Are you looking for a 401(k) savings guide? This post will go through how much I think you should have in your 401(k) by age in order to have a comfortable retirement in your 60s and beyond. My goal is for all of you to become 401(k) millionaires.
Unfortunately, the 401(k) is one of the most woefully light retirement instruments ever invented. The maximum amount you can contribute is $22,500 for 2023, up from $20,500 in 2022.
A 401(k) is part of your new three-legged retirement stool. The other two legs include your after-tax investment accounts and your side hustles. In other words, it’s up to all of us to take care of our own retirement needs and not depend on anything else.
Although the 401(k) pales in comparison to a nicely funded pension, even more disappointing than the 401(k) is the IRA. With the IRA retirement plan, you can only contribute $6,500 in pre-tax dollars. Further, you can only contribute if you make under $76,000 a year as an individual and $125,000 as a married couple. What about the rest of us?
Meanwhile, you have to make less than $140,000 a year as a single person or $208,000 as a married couple for the privilege of contributing the maximum $6,500 in after- tax dollars to a Roth IRA. I do not recommend doing this before maxing out your 401(k).
Give me a pension that pays 70% of my last year’s salary for the rest of my life over a 401k or IRA any time! At least with the 401(k), anybody can contribute.
Average 401(k) Retirement Balances
Based on Fidelity’s 2020 study, here are the average retirement balances for the IRA, 401(k), and 403(b). Expect the balances to be about the same for 2023 after a strong 2021 and a poor 2022.
- The average IRA balance was $111,500, a 13% increase from last quarter. It is slightly higher than the average balance of $110,400 in 2020.
- The average 401(k) balance increased to $104,400 in Q22020, a 14% increase from Q1 but down 2% from a year ago. For 4Q2020, the average 401(k) balance rose to roughly $120,000.
- Average 403(b) account balance increased to $91,100. This is an increase of 17% from last quarter and up 3% from a year ago.
Based on Fidelity’s latest 2022 report, the average 401(k) balance is $121,700 as of 1Q 2022. Here’s a more filtered breakdown of the average 401(k) balance by age range in 2022.
- Age 20-29: $14,600
- Age 30-39: $51,200
- Age 40-49: $120,200
- Age 50-59: $206,100
According to Vanguard, another money management giant, the average participant 401(k) account balance at Vanguard was $112,572 at the end of 2022, down 20% from the close of 2021.
The median 401(k) balance at Vanguard was $27,376 at the end of 2022, an annual drop of 23%.
Hardship withdrawals ticked up slightly, but remain a low share of all participant activity at 2.8%.
The Average 401(k) Balance By Age
Let’s focus on the 401(k) and what people should have in their 401(k) by age. The entire goal is to accumulate enough money in your 401(k) and other retirement accounts to eventually live financially free.
The average 401(k) balance at the the end of 2022 is somewhere around $112,000 – $120,000. Therefore, what should the 401(k) savings by age be today?
Given the median age in America is about 36 years old, the average 36-year-old should have a 401(k) balance of around $121,700. Unfortunately, $121,700 is still pretty low.
As an educated reader who is logical and believes saving for retirement is a must, I’ve proposed a 401(k) savings by age recommendation table that shows how much each person should have s(a)ved in their 401k at age 25, 30, 35, 40, 45, 50, 55, 60, and 65. The amounts are much greater than the average 401k savings by age in America.
We stop at 65 because you are allowed to start withdrawing penalty free from your 401(k) at age 59 1/2. Meanwhile, I pray to goodness you don’t have to work much past 65. By age 65, you will have had 40+ years to save and investment already!
401k Savings By Age: How Much You Should Have
To determine how much you should have saved in your 401k by age, I’ve come with some assumptions that have encapsulated in a chart below.
The assumptions for the below chart are as follows:
- Low End column accounts for lower maximum contribution amounts available to savers above 45.
- Mid End column accounts for lower maximum contribution amounts available to savers below 45.
- High End column accounts for savers who are under the age of 25. After the first year, one maximizes their contribution every year to their 401k plan without failure.
- Average starting working age is 22. But you can follow the number of years working as a different guideline if you graduate later or earlier.
- $18,000 is used as the conservative base case maximum contribution amount for one’s entire working life.
- No after-tax income contribution, although more power to you if you have the disposable income to do so.
- The rate of return assumptions are between 0% – 10%.
- Company match assumption is between 0% – 100% of employee contribution. $61,000 is the total 401k contribution for 2022. But in 2023, the total 401(k) contribution between employee ($22,500) and employer ($43,500) is $66,000. Hence, find yourself a good employer!
- The Low, Mid, and High columns should successfully encapsulate about 80% of all 401K contributors who max out their contributions each year. There will be those with less, and those which much greater balances thanks to higher returns.
- You are logical and not a knucklehead. Just by searching this topic, you are taking ownership of your retirement and are thinking ahead with an action plan.
Financial Samurai 401(k) Savings By Age Guide
Here is my 401(k) savings targets by age.
From the results, we can see that even after 38 years of consistent saving, you’ll only have around $1,000,000 to $5,000,000 in your 401k in a realistic cycle of bull and bear markets. In other words, I believe everybody should become 401(k) millionaires by 60.
If you’re just starting your 401(k) savings journey, you could get lucky and achieve the high end column with consistent 8%+ annual growth and company profit sharing after 38 years. After all, the maximum 401(k) contributions will be much higher over the next 38 years than the previous 38 years.
But it’s most likely that most people reading this article should follow the middle-to-low end columns as a 401(k) savings guide. The median age in America is roughly 36. Meanwhile, the median age of a Financial Samurai reader is closer to 38.
Investing Matters Because Inflation Matters
Let’s say you live for 25 years after retiring at 60. You only get to live on $40,000 – $100,000 a year on the low-to-mid end. Sounds feasible in today’s dollars, but not so much in future dollars due to inflation.
If goodness forbid you live for 35 years after retiring at 60, then you can only live off of $28,571 – $71,000. If we use a 2% inflation rate to calculate what $1,000,000 – $5,000,000 is worth today, its only worth about $5500,000 – $2,355,000.
We know that due to inflation, a dollar today will not go as far as a dollar 30+ years from now. Private university tuition will probably cost over $100,000 a year in 20 years. That is ridiculous since education is now free thanks to the internet.
Then there is the incredible growth of healthcare costs that is the most worrisome for retirees. For example, I’ve been paying $23,000+ a year in healthcare premiums for a platinum plan for my family of three. This is despite us all in good health.
Does that sound affordable for the average American household who makes $68,000 a year? Absolutely not, which is why employees should not underestimate the value of their overall work benefits.
In fact, inflation is the reason why it takes $3 million to be a real millionaire today. Make sure you own assets like stocks, real estate, and more to let inflation work for you!
To help grow your net worth, I recommend diligently tracking your net worth with Personal Capital. Technology has come a long way since tracking our money by hand or with an Excel spreadsheet. Remember, what is measured can be optimized.
Depend On Nobody But Yourself
Contribute the maximum pre-tax income you can to your 401(k) for as long as you work. This is the absolute MINIMUM you can do to by on the right 401k savings by age path.
Below is a chart that shows what you could have in your 401(k) if you max it out each year starting in 2023. The right hand column shows what you would have in your 401(k) with 8% compound annual returns.
In other words, everybody who consistently maxes out their 401(k) each year will likely be a 401(k) millionaire by the time they turn 60.
After you contribute a maximum to your 401k every year, try and contribute at least 20% of your after-tax income after 401k contribution to your savings or retirement portfolio accounts.
This way, you will have potentially DOUBLE the amount in total retirement saving if your household income is $100,000 or more. If your household income is closer to $50,000, you should still see a nice 30% boost to your retirement savings if you consistently save 20% of your after tax income. Here is the recommended order to contribute to your retirement accounts.
Treat your 401k just like Social Security and write it off completely from your mind. Do not expect either accounts to be there for you when you retire. It’s just like how you should never expect the government to ever help you when you’re in need.
Just imagine 30 years from now, the government deciding to raise penalty free 401k withdrawal to age 75 from 59.5? Unfortunately, you need the money at age 60. Because you withdraw, the government imposes a 30% penalty on top of the taxes you have to pay. Don’t think it can’t happen. Expect it to happen!
Taxable Investment Portfolio Is Key
The only thing you can count on is after-tax money you’ve invested or saved. This is why after maxing out your 401k, it’s good to open up an after-tax brokerage account. Consistently contribute a percentage of your paycheck each mont into your taxable investment portfolio. I recommend at least 20%.
Your goal should be to then build as many passive income streams as possible. The more passive income streams and active income streams you have, the more financially free you will be.
Challenge yourself to raise your after-tax and 401k contribution savings percent to possibly 50%. It won’t be easy. But if you practice raising your savings rate by 1% a month until it hurts, you’ll find it easier than you think.
A straightforward way to maximum savings is to make your 401(k) maximum contribution automatic. Save every other paycheck for the rest of your working life.
Max out your 401k and save over 50% of your after-tax income for at least 10 years in a row. If you do, you will be financially free to do whatever you want!
Recommendation To Growing A Large 401(k)
Now that you know what the appropriate 401(k) savings by age is, it’s time to manage your finances like a hawk. To do so, sign up for Personal Capital, the web’s #1 free wealth management tool. Personal Capital will enable you to get a better handle on your finances.
In addition to better money oversight, run your investments through their award-winning Investment Checkup tool. I will show you exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying.
After you link all your accounts, use their Retirement Planning calculator. It pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. Definitely run your numbers to see how you’re doing.
To track my 401(k) savings by age guide you must max out your 401k each year. With investment returns coupled with company matching, you’ll be amazed how much you will accumulate over the years.
I’ve been using Personal Capital since 2012. In this time, I have seen my net worth skyrocket thanks to better money management.
Build Wealth Through Real Estate
In addition to investing in stocks and bonds through your 401(k), I recommend diversifying into real estate as well. Real estate is a core asset class that has proven to build long-term wealth. It’s important to own a tangible asset that provides utility and a steady stream of income. Unlike stock values, real estate values tend to be much less volatile.
With real estate, you can earn a steady stream of passive to semi-passive income well before age 59.5, which is when you can withdraw from a 401k penalty-free.
Two Favorite Real Estate Platforms
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds and eREITs. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most investors, investing in a diversified portfolio is the best way to go. Fundrise manages over $3 billion in assets.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations. They also have higher rental yields, and potentially higher growth due to job growth and demographic trends.
Both platforms are free to sign up and explore.
I’ve personally invested $810,000 in real estate crowdfunding across 18 projects. My goal is to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000.
Follow my 401k savings by age guide. But in the meantime, also build a passive income portfolio so you can live a better life today. Given you cannot withdraw from your 401k without penalty until 59.5, it is your passive investment portfolio that matters even more.
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How Much Should I Have Saved In My 401k By Age is a Financial Samurai original post. Everything I write is based off first hand experience because money is too important to be left up to pontification. Join 55,000+ others and sign up for my free weekly newsletter as well.
So for those people in their sixties with limited 401K funds. This has been the story for some time. So where are these people now? Broke, eating Alpo from the store, living in a tent?
I read about all the coming financial Armageddon but seems to not yet have appeared.
Thanks for the proposed guidance on how much to save in my 401(k) by age. It gets me motivated to save more because I now see what’s possible.
To the people who are angry at the guidance, I encourage you to ask yourself how much do you really want to achieve financial independence. Just because the 401(k) amount is higher than what you currently have doesn’t mean you’re right and this guidance is wrong.
This type of insular, fixed-mindset thinking is what will keep you middle-class or poor. You can shout at the internet for disagreeing with you. Or you can take action to improve your financial situation.
A bear market obviously makes growing your 401(k) balance more difficult. But all the more reason to buy more shares now.
Financial Samurai says
No problem Andy.
Yeah, it’s human nature to get angry and blame other people for our problems. But blaming other people for our problems won’t solve anything.
Hopefully, this post acts as a guide to encourage people to save more, invest more, and pay closer attention to their finances. This is especially true now as another recession is coming due to aggressive Fed rate hikes.
Let’s get in the mindset that nobody will save us. Therefore, we’ve got to save ourselves.
Fredrick Hembeck says
This is a little out of touch. To max out 401k is $22500 in 2023. If one makes 60k, maxes out the $22500 then does another 20% of what remains into after tax brokerage account they are left with 30k to pay ALL other bills. These are not reasonable suggestions and anyone who comes here looking for Germaine info will surely glaze over when they get to that section.
Financial Samurai says
I use $18,000 a year as a base case contribution about after a couple of years of work. There are three columns in my chart.
If you make $60,000 a year, then it is feasible to contribute $18,000 a year or even the maximum to $22,500 in 2023.
You can get upset, looking at the 401(k) by age guide, or you can get motivated. At the end of the day, it’s your life and your choices to make.
Achieving financial independence making $40,000 a year
20 side hustle ideas to make more money
Josh Johnson says
I appreciate where the author is coming from and agree with the retirement breakdown by age. We live in northern CA and have a net worth of 1.3M with $882k in 401k and $135k of that being in Roth accounts. I’m 43 and my wife is 45 and we’d like to retire when I’m 58 and we should have $5M in 401k/Roth at that point, I max out my 401k and my does probably 80% of max and we max out our Roth IRA’s after that, $13k this year in 2023.
Where I disagree with the author is when he says to ‘write off’ any pre-tax retirement savings as if they won’t be there and only trust in post-tax retirement, if that was a true belief then a person should only advocate for pre-tax savings only to a company match and then save only in post-retirement dollars after that. While I don’t trust the government AT ALL there are things beyond my control and my view is to control what I can control. If you’re going down the road that the government will change the rules on retirement income there’s no reason they couldn’t do the same thing with regular investments through additional taxes or others ways.
The core principle of the author that is saving and living within your means I wholeheartedly agree with, just not some of the outlying beliefs.
Financial Samurai says
When I say “write off” your 401(k) after maxing it out, it’s a mental trick so you keep building your taxable portfolio. Chances are high our 401(k)s will be there for us after 59.5. But The goal is to build as large of a taxable portfolio if you want to achieve financial freedom sooner.
But if you don’t want to retire before 59.5, all good too. It’s nice to find a job you enjoy. Social Security is also a bonus, which we’ll get, but I don’t want to depend on in my models.
The Motivated M.D. says
Great post that is clearly wildly applicable to us all. From my perspective it is always interesting to look at expectations. As a physician we often make less than the median household income in the US for the first 3-8 years of our careers/training depending on specialty. We benefit by ultimately graduating into much high incomes following completion of all formal supervision and training (i.e. residency or fellowship). I think this highlights what is achievable if your set out with a ‘savings’ mindset and make it a habit. These habits turn into consistent growth, and this consistent growth turns into a sizeable nest egg (or more). For individuals in similar careers (specifically ones that substantially increase reimbursement later in life) we can often feel the need to catch up to our peers who began this process in their late teens or early twenties. Thanks for the great post as always!
Michael Muccio says
I would recommend against contributing anything over the employer match in the 401(k). Taxes will be higher in the future and all you are doing is setting those assets up to be cut by 75%! Govt keeps printing money. Brokerage account, Cash Value whole life and maybe, maybe a VA with downside protection. But a 401(k), IRA or Roth, are garbage.
So your crystal ball says an effective tax rate of 75% in the future so don’t take advantage of tax-advantaged programs now beyond their matches, and Roths will be garbage because… they will be taxed? Would that same crystal ball not also see taxable incomes including capital gains, interest, dividends and such also be taxed at 75%? Trying to get a handle on what this prediction offers benefit to not using tax-reducing accounts now (401k, IRA) when a dollar is more valuable than presumably it would be in the future.
Financial Samurai says
Here’s a post worth reading:
Shifting Assets From Tax-Deferred To Tax-Now Retirement Vehicles Ahead Of 2026
Max out your 401k at 20,000 huh? The average annual income for a household in my zip code is 28,333 according to the last census. Be mighty tough to live on 8,333 a year wouldn’t it?
Financial Samurai says
Call STEF Lane. If this is the case, try to contribute up to your employer match. This way, if you get a 100% return on your contributions. Three money!
“With real estate, you can earn a steady stream of passive to semi-passive income well before age 59.5, which is when you can withdraw from a 401k penalty-free.”
I believe this statement is false but please correct me. I have learned you CAN withdraw penalty free from your 401 K at age 55 PROVIDED you are not employed. This key point is rarely mentioned.
How the Rule of 55 Works
The rule of 55 affects how and when you can access your retirement savings. If you are between ages 55 and 59 1/2 and get laid off or fired or quit your job, the IRS rule of 55 lets you pull money out of your 401(k) or 403(b) plan without penalty.1 It applies to workers who leave their jobs anytime during or after the year of their 55th birthday but only applies to that last job you had so if you’ve had a long career at your last job, you certainly can withdraw penalty free.
Financial Samurai says
You can withdraw from your 401(k) early as well with the rule of 55. But it is also true that you can withdraw at age 59 1/2 from your 401(k) penalty free.
But relying on our tax-advantaged accounts for retirement should be an afterthought. It should be considered bonus money instead.
If you have to start withdrawing early from your 401(k), I would suggest you continue working on building your taxable investment accounts.
Ugh, i was feeling pretty on track for this beginning of the year. Down 20% in my retirement porfolio since Christmas. (I’m pretty tech heavy funds… only my Apple stock has held up ok).
Went from $320K to $250K in a few months .. painful. Oh well, I’m about 20 years out from being 62… so I got time i guess. Main worry is the stock market crash leading to a housing crash in 6months – a year. That would lead to a major recession.
This is the best thing that could happen to you with 20 years left. This gives you the chance to contribute more at much lower prices. My personal advice is don’t try and time things, or think you can out smart the market. Just keep contributing!
Tim Lee says
Great article! I’ve always maxed out my 401k contributions, but in the last year, I bought 2 rental properties. As I continue to learn more about real estate, what are your thoughts about not contributing to the 401k and instead diverting toward real estate, especially in these times?
Financial Samurai says
I think you should max out your 401(k) every year no matter what.
You can also strategically invest in private real estate funds instead of going all-in on individual rental properties.
For example, you can invest in Fundrise for as little as $10 and dollar cost average each month.
I’ve invested $810,000 in private real estate since 2016 to diversify and earn more passive income. I have reached my limit in terms of the number of physical rental properties I want to own.
2021 was definitely a year to forgo investing in your 401K .. atleast since hindsight is 20/20. But since we are crashing now and down 20%..i would be plowing extra into your 401K now and forget about the rental properties for awhile. Rents are gonna pullback this year and housing prices are gonna retreat if the stock market keeps falling. Real estate lags the stock market.
Financial Samurai says
Just keep buying. Over the long run, things generally turn out fine.
I still think real estate is going to hold on due to tremendous undersupply. But no doubt prices are cooling. Real estate could easily decline by 5-10% over the next 24 months. But if inflation peaks in 2022 and the Fed stops raising rates, real estate will likely continue to outperform.
Michael Biasatti says
Great site, I really learn something reading it. Question. I’ve been contributing to my company’s 401K for the last 10 years. The match 8% (or 50% of the first 8%, I ‘ve never fully understood how that works). Last year I was finally able to contribute the max, hooray. That year they began offering for the first time a Roth 401K as well (no match, the match only goes to the 401K). My question is should I contribute half the annual max to each which for me would be about 18% total. I’d still get the max, but also be able to build up some tax free retirement holdings. I’d lose out of lowering my taxable income somewhat by reducing the 401K contribution though. I do fully fund a ROTH IRA outside of work. I’m 53 and several years ago divorced and lost half of my 401K so I’ve been trying to really amp up contributions, just want to make sure my logic in splitting contributions makes sense. Thank you.
Hi Financial Samurai.
After many years of abandoning doing anything active with my finances – when I was younger I bought some stocks, opened an IRA, Roth IRA, etc. – did a lot of the “right things” – for a few years now I’ve felt paralyzed. (I’m 52). I think it started in 2008 when my IRA and Roth IRA lost most of what I had saved up. It blindsided me – I took what I had left – 9K in the Roth and 5K in the regular IRA – and put it into cash and haven’t touched it since. I know my money is “safe” but I know this isn’t the best thing I can do with it.
I don’t know where to start. But reading your blog has inspired me to start acting and start doing something.
I am married and making about 70K after taxes. My husband makes about the same.
Do you have some thoughts or guidance as to where I should start or what I should do, any next steps?
Would appreciate your help so much.
Financial Samurai says
Sure! Here is a new article I wrote to address your questions.
Ernst Sigmond says
Age: 32 1/2
Salary: 60k :(
457B (government version of 401k): 10k
Roth IRA: 40K
Taxable Personal Investments: 14k
Cash Savings: 32k
Pension Plan: 2% at age 62
Looks like I’ll be living my retirement out of a tent.
Don’t worry too much! I didn’t even start my formal profession until 29 (I went to grad school then law school). You are in WAY better shape than I was at your age (I’m 49 now). Just save as much as you can, and apply for any and all promotions. Is your pension 2% per year at 62? That’s pretty good, after 30 years, you’d have 60% of your salary.
At 29, I had zero in 401k and no other retirement savings, and over $200k in student loan debt. Today, 20 years later, I have no student loan debt (thanks to PSLF), had $900,000 in 401k/TSP, even though the first 8 years of working I got no match. I say “had” because due to the latest dip in the market I’m now at $840k or something. I did contribute the maximum and was aggressive in my allocation.
But it shows that you can save a ton in your 401k just contributing the max every year and not even getting a match for 1/3 of the years. But given your lower salary, my main suggestion would be to try to get promoted to higher-paying positions if you can, maybe take additional educational courses if you need to.
Great job so far, by the way!
Hmm, I’m a bit behind because I’m 31 and only have 150K in the 401K. I’m a high earner and can put the full amount in each year. Was wondering if there’s any tips/tricks to “catch up” to the 500K mark by the 35 year-old mark?
Perhaps through some 401K backdoor (if any exists), or some optimal way to pick funds in 401K?
Or would you say chasing alpha isn’t worth the risk in a 401K?
You are not limited to the 19,500 a year in a way… you see in the chart that the maximum allowable total contribution to an employee retirement plan for someone under 50 is actually 58,000. …. You can put in 19,500 of your own, say in a Roth 401K, then between employee match and your additional after-tax contributions with an immediate Roth conversion, you can essentially put 58,000 a year into the a Roth 401K. I hope that makes sense.
Financial Samurai says
And the 401(k) limit is going up again to $20,500 from the employee + $40,500 from the employer for 2022. Not bad!
I think your matching contributions is way off. I agree that the employee contribution rate is OK, but I never have seen any employer offer more than a 100% match up to the employee contribution of 5%. This is far less than the $58,000 stated. All calculations from there are meaning less.
So is that part about the gov. changing the rules a real concern or hyperbole?
Because of one thought the gov. was really going to raise the age and impose a 30% penalty, wouldn’t the correct response be to not open a 401k at all, but simply your own private investing account. 30% penalty would more than offset any tax advantages
Financial Samurai says
Should hedge and do both IMO. There’s probably a 20% chance the government does change the 401k rules not in our favor during our lifetimes. Just like with Social Security. But that also means there’s an 80% chance it keeps things generally the same.
But I always believe in taking advantage of what government benefits are provided and focus on taking care of your own finances.
See: After-Tax Investment Amounts By Age So You Can Comfortably Retire
Does this average of 200k of retirement savings take into account of all the 401k’s that have been left with a previous employer? This is where in reality the average is probably higher. If one changes jobs 2 or 3 times and leave few hundred thousand in each, if combined, the average will be higher….thoughts?
Age: 51, single, no kids
401k: 560k (contribute 25%)
ROTH IRA: 10k (stopped contributing, wish to max 401k)
Savings acct: 10k
Pension: 50k at 2.8%/yr
HSA account: 3k
FHA account: 30k
Cryptocurrency accounts: 110k
Home mortgage balance: 65k
Auto loan: 13k
Desired Retirement age: 55yo
Retirement state: Texas
Am I on track?
Alyssa Johnson says
Looks like you are on track moneywise, but just curious, what are you going to do with all that money? What gives your life meaning? Has it been enough to play the money game and collect a big enough pile of gold coins for “the end”? I’m nowhere near this, and there’s no way I’ll ever catch up, so I guess I am focusing on what priorities in my life are important. I can die happy homeless in the streets if I can find meaning beyond hoarding $$$. I am trying to be smart, but there’s no way I’ll ever earn enough to get this kind of retirement income. I’m an environmental and data scientist with 3 kids and my husband is a carpenter. I wonder what will become of us folks who are doing practical things like building houses and restoring the environment? Are we doomed because investors and programmers are dragging prices up? Do you all ever think about that, about who is actually doing things of practical value and what will become of them and what will be left for you besides numbers on a screen?
this is not super helpful IMO Alyssa. For poster Hoping, you don’t say if you are male or female but I think a common planning age is to plan to live until around age 80. If you retire at 55, you need 25 years of savings. Have you put together your retirement costs? How much will healthcare cost? Will you pay off your mortgage and only have upkeep/taxes/etc? Will you take vacations and how much per year will that cost? Will you stop buying fancy work clothing and so your clothing budget can be a little less in retirement? These are the types of questions I’d ask to budget what I’d need for retirement and see if I was on track. I hope this helps!
Donna Wanner says
Agree! But instead of criticizing what the “money hoarders” are doing, and what they value, let’s just focus on how helpful and soothing this train of thought is for those of us who do not have a wonderful retirement plan. We have traded it for daily meaning in our jobs, which has its own type of value. Not better, not worse, just different! (I am a teacher.)
I think you should try the financial checkup site he recommends. I think to retire you need a little more…I was hoping to retire at 62 (when my kid graduates college) with 2 million in 401k. However, I don’t know your expenses. But with 100k in crypto…is that still accurate because I saw 50% losses recently but should come back up. What coins do you have? I just started buying them last week.
Can you re-do the article with different goals for different people? As an example, as a single man living in rural South Dakota you can retire like a king with $1,000,000. Can you show us the goals based on cost of living and family situation, maybe a spreadsheet?
Exactly. Moving to a location with no mortgage, free healthcare, no property taxes and an overall lower cost of living. Ireland I mean. And by referencing the 4% rule, the capital is not necessarily running out after 25 or 35 years. Potentially increasing.
How does COVID experience and lengthy moratoriums on non-paying rent evictions alter your recommendation on using rental properties for passive income?
Oh wow, thanks so much for giving us an insight of how much you should have in your retirement age by age. Whilst I’m a little far off the mark (behind), I’m lucky I have investment properties that grow in value as well. Regardless, I’ll always work hard to make sure I’ll have a comfortable retirement. Thanks so much again for this post!
If you have no debt, then just add up reoccurring costs, its probably less than 25K a year. Groceries , eating out, utilities, Insurance, internet, cell phone, you get the idea. Anything above this is gravy.