“Expert Advice” on How Much Retirement Savings You Should Have At Your Age

20 comments

Posted on 26th February 2013 by Darwin in Economy

There are a lot of articles and financial firms that give varying forms of advice on how much retirement savings you should have at a given age.  Recently, there was a report put out by Fidelity, a major 401(k) player outlining their advice in the table below.  We’ll take a look at their suggestions and then I’ll share some thoughts on why broad cookie-cutter advice may be way off (primarily because their assumptions are wildly unrealistic for most Americans today) and how to appropriately plan for your retirement needs based on your individual circumstances.

According to this popular article at MarketWatch, based on your current salary, you should have about 1X salary saved by 35, 2X by 40, 3X by 45 and so on.  This may seem like a laudable goal, but some of the assumptions leave something to be desired.  First off, they assume you continue saving at the prescribed rate until age 67. Who’s Really Going to Work Until 67? – First off, many Americans actually NEED to work well into their 70s because of the financial situation they’re in.  But that doesn’t mean they have the choice to just keep on working their current high-paying job.  Someone half their age, overseas, or a robot will be doing it

Continue Reading Why Most Retirement Advice is Wildly Unrealistic

20 Comments
  1. Eddie says:

    I hope to work until I’m in my mid seventies, but that assumes that there will be work to be had in a collapsing economy, and that my eyes and hands will let me do my job.

    I never really wanted to retire, ever. It seems like a false concept to me, that a man should live on after his usefulness is spent. If I can do something useful, then i should be able to support myself, at least. I’ve supported a big family and provided a job to several others for over 20 years.

    My primary goal has been to educate my children and let them enter the real world without a debt serf burden. It might take me five more years just to accomplish that. After that, I’ll take it as it comes.

    Like or Dislike: Thumb up 4 Thumb down 0

    26th February 2013 at 9:50 am

  2. treemagnet says:

    If I could work in a field or pursuit I was passionate about I’d like to work to my last day. Otherwise, tomorrow will do.

    Like or Dislike: Thumb up 3 Thumb down 0

    26th February 2013 at 10:12 am

  3. TC says:

    Funny how all the “advice” from those who happen to take a nice rake from your money while you take the risk is to maximize the amount of money you put into their oh-so-expert care.

    Maximize your IRA! Maximize your 401K! Motherfuckers be needing new Ferraris already!

    Like or Dislike: Thumb up 4 Thumb down 0

    26th February 2013 at 10:15 am

  4. Darwin's Money says:

    I know I ain’t makin’ in past 55 at my blue chip company. Just doesn’t happen much anymore these days. Out with the old, in with the new. I’ll be doing something – but probably consulting if I can find it or some online freelance/landlording. I can’t envision just going cold turkey if/when that “early retirement” announcement occurs.

    Like or Dislike: Thumb up 2 Thumb down 0

    26th February 2013 at 10:17 am

  5. anotherjuan says:

    hang in there Darwin. i’ve been wathcing my old shipmates file out of here over the past 2 years. and the oldest is in that age group. the first to go got jobs elsewhere, one retired on SS, a couple went on SS disability, the last group is facing living on unemployment while awaiting SS.

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    26th February 2013 at 10:39 am

  6. anotherjuan says:

    i appreciate TBP because it has gotten me moving, shaken me out of complacency. more people ought to be following this site.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 0

    26th February 2013 at 10:41 am

  7. KaD says:

    What is the point of having a shitload of cash saved that is devaluing at a rate faster than the interest you can earn on it? When TSHTF the US dollar is likely to not be worth the paper it’s written on.

    Well-loved. Like or Dislike: Thumb up 6 Thumb down 0

    26th February 2013 at 11:58 am

  8. Pirate Jo says:

    Retirement will be a lot less common in 20 years, when I am 62.

    In the meantime, the baby boomers are going to break entitlements, one way or another.

    Like or Dislike: Thumb up 4 Thumb down 0

    26th February 2013 at 12:06 pm

  9. Ron says:

    I dont meet many people who retire.Most think they well work till they die.
    Most well work them self to death to pay for they’re home.I recommend a paid for RV.

    Like or Dislike: Thumb up 4 Thumb down 0

    26th February 2013 at 1:07 pm

  10. TeresaE says:

    How much to save.

    First, determine the rate that the fiat is devaluing, now realize that you need to save about twice what you earn to stay level in 20 years. Probably a best case scenario.

    So, pretty impossible.

    I will work until the day I die, or the day one, or both, kids determine they can no longer feed me.

    So, I’ve determined that this is the year I actually get determined to rebuild my body. My elders weren’t kidding when they told me it was all downhill past 40.

    Between using food as an emotional silencer, and depression leading to apathy leading to inertia and being married to someone that shuns anything, well most anything, physical, I’m feeling way too close to my age.

    So, I’ve been doing 10 minutes of hard (as in muscles are sore next day, but a good sore) leg and ab exercises, nearly everyday for the past two weeks. I quit giving myself the out of the excuse, after all I’m only talking 5 minutes twice a freaking day.

    Once I get in better shape I’ll need to increase (or figure out a way to add weight/resistance) the time, but really the goal is not the end result, but the habit.

    And vanity. And reality.

    Here is reality, I am going to have to work until very near the day the die. There are no two ways about it, my retirement will be stolen – if I could even save enough, my wages ever pinched, my expenses ever increasing and the government taxing and regulating anything that is left.

    In order, in the coming years, to be as left alone as possible you are going to have to healthy and be able to work to feed yourself.

    There is only one thing in this world that can give your body the ability to work until your 70s, and that is exercise.

    So, I’ve decided to fund my retirement through steady exercise and a continuous goal of increasing my knowledge and skills. The money issue will more than likely be decided for us by the CONgress in DC, or the banksters in, well, all over.

    Well-loved. Like or Dislike: Thumb up 7 Thumb down 0

    26th February 2013 at 1:51 pm

  11. prtrb'd says:

    Work, or not to work, does not need be related to retirement. Let me explain by real life example.
    I quit working for other people’s money (retirement) when I turned 50. Since then I’ve worked my piece of land, growing food, cutting firewood, building sustainable energy alternatives, developing a simple lifestyle that does not require much money to thrive. I expect to continue to work until I’m unable to move anymore, in full retirement. Maybe not for everyone, but it works for me.

    Well-loved. Like or Dislike: Thumb up 8 Thumb down 0

    26th February 2013 at 3:39 pm

  12. llpoh says:

    Fact is, returns on investments are so low now, and SS is so uncertain heading forward, I suspect that folks need something approaching the following:

    Assume retirement at age 65, and allow for a life expectancy of say 90. That is 25 years. Assume zero return above inflation. Say a retired couple can live on 65% of pre-retirement earnings.

    .65 x 25 = 16. To be reasonably safe, a person will need 16 times their last years pre-retirement after tax earnings saved up by 65. Tax rates can change, etc., so as to have an impact.

    Say a person has a working life of 40 years. Again assume no rate of return above inflation. 16/45 = 35%. A person therefore needs to save around one third of their after tax earnings EACH YEAR from the age of 25 to be assured of having enough to retire on reasonably comfortably. Those are round figures, and we can argue the toss re how house assets, etc. calculate in.

    How many people do you know that can do that?

    Govt drones on defined benefits schemes will do ok until the system fails. Then they are really screwed.

    Like or Dislike: Thumb up 3 Thumb down 0

    26th February 2013 at 6:57 pm

  13. taxSlave says:

    We are living in a freaking inflationary monetary bubble the likes of which have never been experienced by the human race.

    I do not know how the tsunami will unfold, but I betting that my meager 401K will be consumed by the government before I get my mitts on it.

    The wave is coming.

    BASE_Max_630_378.png

    Like or Dislike: Thumb up 2 Thumb down 0

    26th February 2013 at 7:36 pm

  14. BUCKHED says:

    Spoke with my financial adviser yesterday…he calculated that I can retire 5 years after I die .

    Well-loved. Like or Dislike: Thumb up 5 Thumb down 0

    26th February 2013 at 6:15 am

  15. Eddie says:

    taxSlave said

    “We are living in a freaking inflationary monetary bubble the likes of which have never been experienced by the human race.

    I do not know how the tsunami will unfold, but I betting that my meager 401K will be consumed by the government before I get my mitts on it.”

    As soon as we invaded Afghanistan i knew inflation would come. However, I’ll have to say that i did not quite grasp that we could have a substantial deflationary pressure occurring in assets like real estate, stocks, (and even commodities) at the very same time we have serious inflation in food, petroleum, electricity, and certain other desirables, like college tuition.

    My question to you, myself, and anyone else who might care to give an opinion, is this:
    “Is there any real reason this skewed inflation vs.deflation scenario cannot continue for many years, as all nations race to debase their currencies?”

    We have already seen that the dollar can stay strong vs. other currencies without any real “visible means of support”. As long as the dollar is the petrodollar, I don’t see this changing. Well, it is changing but ever so slowly. Will there be a tipping point? Will a collapsing US bond market be the “tell” for this?

    Another thing is I don’t see the fundamentals to make assets inflate. Demographics are crap for housing. Real wages are falling, not rising. Will some tipping point occur here as well? Will employers be forced to raise wages when their employees can’t afford food or gas to get to work even?

    The fundamental difference between this stagflationary period as opposed to say, the 1970s, seems to be that we lack the real industry and/or demographic forces to cause asset inflation.

    That, and as has often been stated here, the debt level is off the scale.

    To me it looks like the inevitable consequences of the current scenario is just more of the same…a standard of living that continues to decline for 95% of us. This could last for another 10 or 12 years, easy.

    Like or Dislike: Thumb up 0 Thumb down 0

    26th February 2013 at 9:21 am

  16. anotherjuan says:

    if it’s done right we can inflate to the point where gov’t debt becomes meaningless. then reissue the money in new currency to lop off 3 or 4 zeros. it’ll cost you to get the new currency, if you have a few thousands under the mattress or if you have several millions stashed in a safehouse in mexico.

    Like or Dislike: Thumb up 1 Thumb down 0

    26th February 2013 at 10:54 am

  17. Eddie says:

    anotheruan

    If that happens, people who have fixed rate mortgages will pay off their houses for pennies on the dollar.

    Somebody explain to me again why I should be debt free?

    Like or Dislike: Thumb up 0 Thumb down 0

    26th February 2013 at 11:03 am

  18. BUCKHED says:

    Eddie…I’ve asked the same question..I owe 75K on my house…if we have a Weimar type incident here in the USA and I can convert two ounces of silver for 75K in USA bucks, can I pay off my house with these dollars ?

    Like or Dislike: Thumb up 1 Thumb down 0

    26th February 2013 at 12:48 pm

  19. Eddie says:

    That is exactly the way it has happened in the past. I wouldn’t put it past our masters to come up with a plan to screw us on any deal that leaves them holding the bag, however.

    Like or Dislike: Thumb up 1 Thumb down 0

    26th February 2013 at 12:57 pm

  20. anotherjuan says:

    most people have an idea of what’s going on, it just takes a great explainer to bring it all into focus for everybody. people didn’t go blindly refinancing their homes for double what they paid originally, they expected things to pop but they got snookered, only the banks got bailed out. shucks. maybe we better wait. they way it looks now it there is a plan affoot to dispossess the boomers since they hold most of the assets.when the anti-boomer chorus gets loud enough, it’s time to pack it in, we’re going to the gulags

    Like or Dislike: Thumb up 0 Thumb down 0

    26th February 2013 at 1:38 pm

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