What Age Do Most People Retire In America?

If you plan to retire, it's good to know what age do most people retire in America. You don't want to be a misfit and retire too soon. Otherwise, what are you going to do with the rest of your life? You also don't want to retire too late and miss out on doing all the things you want to do.

Many Americans are in a difficult financial situation with only about $17,500 in retirement savings for those between the age of 56 and 61. With such low retirement savings according to the Economic Policy Institute, you'd think most Americans are never going to retire.

The truth is, most Americans do eventually retire. Let's look at the age most people retire in America so you have a baseline retirement goal to shoot for.

What Age Do Most People Retire?

According to the Life Insurance And Market Research Association (LIMRA), 69% of Americans retire by age 66. Roughly 51% retire between the ages of 61 and 65. By age 75, 89% of Americans have left the labor force.

It surprises me that less than 1% of Americans retire before age 50. With the way the Financial Independence Retire Early (FIRE) movement has taken off, as well as the rise of freelance work, you'd think the percentage would be higher.

Further, I've been writing about retirement on Financial Samurai since 2009. Tens of millions of readers have read this site since. I'm hopeful that during this time, more people have built more wealth and have been able to retire earlier as a result.

Take a look at this graphic below that shows what age do most people retire in America.

What age do most people retire in America?
Not sure why they have two “Age 50-54” groups

How Are Retirees Able To Survive?

LIMRA estimates the average American household has about $253,200. But most of that is owned by the wealthy. 

The median holding is just $17,500, which matches up well with the Economic Policy Institute's estimate of $17,000 (from 2013). 75% of Americans have less than $100,000 saved.

Percentage of wealth ownership by decile - What age do most people retire in America?
The top 10% own 77.1% of all wealth

The reason why most Americans are able to retire by 66 despite so little wealth is due to Social Security, a traditional pension, and retirement work plans. LIMRA reports that some 41% of retirees have annual income less than $25,000. Of retirees with income over $50,000 a year, about 80% draw from a pension or retirement plan.

Unfortunately, very few Americans under 40 will have a traditional pension that can fully support a retirement anymore. And even if there was such a thing as a pension, with the typical American changing jobs every three years, there's no way today's workers will stay long enough to ever collect.

Retirement Savings Is Mostly Up To You

Therefore, the focus on retirement savings needs to be on maxing out a 401K, an IRA, and other pre-tax retirement plans while also saving additional money in after-tax investment accounts.

Just in case there's a job change, a need for liquidity, or the desire to retire before the 10% early withdrawal penalty goes away, having a robust after-tax investment portfolio is a wise move.

For added security, it's wise to build even multiple income streams to reduce concentration risk. There's not one person I know who retired before the age of 50 who doesn't have at least three income streams beyond a traditional retirement plan.

To learn more about building passive income, take a look at my newly updated post: Ranking The Best Passive Income Investments. This posts highlights the best passive income investments to support your retirement. Because frankly, having a 401(k) and Social Security is not enough.

Median retirement account savings by age group

Part-Time Work For Supplemental Retirement Income

Despite the anemic retirement income figures, the gig economy enables millions of Americans to work part-time and supplement or replace a full-time income source.

I'm pretty sure if all went to hell, I could earn at least $50,000 a year driving for Lyft, assembling furniture for Task Rabbit, and being the friendliest greeter at Walmart. But then, by working 50+ hours a week, I wouldn't really be retired.

Working to help supplement your retirement income is what I call Barista FIRE. You're essentially working to build an income buffer or cover an income gap between your desired lifestyle expense and how much your taxable passive investments spit out.

You might even be able to get subsidized healthcare if you work enough hours.

The one expense that is really weighing heavily on my wife and I in retirement is our healthcare insurance. We pay a whopping $2,380/month in unsubsidized healthcare insurance for a family of four.

Number of part-time workers in America - What age do most people retire in America?
Part-time work is a double-edged sword

Keep Housing Costs Low To Help You Retire

The key to surviving retirement on a low income is owning a home debt free and having sufficient medical coverage. With health and living expenses taken care of, surviving off just $2,000 a month, while challenging, is doable.

I highly recommend trying to keep housing expenses to 10% of your annual gross income. If you do, retiring early becomes much easier.

If you're fortunate enough to have children who call you back, they might even come to your rescue if things get too difficult. That said, raising children can be very expensive.

For those living in a high-cost area of the country with a couple kids, earning $300,000 a year only provides a comfortable middle class lifestyle. You won't be able to retire before 60, let alone 50.

With mortgage interest rates at all-time lows in 2020+, I highly recommend everyone refinance their mortgage ASAP. I refinanced my mortgage for free to a 7/1 jumbo ARM at 2.125% and am saving about $1,000 a month in cash flow.

Check out Credible for some competitive rates where qualified lenders compete for your business. They are my favorite lending market place to get free mortgage rate quotes. Take advantage of low mortgage rates.

NMLS ID# 1681276, Address: 320 Blackwell St. Ste 200, Durham, NC, 27701

You'll Stay Busy In Retirement

Although I left full-time work at age 34, I've never stopped doing some things here and there to keep busy.

For example, I've continued to publish three times a week on Financial Samurai since 2009 out of enjoyment and mental stimulation. As a result, this site brings in some advertising revenue to supplement my retirement.

Regardless of what age do most people retire in America, you should always stay active once you retire. Most will be fine because most will retire to something, not from something.

Your focus simply shifts from something you're sick of doing to something that's much more interesting. If you're lucky enough to love what you do, then by all means work until the very end!

Read The Best Retirement Planning Book Today

If you want to read the best book on achieving financial freedom sooner, check out Buy This, Not That: How to Spend Your Way To Wealth And Freedom. BTNT is jam-packed with all my insights after spending 30 years working in, studying, and writing about personal finance. 

Building wealth is only a part of the equation. Consistently making optimal decisions on some of life's biggest dilemmas is the other. My book helps you minimize regret and live a more purposeful life as you build more passive income.

You can buy a copy on Amazon today. The richest people in the world are always reading and always learning new things. Learn from those who are already where you want to go.

Buy This Not That Book Best Seller On Amazon

Manage Your Retirement More Effectively

Check out Personal Capital's free Retirement Planning Calculator, using your real data to run thousands of algorithms to see what your probability is for retirement success. 

Once you register, simply go to Planning -> Retirement Planner to run your various retirement scenarios. There’s no better free tool online to help you track your net worth, minimize investment expenses, and manage your wealth.

Personal Capital Retirement Planner Tool
Are you on track? Sign up for free to plan for your retirement future

Real Estate Diversification

Real estate is my favorite asset class to help you retire and stay retired. It is a tangible asset that is less volatile and produces retirement income.

Look to diversify your real estate investments across the country where valuations are lower, net rental yields are higher, and growth rates may be higher. The global pandemic has accelerated demographic shifts towards lower cost areas of the country due to the work from home trend.

Check out Fundrise and their eREITs. eREITs give investors a way to diversify their real estate exposure with lower volatility compared to stocks. Income is completely passive and there is much less concentration risk.

If you are bullish on the demographic shift towards lower-cost and less densely populated areas of the country, check out CrowdStreet. CrowdStreet focuses on individual commercial real estate opportunities in 18-hour cities.

Both platforms are free to sign up and explore. I've personally invested $810,000 in real estate crowdfunding across 18 properties to earn income 100% passively.

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108 thoughts on “What Age Do Most People Retire In America?”

  1. Steve Rutoski

    I am retired at 55 on one income. I pay 70 per month for family healthcare, 500 for my luxury 3 bed 3 bath apartment, eat in restaurants whenever we want. and have 50% monthly money left over to travel the world. I budget for a trip to other countries 4 times a year. All this on a 401k. How is this possible. The secret is to open your eyes, think outside the box, and to leave your comfort zone. Find a country to live in that the dollar goes further. As far as needing purposes when retired. It’s all a matter of opinion. Everyone is different. Some people need have a purpose and others are content with having more time with family, exercising, and enjoying not having to be part of the rat race.

    1. Can you share how you pay so little for healthcare? I pay about $2,350 a month for a family of four for a silver plan.

      Where is your $500/month luxury apartment?

      My eyes are wide open and would love to learn more. I’ve found kids to be quite expensive. How many kids do you have?


  2. Philip Edwards

    I’m happily retired at 62. Please don’t tell anyone , but I had nothing when I retired and now I still don’t have anything. Except I collect as much from SS as I did working If you count in transportation costs, eating out for lunch Im ahead of the game. Something I never saw coming. I thought I would be working untill I was 99. Retires that are up all night worrying about how they broke there monthly budget won’t live long. If you have money you will spend it. That is what its for. If you don’t have money then you can’t spend what you don’t have. Simple math.

  3. I’ve only had an IRA for 2.5 years and I’m at 16K even though I’ve not put in the max for 2017 yet. I guess I’m almost average. Except I’m in my early 30s and have time to fix this.

  4. One principal rule for retire early is VERY simple, that is to start your Roth IRA ($5500 a year) and 401k contributions (at least up to the match percentage from employer) at your early 20’s.
    You will have several million dollars when you reach 62 years of age.

  5. Honestly I don’t know enough to analyze this well. The area is West of the strip, behind the Orleans Casino on Tropicana (many blocks away), and is semi industrial type area as I recall. There are at least two large mobile home parks there. That area has some warehouses and businesses and self storage in the area. I would imagine tenants will be heavily people with jobs on the strip, casino workers who want close commutes. I don’t think of it as a particularly kid friendly, residential, dog walking area. It is not far from Chinatown which is on Spring Mountain Rd and has many apartment complexes around it.

    I googled the name which I’m sure you have done, and then read Yelp and Google reviews by tenants. Of course you can expect complaints, there are always some. But it is a data point.

    I don’t understand the financing much, what the “conversion” means, or how the preferred stake is treated but I have only one comment related to the deposit of 28 months of payments into an account controlled by Realty Shares. This may not be applicable because I don’t understand but it reminded me of the blown up 12% loans I mentioned to you before. In those, let’s say the loan was a 1st trust deed $3M on vacant land with an apprasal (later proved grossly optimistic) of $6M. 50% LTV. Interest only, term 2 years, very typical. The funds were borrowed to ‘refinance prior debt, and contribute to soft costs of development’ planning grading things like that. The borrower then always gave a personal guarantee to place his own assets at risk. The note had all the normal default penalties, acceleration clauses and everything you would expect. Then as a further incentive often there would be a stipulation that the borrower would place an amount of the loan, say $1M into an account controlled by the lenders, to be released for the first year’s interest payments and other releases to the borrower to be gated by the lenders getting confirmation of various construction steps being done. All standard.

    In the end all blew up as I said. Here’s my comment. If you lend someone $3M, and they agree to place $1M back into an account you control, and $360K of that (12%) is prepaid interest, all they have done is sign a paper and hand you back a portion of your capital which was yours anyway, as taxable interest. The loan manager would send everyone a monthly check making them feel great their investment was indeed yielding 12%. In fact they were only sending them back a tiny part of their own money each month, as taxable interest. The rest of the money got to the borrower. It later turned out that when things started to go wrong the loan manager let them slide a bit on the construction milestones that gated their release of the rest of the funds to the borrower, and released anyway with a stern warning that things had to shape up. Meanwhile it was all going to hell, not only on that deal but on many others at the same time with other lenders. For the first year there was no default of course, the interest was there it was borrowed money to start with. And in fact no default happened until all the funds had been released so there was nothing left in the escrow account. Then they defaulted and started trying to negotiate extensions and terms. Not another penny was ever received.

    This is only a parallel but it reminded me of that. In your case, the property should generate income. In our case, it was vacant land and generated none. That is a key difference. So it may not be relevant.

    I am not a finance guy, so I don’t understand a lot of this. But I stand by my one statement on all this crowdfunding stuff. If money is being raised, something will be invented or found to put it in, even if not optimal, and if lots of money is being raised because lots of investors have money lying around they want to earn high returns on and don’t know what else to do with, the less desirable projects will get funded too because there is so much money to be placed. Then more will be raised. Second, when high net worth people with lots of cash in San Francisco can’t find investments in SFO they can see and touch and know something about, so send it to Kansas where they have never been to invest in midwest projects with pretty prospectuses and term sheets and great stories to get great returns not available in SFO, I see a poker game where the skilled player is in Kansas and the patsy is in SFO. I also think the insiders in Kansas who know the area and markets passed up on this great deal so it had to be sold to the out of towners loaded with cash. I’m not a fan and saw a lot of CA money vaporized here in Vegas during the last downturn where the lenders bought wonderful turnkey deals (condo conversions) where the sharp shooter was the borrower who skated away and lenders lost everything in the end. What was amazing on the conference calls I was on was how little these investors in CA knew about what they were buying. They simply had way too much cash and had to find a place for it, so they did. So I have VNQ an index of publicly traded REITs and expect to earn much less but with less risk on my securities RE.

  6. Many thoughts. Maybe some major issues due to age. I’m 59, from the semiconductor industry, retired (not my choice) 19 years ago. I can honestly say of all the people I knew I can’t think of a single one who chose his own retirement. In every single case, something happened which he did not plan. Layoff, downsizing, firing, buyout, recession, occasionally medical, but in each case the retirement was not his preference, it was after a few career cycles of something happening and a rebound or attempt, the cumulative baggage combined with age forced the person to give up trying to get back in the game even at a lower level and say “That’s it, I’m retired!”

    Next the self managed 401k/IRA system vs pension. Already in my time you were on your own unless you had some government gig, the defined benefit pension funded by employer was gone. And of the folks I know, 100% either grossly underperformed or completely destroyed their retirement by trading their 401k/IRAs into oblivion or making very bad investments or being in at very bad times and not having patience. I think about so many people I know, otherwise intelligent and educated, who with 30 years of investment under their belt have negative total returns. That means if all their lives they had simply placed every cent of their savings into a checking account, never earning a penny of interest, but every penny still there, they would be ahead in life of where they are. That is an amazing fact. You can call them hardened gamblers or whatever you like, but human nature is not to place money into an account you control, in stocks and bonds, and sit there patiently watching during a 4 year downturn while the balance goes down 57% as it did in the last big downturn. They trade. We all know it will likely end up badly, but they do it anyway. Inevitably they are out of the market when it rebounds, then jump in later just as it is about to downturn again. You can’t change human nature.

    Right now everyone is a genius and feels very proud of their abilities. Recently I spoke to an engineer much younger than me, mid 30’s, who said it is all happening again. He talked about how his co workers walk around with their phones and Scottrade apps, placing trades in and out of individual securities day and night, trading their IRAs. Some 401ks allow individual stock trading. Every single one of them hopes they will earn >20% a year doing this, and for the present time some have. The more adventurous play options. They play. Play is the word. They love to play. It is exciting. Maybe in the end some will keep some money. Most have never seen a downturn, have no clue that markets can go down for incredibly long periods (during which coincidentally your job seems at greatest risk), and think how stupid everyone is who doesn’t understand markets as they do right now, getting up in the morning checking some graph and feeling like XYZ is about to pop, buying it, maybe checking a quote at lunch, selling and capturing a gain tax free in their IRA, then heading to lunch to brag about it. It sounds like 1985 to me all over again. Somehow I doubt 30 years from now most of these people will have compounded gains in their accounts that the tables forecast, and like many real cases I know, some of them will even have less than their total contributions in their account with a loss to show for their 30 years of activity. Or maybe a break even. Maybe a 1% annualized gain.

    1. You’re right about the excessive trading hurting overall returns. It’s hard to stay patient during volatile times. And you’re right about everybody thinking they already financial genius now.

      For those of us who have survived the past to downturns, this current bull market is blessing to give us another chance to make some good returns and then cash out before everything implodes.

      I’ve taken a good amount of money off the table this summer by selling my rental property iVe owned since 2005, Right before the big crash. I feel good about it even though I may be early.

      I’m still long real estate, but just not as long. Reducing debt feels great, and reduce responsibility.

      See: https://www.financialsamurai.com/why-i-sold-my-rental-home/

      1. As you know, because you wrote a horror story article about my comments on my real estate results long ago, you live in an extreme coastal market blessed by fantastic gains limited supply and filled with moneyed buyers with top jobs and credit strongly desiring to buy. I am the sad case who moved to Las Vegas in 2004, leaving the Bay Area behind only to watch my new market peak a couple of years later then crash down 80% in some extreme cases and now 13 years later have recovered to perhaps a gain of 20% over 13 years on typical properties though I have some much worse. There is no comparison, you live in a world and write a blog about a different country and an alien people to me.

        Last night I noticed a number of tv ads from law firms about bankruptcy, short sales, and how they would represent you to your bank to ‘save your house’ getting either a principal reduction on a loan (by threatening bankruptcy) or cash for moving, an allowance for you to go on with life in a negotiated short sale. The ad claimed they can get a bank to give you moving money to give up your house and walk away from all the delinquent payments and your debt while the bank takes a huge loss on their mortgage but gets to move it off their unperforming book. A buyer comes in and buys at today’s price, the bank takes a huge loss, and you get some cash to get you out the door and on your way. An old story I’ve heard advertised many times in the 2008-2014 era. What struck me is that we are in 2017 and such ads are still bringing in business for law firms focusing on this. There are still many ‘owners’ who possibly haven’t made a single payment on their house in years, where the bank has opted to not foreclose because either they are backed up with more foreclosure inventory than they can handle for years or they are letting you house sit and pay utilities for them free for years while they hope for some recovery in value.

        In my case, the 2004 purchases of townhomes at $200K, bottomed at foreclosure prices of $40K around 2011, the project remains distressed, and I have noticed as of today prices in that project have recovered to a new recent year high of $170K. Still $30K loss after 13 years. I contrast this with your capital gain from which you took money off the table.

        In my case taking money off the table would mean selling at a loss (actually due to depreciation a taxable gain now), and 13 years later having less money than originally invested to use for later opportunities. Such opportunities one should not wish on their worst enemy.

        Again, different planet, different country, alien people. Please don’t mention crowdfunding. We strongly disagree on that, I understand the referral fees are probably lucrative but as you know I see it as a means to take easy money from people thousands of miles away who have too much and basically sell them a prospectus. I guess no different than investing in a start up which pays the founders well, tries for the best result, and if it blows up whoops sorry ‘we’ lost your money.

        Did I tell you that here in Vegas circa 2004 there were tons of mortgage brokers raising money for private financing of land buys for development, offering 12% returns, with loan to value never more than 50%. Safe, backed by first position trust deeds, who wouldn’t do that instead of a 5% CD? Stable, monthly returns. Of course the smartest people were the borrowers, because if things worked out great, everyone got paid, often the greedy lenders would be clamoring to lend again at 12% on the next deal. But of course when land prices crashed (95% drop in the case of vacant land), which no one thought possible, we learned that the loans weren’t worth the paper they were printed on. All had backups of personal guarantees from the developers too. Years of court efforts later, we learned that the borrower who has your money also has the power to use it to fight you in court and never pay you and he too can file BK or flee the country with his assets. Judgments are uncollectible. 100% losses of all principal made in these investments were common, sometimes more than 100% due to the legal costs. A few of the lenders I knew lost their entire net worths some more than that because they had levered to borrow at their good credit rates to lend at 12% and committed suicide rather than face their own bankruptcies. Yeah, I was there too. 100% losses of principal, 3x$50K loans for me, but no leverage and no suicide. 3 different borrowers, different projects, for diversification. It did no good when every project and every borrower went down. I have an extreme talent for being in the absolute worst place at the worst time. You seem to have the exact opposite talent for being in the best market and best place at exactly the right time. (Your Tahoe downturn was like having a knee scraped compared to the war like casualties I have seen.)

        The best laid plans of mice and men. Things can, and do, blow up in incredible and unpredicted ways.

        1. Hi Len,

          Would you be buying in LV now? My crowdfunding fund just bought a multi-unit property there and I’m shaking my head after such a huge run up in prices!

          Are we really in a different world though? You were just here 13 years ago. Would you have taken profits if you were me this summer in San Francisco?


          1. If I buy a SFH today I can earn perhaps 4.5% net if honest about my expenses repairs and vacancies, plus/minus any capital appreciation/depr. (A/C is a major repair and expense item here which you wouldn’t have in your rentals, it is used heavily, is expensive to service and repair, is classed a health/safety emergency when it breaks, and is way underestimated.) 20 years history here shows appreciation maybe 1-2% per year ignoring the huge disruption up and down in the boom bust. Really it hasn’t been more, and there is no constraint on further construction. At those returns, with the work required for me to keep a house rented, I am not interested in buying anything, it is too much hassle. Again the tenant pool is different than yours. People with stable jobs and lives have no problems buying their own house. And there is a troubled, eager to rent, tenant pool which you have to constantly work to avoid, more arrive continuously new to town because it tends to attract people with hopes and dreams and a history of problems. It’s a hassle. It isn’t MBAs and engineers moving to do creative work in corporate jobs needing to find a place to settle. It is a completely different pool of people. Often they are running away from something somewhere else, with hopes to come here for a fresh start a new job and new luck. What better place to hope for new good luck?

            If we are talking about buying a wreck, at a huge discount, and putting major repairs in, that is a different subject and more like a job, I’ve done it and managed it and it is work. Also there are 20 offers on every wreck because everyone has the same idea so I don’t compete there, I’m too lazy and others are willing to pay too much.

            Your fund bought MFH and I have nothing to base an opinion on, they are making a bet on future economy and average rent. Right now people seem to think the sports franchises, hockey and football, that are moving here mean a boom economy. I simply don’t get how that brings in so much money into the economy to matter. Yes, some rabid fans (most I think already live here) will pay $1000 to get a seat to watch a game. They will go eat in a restaurant drop bucks and tips on bar tabs and parties. So what? Is that going to generate enough new wealth to affect the average rent? What I want to see is a major company investing in an electronics/cyber business that hires 10K new employees, professionals, who need college degrees to do their jobs, have 401ks, stock options and do work with their minds and not their hands, and make $100K or more. I do not see that anywhere. Where would they find the 10K people, import them? We have one large university which offers engineering and hard science, but also offers a BA degree in “Beverage Management.” Yes, true. I see restaurants, bars, hotels, sports franchises, gaming, and tons of party related lower skilled jobs that earn a wage plus maybe tips. Some are management, some make large tips I acknowledge, but it’s not the kind of thing that truly drives appreciation.

            Your crowdfunding fund has to invest all the money it is raising to keep growing and earning fees. During the last bubble here that blew up I saw retail shopping projects, condo conversions that made no sense to me, and the reason had nothing to do with viability or market, it was that there was way too much money coming from outside of the state hot money needing to be parked in an investment. Money was everywhere. I guarantee investments will be found or manufactured to suck up all the funds raised, so that more money can be raised.

            One other thing. Imagine we have a downturn in the US economy. We are totally dependent on tourism, that is the economy. Vacations and party trips get canceled. It gets felt quickly. The economic base is too narrow.

            In the Bay Area you have finance, pharma, electronics, web based stuff, and everything else. When one is down maybe the other is up. We have adult recreation, everything is that sector.

            Would I have taken profits in SFO? I did in 2004 at a fraction of today’s prices. Had I not done that, I would have been itching again to do it every year since, terrified that a crash was around the corner. I doubt I would have been able to hold out until 2017 as you did. And I would have been way too scared to buy a rental like that in 2005 with such a huge price anyway. I can’t imagine finding tenants who can pay $9K a month.

            Different world? I’d guess everyone you know or interact with, including your tenants, all have advanced degrees in finance, law, engineering or some science. All make over $100K and work professional jobs. I’m thinking right now not a single neighbor of mine here, and not a single one of my tenants went to college. They are: masseuse, prison guard, section 8 single mom, security guard, secretary, baker working the night shift in bakery, counselor at school with unemployed ex-cop husband, retired city bus drivers. None of them pays more than $1400 a month in rent.

            1. Thanks for the insights. Really.

              I guess I wasn’t itching bc I lived in the house for 9.5 years, and had nowhere else I wanted to go.

              I had 5 tenants, each pay around $1,800 each to live in the house. Not too far away from $1,400, and their salaries were more like $70,000 – $100,000.

              Here’s the skinny on the latest LV Multi unit deal with a target 13.3% IRR, which I’m not a fan of. Let me know your thoughts.

              The RealtyShares DME fund invested $600,000 in a preferred equity investment in Vernazza Apartments, a 168-unit garden-style apartment complex in Las Vegas, NV, only 3.5 miles from the Las Vegas Strip, 4.5 miles from McCarren International Airport and 8 miles from downtown Las Vegas.

              Although technically a market rate property, residents in occupancy during the conversion maintain protected below market rents for a period of up to three years, and as of May 2017 only 54 of 168 units (~32%) had rolled over to market rate units.

              The Sponsor has successfully raised capital on the RealtyShares platform for three prior deals, and all payments for those investments are current. For Vernazza Apartments, the Sponsor is contributing $3.5mm of capital to the deal (100% of JV equity), putting its own money at risk before any losses would be incurred by RealtyShares. Additionally, the Sponsor is expected to set aside 28 months of preferred current payments in a RealtyShares controlled account.

  7. I find this hard to believe. Are there truly that many people in their 40’s and 50’s living over their means? You can make $100-$150k, save for retirement, pay a mortgage and for a car and still be comfortable. Instant gratification and keeping up with your neighbor is more rampant than I ever thought.

    I truly think one main reason for this is divorce. It sucks to be them. I retired at 63, my wife at 61 and we will be comfortable going forward.

    1. One observation I’ve made about broke people I work with making in that 100-150k range is the biggest portion of their budgets go towards debt. Student loans, car payments, and mortgages bury them. The second biggest is taxes. By the time they get down to their fun money, most of their income has been eaten up by those things so even though they make good money they feel broke constantly. Its crazy how much better financially they could be doing if they just went into frugal mode for 1 year right after college and hammered their student loans, and held off on buying a new fancy car for a couple years. I don’t think most people ever stop to think how paying so much interest servicing debt all their life means they’ll have so much less money to actually spend on things, and all they can think is they want things now so its worth it.

      I agree with the divorce as well. Sad as it sounds its a terrible idea these days to marry someone if their income, net worth, and outlook on saving/spending/investing isn’t the same as yours. If you happen to be a high income saver/investor and marry a lower income spender it means you get wrecked should you ever get divorced.

  8. I’m not surprised savings are so low. I work in a relatively high paying job where pretty much everyone in my department is making six figures, and quite a few of them are only saving just enough to get the company match. If the average person making good money like that is saving 10% or less I could only imagine people making less are saving significantly less, if anything at all.

    A lot of people are just total failures with finances. I have so many coworkers that the company we work for is their first really well paying job. Many of them have student loans and other debts…so you think they’d be like heck yeah…I’m making more money than I ever have…I’m going to hammer down my debts before I get used to spending more…instead many of them are just like heck yeah…I’m making more money than I ever have…time to go finance a fancy new car and start going out to expensive restaurants every weekend!

    Its crazy…its like they want to be debt slaves forever and don’t realize how much easier saving becomes when you aren’t dumping 1000+ a month into a car payment and student loans before you even pay any of your other living expenses. So many of them think I’m nuts for maxing my 401k, but, they don’t even get the after tax dollar cost of their student loans and car payments, bills which I don’t have, is relatively more expensive than the 18k pre-tax in a high tax bracket I dumped into my 401k this year.

    1. I was thinking about the reason for this, and perhaps it’s because they really love to work and they really love their jobs? Because I didn’t like my work and I didn’t like being away all day, as a result, I saved like a madman my entire career.

      1. I’d like to think that for their sake, but for some of them it seems like spending is a way to cope with holding on to a high paying job they hate. Ironically that just makes it so they’ll have to spend more years of their life there, especially the ones who factor overtime pay into their spending habits rather than saving it. The alternative they face is to take a pay cut but maybe find something they enjoy doing more…but then the big spenders end up miserable because they are broke all the time and can’t pay for the lifestyle they think they deserve.

        Makes me glad to be on the path to be one of the 1% who FIRE before 50 and avoid the whole debt slave consumerist life style that so many people get themselves trapped in.

  9. Hi Sam,

    The statistics are misleading. If the pollsters had asked how many people can comfortably retire at a certain age, rather than what year you phisically retired the numbers would look much better. I’m 46 years old and could comfortably retire now. However, since I own a profitable business and come and I go as I wish I choose to stay “working”. “A grand total of 3 hours this week ” For the purpose of this study I would not be retired. That doesn’t make much sense to me. Compare me to the retired guy who writes a blog, drives uber, watches the neighbors pets. Who sounds more retired to you?

    I love stats, but what I love even more is the authors perspective. Most of these pollsters have an agenda and phrase their questions in order to elicit the desired response.

    Thanks, Bill

  10. My Megacorp retired me at 55 in July of 2016 so that was not completely planned. I had planned to retire on my own terms April 2018.

    I’m a year into this and have considered part time work to fill some gaps in my day. It has been a big adjustment having someone give you back 50 hours a week.

    Fortunate to have a pension and 31 yrs of 401K savings and the buyout severance pkg. What I’ve found is there are the $12 an hour jobs or the all in full time jobs like I had (north of $100k a year). Not much “in-between” so to speak. Considering going the non-profit route with my cost accounting and IT Project Management background. Seems like I’m wasting my masters degree at times…Ha.

  11. Man, that first graphic isn’t what I’d expect at all. I think there would be a little more of a leaning towards people retiring before 55 than the ~4% there. Based on the other chart about % of households with little to no savings, it does fit that the amount of that subset that could retire would be another small group.

  12. I like the addition of the audio-“book” (audio-article? audio-post?). I hope to see it more in the future

  13. Subsaharan Dreamer

    Thank you FinancialSamurai for these action-demanding posts . Because of such, I have found myself with the stockbroker to buy some shares in a Utilities. And just this week I have registered for an IRA, I intend to save for my dream home for 10 years, before any thing else. These are not things typical of a 21 year in a Subsaharan Africa.
    Thanks FinancialSamurai for the life giving posts

    One Love.

  14. Chris @ Keep Thrifty

    I was also surprised to see the <50 number so low. I figured the FIRE movement had gotten around more. Then again, maybe it just means that chart will look drastically different in 10-15 years when all of us on track right now get there :)

  15. I think these figures are slim for a couple of reasons. First LACK of financial education. So many people don’t know about the power of compounding how saving more early and consistently can help. And then trying to stay healthy. If you stay healthy, your expenses for healthcare should stay low throughout working years and increase but not by a heck of a whole lot in retirement years hopefully :-)

  16. Interesting statistics. My parents are both right there with the 51%. My grandparents, however, were ‘forced’ to work longer. Mentality was quite different back in the day, they didn’t make saving money a priority, and neither did most elderly people I know.

    1. Professional voice actor that charges $500 per reading. Not bad huh? Hope readers and listeners appreciate the money and time spent on offering free material.

      Tell me about yourself.

        1. But I’m trying to learn how to tell/get other people to do something so I don’t have to do anything. It’s something I’ve noticed time and time again that it’s much easier to tell someone to do something than to do anything yourself.

          What’s your story?

          You don’t like the voice?

  17. Money Miser

    It’s kind of staggering that less than 1% of retirees are below 50. I wonder what the figure is for below 40? I knew the FIRE community was small, but damn…Hey, at least this means we will be in the top 1%, which I know FS likes to preach.

  18. My parents are the most wonderful people but saving was never their strong suit. I am grateful everyday that they have a paid off house and are going to be able to retire on the generous military pension and excellent military healthcare of my home country.

  19. WeWantTheFIRE

    “The key to surviving retirement on a low income is owning a home debt free and having sufficient medical coverage. With health and living expenses taken care of, surviving off just $2,000 a month, while challenging, is doable.”

    Health expenses for me are the biggest elephant in the room. I’m saving at a rate that could easily put me at FIRE at 50 (or sooner based on market returns) with current saving, but I’m 32, and healthy (no prescriptions even!). I’d love for you to do a post or point me to some that shows good guidance on what to plan for healthcare costs for FIRE until you can get medicare!

  20. I think we’re going to look back and realize the failure 401ks and the like are for most people. Pensions just provided a level of security in retirement that a 401k can’t (for most people). My mother will retire soon, but she also has a pension that nearly doubles her social security income. Between those two, she can cover her base expenses and then some.

    Some sort of hybrid between the two would a step in the right direction. Strong company matches with forced savings that is in a professionally managed cash-balance plan perhaps. Still portable, but without the need for HR to try to pick a list of mutual funds and employees to try to determine their own asset allocations. Most corporate pension plans actually do a pretty nice job on the investing front.

    That being said, I love my 401k plan!

  21. My parents retired in their 50s, and both got part-time jobs just for something to do. Between their jobs, pension, and social security (don’t wait to take it – even if you don’t need it you can then invest your checks), they haven’t really even touched their retirement accounts yet.

    I’m 35 and working to be done by 40. I should have all debts paid off by that point, as for income I already have rental properties, I could work part-time…I just need the 3rd leg of my stool. I’m not sure what that will be yet, but I’m blogging and working on some children’s stories – which even if they never earn me any money at least allow me to feel creative!

  22. Neat post! The stats on savings for retirement are crazy. $17K is not nearly enough! I guess it is good that people have flexibility to supplement their income with part time work, but overall it sounds like they should be reading more Financial Samurai!

  23. 51 percent retire before the government stated retirement age. That’s pretty good. It’s better than I would’ve have expected.

  24. I am curious to see what will happen in the next decade or two with people that retire but have only $17k in their accounts? Can they rely in social security?
    I am from Germany and here you can basically rely on social security if you have to. It is not an easy lifestyle, nor is it well regarded in the country if you have to life like that, but the state definitely doesn’t let you life under a bridge.
    So is there any “back up” plan for those people in the States?

    Kind regards

  25. Woohoo! I’m in the 1% finally. Being part time self employed is awesome and I love it. I’m not sure if I’d do it until I die, though. Someday, I’ll probably stop working completely. Maybe when I’m 60. That seems like a good time to take it easy. Older relatives will need a lot of help by then.

    BTW, I read that the average Uber driver hardly make any money. Something like $200/month. I guess it depends on how much time you put into it. I hate traffic jam so I don’t think I can be a driver.

    1. I gave over 500 rides and during the high point, I could easily make over $1,000/week. And if you added in driver referral income, it could have been over $2,000/week, but I decided it wasn’t for me a year later. It was an interesting experience, but not something I became passionate about.

      1. Uber payments vary widely by location. One Uber driver told me he drove from LA to SF, stayed with friends for a week, and made double what he could have made driving the same amount of time in LA.

  26. I retire from the military in May. With the retirement, disability, and my rental property income, I will FIRE for good 2 years later by 50. Need those 2 additional years of contract work to pay off my rental properties and personal home. Believe me, I am very grateful for it, but free health insurance and 50% of your base pay for the rest of your life the day you exit is probably too generous. To be honest, I have a little anxiety. I have been so driven my whole life, I don’t know what to expect when there is nothing I “have” to do. I will continue to acquire 2-3 more rental properties per year because I have to do something with the extra money, and intend travel, but learning to be “mentally retired” worries me. I started a blog per Sam’s recommendations, and think it will provide a lot of enjoyment. Anyone have the same experience? Is this normal?

    1. Paper Tiger

      Brad, I think it is entirely normal to feel what you are feeling regarding a transition to retirement. You can’t just go from “Turbo Brad” on Friday to “Retired Brad” on Monday and not feel a huge hole in your routine and mental attitude. I’ve personally been in this transition for 2 years and just now starting to figure some things out and beginning to get comfortable with my “new normal.”

      I was laid off 2 years ago after working for 36 years, mostly in medical device sales management. I started a business with some former colleagues in a related field. Typical of startup mode, there can be a lot of downtime in between flurries of activity. This has allowed me to ease into a transition from still being engaged at work but also have more time to fill my days with non-work activities.

      I’m focusing on five dimensions of my life to achieve a balance that I have never had: Physical, Spiritual, Emotional, Financial and Relational. I won’t bore you with the details but the essence is to improve in all areas and to maintain a good balance among all of the dimensions. Working at this balance helps fill my days and also helps with the mental transition to my new life. I’m also thinking about a blog to document this journey with the intent of helping others make this same transition.

      Keep the faith brother and continue to plow forward. You are on the right path!

      1. Thanks for the great reply and words of encouragement. I agree with focusing on life balance. I blog about those 4 areas of life (I include finance in body instead of its own area) but they all overlap, i.e. mental mindset about money and spiritual responsibility with it. Writing helps me clarify my thoughts. I am glad you moved right on after the layoff. That had to be tough. May God bless your endeavors.

  27. I retiered when i was 40 from medical device. But it didn’t last a year. After 3 months on amazing tropical island i was bored. So i enrolled in rigorous language school with idea of joing state department. Most likely i would have been initially in Iraq or worse so i decided instead to move to sf in heathcare management where i work 9 months of the year. I was too young to retiere so i opted for semi-retierment. Low stress with time off in area we can enjoy it whille working on my side gigs. Early retierment is an early death unless you mean working on other things for yourself.

    1. What island were you on? What language do you study? I have similar idea because I am studying English at a language school in San Francisco.

  28. Adam and Jane

    I am surprised that less than 1% of ppl retire before 50 but if I think about it then it makes sense. Like someone already said, americans are taught to consume. No one in our family retired in their 50’s except 2 ppl for health reasons. Back then they live off CD interest, rental incomes and income from their spouses.

    So far 6 of our elders retired at age 62 to collect SS. 5 of them have rental incomes. 1 has a pension, 401K and rental income. 1 has muni bond income and 401K.

    My sister-in-laws have to work until 65 to get medicare because they can’t afford health care on their own.

    I think most ppl in our family and co-workers are not aware of FIRE and just planned to work until age 62-65.

    I am the oldest at age 53 of all of the cousins (1st gen americans). My wife and I are the only ones in our generation to have pensions and probably the only couple that saved min of 50% of our salaries. In the last several years we saved 85% of our incomes to prepare for laid offs. Most ppl in our family are spenders. Since age 30, I always “wanted” to retire at age 43 but I failed. I was depending on 5% bank CDs and did not even consider the cost of health care back then. CD rates has been so low for over a decade. I always knew that working to 55 to get our pensions and company medical health care were a given. I am afraid of the stock market and I did not want to manage rentals. My dad and uncles lost money in the market and I saw how much work my dad had with tenants. At the time, I had no other way to generate passive income.

    My wife and I were only allowed to put 10-15% into our 401Ks but due to HCE, we were never able to max out because our salaries were not high enough. As a result, our 401Ks grew slowly in a fixed interest no risk account. At age 60, we can withdraw 80K of combined interest. If interest rate is 0% then our 401Ks can last 30 years if we draw down principle. My wife was laid off in 2016 at age 52 and she is the youngest retiree in the family with a 52K pension an 8K yearly for company medical.

    At age 45 in 2010, we heard rumours of re-orgs and laid offs. As a result, we dumped our life’s savings to buy 4-5% individual municipal bonds. We became FI by age 49 in 2014. We now get 87K tax free from muni bonds each year. I will retire in 2 years at age 55 so that I can double my pension to 70K and to get 8K for company medical. We want to live in Hawaii part time and take world cruises and that takes lots of money so I want to work til 55 to increase my pension.

    Our munis, pensions, and interest from 401Ks will generate passive income 3x our expenses. It seems that most ppl can’t retire before 62 because they don’t have enough passive income to bridge them to 62-65. They depend on Social Security. Many will retire at 65 so that they can get medicare since they can’t afford to pay health care out of pocket.

    I spoke to two millenials at work and they only put in 4-5% of their salaries into their 401K just to get the 4% company matching. I managed to convinced one recently to increase it to 15% even though the max is 25% for their salaries under 143K. This year in 2017 I am only allowed to put 11% max in my 401K. Last year I was only allowed to a max of 10% in my 401K.

    Ever since 2010, I shared my plans to buy 4-5% munis due to rumours of laid offs to generate passive income with 34 co-workers and family members. I am surprised that not one of them bought any at the time. They just kept their money in low .15% interest accounts. In 2012, there were laid offs and still no co-workers prepared to generate passive income or reduce expenses. In 2016, there were more laid offs and a few co-workers that were laid off asked me to show them how to buy munis. They bought some munis but not enough to make a financial difference in their life. Only one co-worker that was also laid off bought enough munis to supplement his small pension and retired at age 58. Finally, one family member age 62 asked me last week in Sept 2017 to help her buy munis. Her hubby gave her the OK buy munis since they are tired of earning nothing in the regular savings accounts.

    Like Sam said, ppl who dont take any action are doing OK.


    1. Can you please tell me how to buy bonds? I searched for them on Fidelity, but I don’t know what criteria to use. I would love to get 4-5%. Thank you!

      1. Adam and Jane


        You need to have a Fidelity account in order to search.

        What is your state so that I can test the search for you in Fidelity? I can then paste the search URL for your state here in a reply for you.

        The prices of muni bond are quite expensive now. When we bought 5% NY muni bonds in 2010 for $108 and YTW was 3.5%. CD rates were less than 1% so 3.5% yield to worst tax free is like a 5% to me. Thru the years I was lucky to buy some 5% from $99 to $104. Over a year ago I bought over 650K of 4% individual muni bonds around PAR ($100). This days I try to not pay high premiums for a bond. Try to pay close to par as possible.

        The Fidelity muni bond search is fiddly. Meaning that sometimes you enter the info and it returns no bonds. I think the maturity date selection is the fiddly part. Trying different values until it works or call Fidelity’s help line. I do a search for a min YTW of 3% in descending order to see the highest yields at the top of the list. Click on the YTW column on the search results page to sort them. Once you get the search working save it in Fidelity and book mark it in your browser! I use the browser book mark everyday to check for new listing of munis.

        Also, in the Fidelity muni bond search screen
        -Set YTW to min 3
        -Leave YTW set to max value(default)
        -Select your State
        -click on show more criterias.
        -Set Sinking Fund Protection to All. It defaults to Yes which will display a lot less muni bonds. Sinking just means that the bond issuer will start paying back several years before the maturity date. Sinking sounds bad but it is not.
        -Set Zero Coupon to No if you are not interested in them.

        As you make these changes the number of munis changes in the “See ### CUSIPs” button at the bottom of the screen.

        See my comments on my muni bond criterias.

        Let me know if you have any additional questions.


  29. Ten Bucks a Week

    I bet if you polled your readers we’d be way better off than the retiree. As for me I hope to be finished by the time I’m 40. I’m definitely scared for the future where all the underfunding by the government comes due.

  30. Most of the 80+ year olds that I know are super frugal. It is just in their DNA.

    Both of my grandparents have lived in same house for 50+ years, drive used cars, shop at Aldi, vacation is driving to the mountains, their clothes are older than me, going out to eat is getting a hot dog at their favorite diner.

  31. Doesn’t surprise me at all. I had a father who suggested a ROTH IRA which I opened when I was 21 and have been kicking into the MAX for over 20 years at this point, not always invested in the wisest funds. The 401k’s weren’t maxed since co-contributions equaled to 15% or so like the advice at the time said so time and opportunity lost to youth and the lack of easy good information as opposed to today.

    Not everyone had the full picture back then (for me, in the 90s) and it was blogs such as yours that got me more serous and Bogleheads which helped a lot with asset allocation, etc that recently Ive gotten to maxing out and structuring a smarter than not portfolio. While everyone is a genius in a bull market like we’ve had, I could have missed the boat or given up returns I might not have captured were I still in expensive or bad funds.

    Other than the earnings issues of todays youth, there is generally much less of an ‘I didn’t know’ excuse out there. Unlike the days of yore, you almost cant miss it. Not like up 40+ did back in the day. Some were smarter than others, but the fact that more didn’t retire sooner should come as no surprise to anyone.

  32. I referenced that same first chart a while back that shows that less than 1% of Americans retire before age 50. It really kind of surprised me. Sure, we all know that the FIRE movement isn’t the norm, but I expected the number to be a little higher.

    We’re still deciding which route we’ll be taking, but if we stay here in the US and leave things as they are, we’ll be able to FIRE by the time I’m 49… just making the under-50 cut! :-)

    We don’t have very high incomes, but over the past decade, we’ve focused on doing exactly what you said – maxing out the 401(k)s, IRAs, and looking for other streams of income (rental property).

    Maybe just as important though is that we live a very modest lifestyle and don’t spend money on crap… I think that’s what ends up tripping up most folks.

    — Jim

  33. It appears to me that people just don’t focus on what they need to do to retire. Maybe they think the government will just look after them when they get to retirement age. Our website talks about building retirement income through a focus on gaining and growing a decent dividend income but it can also be done through other assets such as real estate (which you talk about a lot on this site), bonds, royalties, private businesses under management etc etc. The starting block is definitely a highly disciplined savings habit with the proceeds saved going into purchasing high quality assets. Compounding (and patience) will take care of the rest. If only it was taught in high school or even college!

  34. Retirement is a number – not an age. Very interesting numbers though… unfortunately, many won’t be able to maintain their current lifestyle once they stop working.

    Sam – reviewing a few other articles you’ve posted and the studies you’ve referenced, it’s interesting that not even tax-advantaged accounts – let alone having multiple sources of income and/or investments in taxable accounts – are fully utilized.

    Perhaps it shouldn’t be suprising considering the income-to-debt and savings ratios in the studies.

    1. An economist by the name of Robert Thaler won the Nobel Prize in Economic Sciences recently for his work in making pre-tax retirement plans auto enrolled for employees.

      Makes sense. Help people help themselves, b/c people generally don’t.

      Look at Singapore and Australia. Their citizens are very wealth due to the government forcing them to save for their future.

  35. Mr. Freaky Frugal

    I FIREd at 52 and it still aggravates me that I didn’t pull it off before 50. Oh well.

    I’m scared that we’re going to eventually see dirt poor retirees living on the street. If a retiree

    – “Retired” because of health reasons
    – Has no pension except Social Security
    – Has no savings for whatever reason

    then what the heck are they going to do? I guess one solution is that poor retirees can move to a cheaper country in Asia or South America to stretch their limited resources.

    1. I think youre right…we will see a retirement crisis of epic proportions as retirement is now a “do it yourself” deal and most are not equipped or disciplined enough to do it for themselves. Is going to be very sad to see unfold, I hope I’m wrong….

  36. Physician on FIRE

    I wonder how many early retirees would be considered to be retired by the U.S. Census Bureau? As you point out, you left full time work at 34, but have never stopped working. The same is true to at least some extent for most who have pulled the early retirement trigger.

    I’m not a deputy of the IRP, but I can’t help but wonder if people like you (and eventually me) will be considered retired for purposes of the survey.


    1. Really could be just semantics. But, the research talks about those who are not in the full-time workforce. So I suspect, with increased mobility thanks to technology, and arise and freelance work, the percentage of early retirees should Only increase.

  37. I’m honestly not all that surprised at the outcomes as I know plenty of real world retirees who only have their pensions. One can only hope that the push to have people auto setup with 401k contributions when they join a company will have a long term positive impact on the results.

  38. An economy like United States which is primarily driven by consumerism, cannot be expected to have people saving money to retire. The purpose of life here is to acquire material things. In such a scenario, retirement savings would have to come from pension etc. With pension no longer available, there is going to be a period where people are going to work even longer (possibly 70) to sustain their lifestyles. Hopefully the FIRE movement does become more widespread and takes off in a good way.

  39. Wow great statistics, I wonder what they are for Canadians. I am also surprised that 1% of Americans have retired under the age of 50 though I do agree with you, people self-reporting whether they are retired or not can skew the numbers. Perhaps the numbers would be different if they used alternate terminology, such as ‘financial independence’ because I do feel that most people who have done FIRE are working on different projects (such as blogging) but just not their previous full-time gig.

  40. Jeff @ Maximum Cents

    The FIRE movement has not taken off. There are a very small number of people who are FIRE. It’s a mistake to think that since maybe 1,000 people who blog about it are FIRE translates to real people. Maybe it’s also because you live in San Francisco where more people are wealthy but it’s not like that everywhere in the US. Most people who retire in their 60’s don’t even have enough money without Social Security.

  41. As an immigrant, my parents could not prepare much for their retirement, and all they have is Social Security. Without the financial support from myself, they won’t be able to survive. I am more than happy to support my parents but I wish they did some retirement savings.

    I am under 40 but I do have pension. As you mentioned, almost no companies provide pension in private sector, but government jobs still do. My brother is about to complete PhD and I am encouraging him to get a job in state university so that he can have pension as well.

    As long as I stick to this job for at least two decades and pay off my small condo, I hope pension + social security will be more than enough for a comfortable retirement.

    1. Oh man, props to you if you can last for 20 years! After 10 years, I felt my soul start to get sucked away and had to go out.

      You definitely will be absolutely fine if you stick to your plan! Definitely try and do something on the side if you can. You won’t regret it!

      1. I am a big fan of your blog and you are my biggest challenger (I usually start my day with visiting your blog and a cup of coffee.) Regarding my side gig, I obtained a real estate license and started a business and also tried Uber after reading your posts. (I stopped after getting the sign up bonus though)

        I am a Pharmacist, and my job can be very stressful sometimes, but overall, I like what I do and as long as I do what I am supposed to do, I am very safe from being laid off compared to other industries.

        Anyways, please keep up the great work and I am keenly waiting for your comments/analysis on Trump tax plan.

    2. In the old days when women didn’t get an education and stayed at home to raise the family. If something happened to the man and he didn’t prepare to take care of his family should he pass early, the wife was left without her having an education where they could get a decent job to support herself. There are many women in this position now. So although your parents are immigrants, women who lived here all their lives are in the same position because of these bad societal norms. Hillary mentioned this early on in her run for president.

  42. I totally agree with the stats. That $17k average matches up to my parents (with $30K between the two of them) and an IRA. The rest they’ll have to depend on social security. They even want to take it early so they can have it and they don’t believe me when I say if you delay it a bit (i.e. I flip their bill for now) you can get more money. Financial ignorance is strong in those two.

  43. Posts like this one are why I enjoy Financial Samurai so much. Premise, setup, conclusion. Lots of data to evaluate. Thoughtful presentation. And something that all the readers of PF blogs are interested in, and can (hopefully) apply to their own situations.

    One thought to share on this…families, and the definition, are becoming a lot more fluid than in the past. The risk/cost of leaving a family is a lot less, when one partner lose a job, spends more than they contribute, etc. The 1% that are able to retire by 50 have planned well, and either make so much money that they can afford multiple families/children, or they stay with the partner and keep solvent.

    1. Thanks JayCeezy. My editor, who recommended I try writing shorter posts (probably b/c he was tired of editing long ones), was giving me a hard time for not having a fuller section on what to do. But I decided to publish this 600 word post anyway like a rebel that I am. :)

      Raising a child is way more expensive than I thought, probably because I underestimated how much I want for him. Suddenly, money is no object, which is why universities can get away with gang buster tuition hikes.

      Posts like this one actually help remind me of other posts I’ve written that I will re-publish or re-highlight.

      Related: The Best States In America To Retire

      1. I’m curious as to what specifically is more expensive that you have underestimated with raising a child.

        I actually feel the opposite.

        1. Safety, transportation, education, food, housing. The more you care for your child, the more you will spend e.g. you were happy renting a crappy one bedroom apartment, but because you want your child to have a yard to play in, you go and buy a house with a flat yard or because you care about your child more than you care about money, you are willing to give up your career for several years, thereby costing you money.

          Do you not agree with the correlation?

            1. It actually does. Parents who care more are willing to spend more for education, food quality, learning toys, lessons, etc.

              Parents who care more work harder before having a kid to have the financial means to provide the best for their kids.

            2. Spending more money does not show that you care more for your child. That is just ridiculous. Spending time with them and taking in interest in how they turn out is free. Some people have the means to provide more stuff or perhaps better opportunities, but this says nothing about who cares more for a child.

            3. The author is trying to say that because you care for your child and want to give them the absolute best in life, if given the financial means, you will always spend more. For example, I retired at 39 and because we are financially sound I spend $30,000 per year for my son’s grade school education. (And I only expect it to increase) It doesn’t mean I love my son more than my brother, who spends approx. $3k per year on his daughter’s grade school eduction. We both spend to our means on our children.

          1. Of course there’s a correlation that spending goes up when you have a child.

            You need as much safety as a child does.
            Not sure what extra transportation costs there are that would be surprising?
            You’re a ways off from college costs, so saving a little now goes a long ways. If day care costs are higher than you thought, that speaks to some serious lack of research prior to having a kid.
            Food has had the least impact on me (granted we didn’t need formula). The kid eats what we eat at home and day care provides food during the week.
            I thought you had a nice house already (not a crappy 1 bedroom apartment)?

            1. Regarding college, how much did you pay for and save for your child’s college given you are saying I’m way off. What do you thin my expectations for college tuition that are and what should they be in 18 years?

              The correlation I’m asking is regards to how much you care for your child, not a correlation with having a child an extra cost, because that is obvious.

              There are some parents out there who actually go back to work within months after having a child bc they care more about work, than spending time with their baby, even though they can afford to take a break. The less you care, the less your child costs.

            2. What I meant by “a ways off” was timeline, not value. i.e. College won’t start for another 18 years, so you have time to save small amounts now.

              My wife went back to work after 4 months and we sent the kid to day care. There we know the kid is getting a more structured day with set “lesson’ plans. It would take a lot of commitment to do this yourself at home, and may even be more stressful then the office! Doesn’t mean I don’t care about em.

              1. Got it. So in other words, people who are stressing about paying for college tuition, and the student debt levels that are constantly being reported is veing overblown? This would be a good post if you would care to elaborate.

                Lesson plans at 4 months old? Can you share what type of lessons they are teaching a four-month-old? I’d like to try those at home.

                Yes, taking care of the baby is a lot of commitment that’s for sure. You and your wife don’t feel even a little bit bad for going to work while your child is in daycare? I guess it is a different system in Asia and Europe where there is a longer parental leave culture. I start to feel terrible after being away from the house for more than five hours.

            3. We are expecting our first child any day.
              We have decided after my wife’s 6 week maternity leave, I will stay home for two weeks.
              After this, we will begin childcare. I don’t feel the least bit bad about this. I was in daycare from a young age and do not feel it had any adverse consequences. I certainly never felt any lack of love or attention.
              We are taking our financial future seriously, and losing one of our incomes doesn’t fit into our plan. This does not mean we don’t care as much about our child. In fact, the income we will make in the next 10 years will have a significant impact on our child’s future in many different ways. Whether or not we are home all day or 16 hours a day will not have terrible effects on their future.

            4. Unfortunately I cannot do too much research on such financial topics, but it would be interesting to know how much 529 money (or any money earmarked for college) all the students overloaded wth student loan debt had/have.

              Were 529 plans available or understood 18-23 years ago when students parents could have started saving?

              how do we think those numbers will compare to kids entering college 18 years from now?

              1. I’d love to know the answer. Feel free to do so and let me know what you fine. I’m sure you have the ability to find out the information.

                Please share why do you think paying for college is no big deal for most people despite massive tuition inflation. Thanks

            5. Didn’t say it was no big deal. Only mentioned saving early.

              Have they stopped giving out scholarships and grants? That’s free money. But that occurs just before college starts. So if the parents start 18-21 years ahead of time, saving small amounts over time will help fill the gap.
              There’s usually a discount for attending instate colleges.
              You don’t need to attend a high profile university to get a good/ high paying job.

              It would be interesting to see the demographic of those with high student loans.
              Did they get scholarships/grants?
              Did they stay in state?
              Did parents assist in any way (i.e. 529 or equivalent)?
              Were they unaware of the costs? If so, why?

              1. Wonderful information. Why do you think there is such a huge student debt burden? This is an important question to answer.

                Are you counting on your child to get scholarships because of their performance? What type of academics, sports and skills are you focusing on?

                I thought you were writing from the perspective that you already paid for your kid’s college and it was less than expected. Or are you just making a forecast that everything will be affordable?

                You may like this post: https://www.financialsamurai.com/average-student-loan-debt-is-at-a-record-high-no-big-deal/

            6. Are you a new parent who is saying he is perfect and has also perfectly forecasted your child’s future cost?

              If so, you’re being seriously delusional. Stop judging others. You have no idea what Sam budgeted.

              Look, you don’t have to feel too guilty that both you and your wife work and don’t see your child all day and let someone else take care of him or her. Most Americans neglect their children that way because they haven’t properly saved and invested before having a family. At least many families have one spouse stay at home, unlike your family.

              Just know you are in for a negative surprise with your attitude. Your kid will likely be very average just like you. Be real true to yourself. If you earn an average income, live in an average town, have an average net worth, etc, what makes you think your kid will be special?

            7. Lucy, yikes! You start off by saying ‘stop judging others’ and the rest of your post is judging me and my kid. Hmm.

              You jumped from me advocating saving early in small amounts so by the time my kid makes the decision to go to college or not, their debt burden won’t be as great, which apparently is not the right attitude according to you, to questioning whether my kid is special despite my wife and I only being assumed to be very average.

              I would ask how you connect the dots, but JUDGING by your post, I don’t think much thought was put into it.

          2. “Your kid will likely be very average just like you. Be real true to yourself. If you earn an average income, live in an average town, have an average net worth, etc, what makes you think your kid will be special?”


            Are you serious? Comments like you made above just make you look very simple and close minded. This country is full of very successful and intelligent people who actually grew up in average or below average towns, with parents who had low incomes.

            You should pay more attention to what is going on or get out of your little bubble and look around. I see lots of loving families with successful children who have little in the way of material possessions or net worth. They are able to make it work because they don’t need money to show that they care. They just care.

            There is a Nobel Prize winner in medicine who grew up in a very below average town in America, and also received his education at very average universities. He is doing just fine and I would say he is pretty special.

  44. Husband and I know this firsthand: he retired, at age 60, two years ago. Would you be interested in a guest column on how we’re doing it? (And no, we don’t have a bazillion dollars in 401Ks.)

  45. It still amazes me that people have so little in retirement savings. These are the same people driving around in leased BMWs… Hopefully most of them have an emergency fund that isn’t reflected in those numbers.

    1. In the USA: With a total leasing volume of about 4 million vehicles per year and the average lease running 3 years, we are talking about at most 12 million households in ALL leased vehicles (or roughly 10% of households assuming each leased vehicle only goes to one household and no household has more than one lease). Luxury would be a much smaller percentage of total leases. So perhaps you were just being tongue in cheek, but clearly it isn’t because the people are dummies spending all their money on leased BMWs. Unless you will next posit that all people over 65 who don’t have retirement money also have a lease (and make up essentially all leases). Both conjectures would not be true, however.

      1. Myfiinthesky

        Someone’s 13 months into a three series lease and starting to regret it… ;)

        “BMW lease” was meant as a placeholder for someone living above their means. But thanks for the research.

    2. Philip Edwards

      What are you Talking about ? Who’s driving expensive leased cars. The folks that don’t have anything saved are the working class backbone of America. Only a small percentage of wage earners are employed by companies that generate huge profits. 80% or more are employed by companies that take money out of there pay to cover med expenses etc. A pay raise ? How far do you think 3 cents per hour is going to help. Apparently you are so far from reality you think everyone is employed by companies like the one you work for( NOT ). I haven’t even mentioned the people with minimum pay jobs and dependents to support. Let me ask you a question if a eighteen year old male works at McDonald’s untill he’s 23 where do you think he goes for his next employment ? I’ll answer that for you (Burger King) For ten cents more per hour, where else would he go. At 23 he has other issues , he’s liable for support for the next eighteen years , his girlfriend of three years is pregnant. Let’s calculate what his worth will be at 65? minus 100k

  46. Andreaus @ The Blue Pants Budget

    I’m not surprised that few people retired before the age of 50. There are a lot of things to consider including their wages, the cost of healthcare, and the lifestyle they plan to have in retirement. My biggest concern with early retirement is forecasting for the cost of medical care, which seems very hard to do.

    Growing up I worked at a grocery store where an older man would scrape gum off of the doors, while down on his knees. I’m not sure if he was doing this by choice or needed the money. Regardless of what age I choose to retire, I want to do so comfortably, so I’m putting in a ton of work now.

    1. It’s great you were putting in the hard work now. You will not regret it.

      In terms of medical costs, just model in about $600 a month in premiums for a gold plan that goes up about 10% a year for the next 50 years.

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