toys or take the trips many of our friends were, but we didn’t have any needs that went unfulfilled either.
Are you surprised – or like me, disappointed – when you see how little people save for their future?
Image Credit: Pixabay