Dedicated to Deposits: Deals, Data, and Discussion
Featured Savings Rates
Featured Accounts

How Much Retirement Savings Is Enough For Your Age?

Saturday, May 4, 2013 - 12:56 PM

With Retirement Savings, How Do You Compare To Others Your Age? - Forbes

"The amount of money that you’ll need for retirement will vary widely based on a number of factors, including your average salary and goals for retirement.

In most cases, an asset-to-salary ratio is used to determine if a person is saving enough for retirement. Using these guidelines, Cathey suggests the following in current retirement savings for a person with a $40,000 salary, who expects to retire at 65:
  • 30 years old: approximately $56,000
  • 40 years old: approximately $112,000
  • 50 years: approximately $180,000"
This is way too low.  The 4% rule is that you should have $1M with an annual retirement expense of $40K.  But you and I can come with our estimates individually and differently. 

The fundamental point is that one should plan early for retirement savings (better at one's 20s) and one should accumulate ones' retirement savings consistently and steadfastly.  Unless one is filthy rich/earning handsomely to begin with or have relatives that are filthy rich; one may never reach the ultimate goal for "sufficient retirement savings."  So it is better to start early and do it diligently. 

I don't know about you, but I really hate to go back to work at 75 or 80.   
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427
1. Saturday, May 4, 2013 - 4:22 PM
Everyone's situation is different. There is no magic rule or broad brush to determine a figure that's ideal. There are just too many variables. If one wants to leave an estate to their heirs it will be way harder to retire comfortably than if one elects to spend-down principal for 20-30 years. I opted for the latter and will have a quality retirement as long as my health holds up reasonably well. Of course, there is another variable again. Health care costs are going up way faster than the rate of inflation. In the end, there is no satisfactory answer to the question "How Much Retirement Savings Is Enough For Your Age?".
ShorebreakShorebreak2,696 posts since
Apr 6, 2010
Rep Points: 14,620
2. Sunday, May 5, 2013 - 10:36 AM
I must say, those numbers they give there are not just ridiculously low, they are terrifyingly low. I think someone got mixed up between the value of the dollar in 2013 and in about 1960. 

But as already stated, there are a lot of variables that make a lot of difference. For instance, someone with a pension coming in needs a lot less in savings than someone who does not have a pension. And the better a pension you have, the less savings you need. The vast majority of people don't have a pension (and it seems most don't even know the difference between a pension and a 401k). Even the more you get from Social Security makes a difference -- just because you made good money in your last 10 years doesn't mean that when you were out of work much of the time through your mid-30s doesn't matter, because Social Security is calculated by 35 years of your earnings, not just the most recent.

Also, the cost of housing in particular and other costs of where you live make a big difference. Little more than a shack in Southern California will run you $500,000, but a much nicer place in Orlando, Fla. will cost you maybe $150,000 now. And in California, you will have to pay 9.3% or more state income tax too, and 39¢ per gallon tax on gas, plus sales tax on gas for all your retirement travels. 
me1004me1004374 posts since
Jan 16, 2010
Rep Points: 2,603
3. Friday, July 26, 2013 - 2:23 AM
I agree with what everyone said here. First off, the retirement figures are extremely low and second, these figures just do not apply to everyone. It all depends on the lifestyle of the person and the benefits (if any) a person is going to get from their company. The important thing is to invest as early as possible. As for me (I’m 24), I am investing in my IRA, 401(k), and in the future, I plan to invest in stocks and bonds. I also make it a point to increase the amount of money I invest according to my finances which I regularly check using my three credit bureau scores. 
joymalijoymali16 posts since
Apr 6, 2013
Rep Points: 23
4. Friday, July 26, 2013 - 10:44 AM
I used to think 1 Million would be enough but that was taking into account I would be getting at least 3% on it.  If interest rates are going to stay this low for the future, I would have to go higher or learn to live quite a bit more frugally.  Some of us have already saved what we could not knowing what we were in for so we have to live on what we have.  However, for those still saving, I would recommend to prepare for anything in the future and save as much as you can, when you can. 
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,152