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The Shockingly Low Amount of Retirement Savings per American
October 18-24 (this week) was recently designated as ‘National Save for Retirement’ week by Congress. Historically, the federal government has always promoted increased spending by consumers to drive us out of recessions. That’s why it’s incredibly interesting that during the largest recession since the Great Depression, Congress would approve of a ‘National Save for Retirement’ week.
Average Retirement Savings per American
It turns out that they have good reason. According to the Employee Benefits Research Institute’s 2009 Retirement Confidence Survey, 53% of workers in the U.S. have less than $25,000 in total savings and investments. The typical American household (headed by a 43 year old) has just over $18,000 in savings! That’s a scary number.
With pension plans being a thing of the past, saving for your own retirement is increasingly important. The government is starting to realize that if it doesn’t begin encouraging savings now, the expense of completely supporting tens of millions of retirees who have zero retirement savings will be catastrophic for the country. Now is the time for action.
These statistics get me absolutely fired up! My employer has a 401K match of 50% of my contributions up to the IRS maximum 401K contribution. That is an incredible benefit that I would never take for granted. However, a number of my colleagues don’t take advantage of this free cash while having no home, no kids, and no major expenses. If they aren’t taking advantage of this benefit, it’s easy to see why workers who aren’t getting a nice match are not saving at all. It kind of makes me sick on behalf of their future self looking back with regret.
I have the feeling that a good many of you are exceptions to these statistics. But why? How are most Americans not getting the message?
Retirement Savings Discussion:
- How much have you saved for retirement and what is your age?
- Why have you decided to save?
- If you could tell peers of yours why they should start saving, what would you say?
Related Posts:
My name is G.E. Miller and 
yeah, I have not done a great job in the past saving and investing my money on a regular basis. I was always a penny-pincher growing up and was able to invest a little back in the day, but ever since I got married and had a ton of expenses i have not been responsible with that.
I’m getting back on track though. http://financialsecrets101.com is showing me how to automate my finances and save on an automatic basis so that I don’t have to remember to be disciplined every month. This has worked wonders for me.
I’m with you on how scary it is in regards to our generation saving so little. Most of us are not going to be prepared for retirement. And by then our government will probably be bankrupt or something ridiculous like that and wont be able to bail us out. I don’t want to be part of this majority!
Thanks for your insight.
I am 51 years old. Currently have $570,000 in 401k/IRA’s……and approximately pproximately $1 million in indiviual equities, mutual funds and cash……………..house worth about $375,000 paid off………I still feel behind!
@ Steve – You’re sitting pretty. If I had that kind of portfolio at your age, I don’t think I’d be too worried.
Show off!
Steve, you feel behind because…?
Either you are being dishonest about your holdings or you are bragging. I have 310k in my 401k about about 400k equity in my house. I don’t feel “behind”, I feel about normal.
He might also be obliquely noting that fear of not being able to provide for yourself is a powerful emotion. Moreover, it’s an emotion so powerful that even someone who has no rational reason to fear may still feel its effects. Why not interpret Steve’s comment generously, rather than looking to take offense at it?
I am neither dishonest nor am I bragging. The choice word “behind” was probably not the best. “Secure” may be a more accurate term. I have worked hard and saved diligently for 35 + years. Not bragging, just a fact. I was brought up by parents who witnessed what the real Great Depression did to their parents. I’m suffering career burnout, now at age 53 and am uneasy of what the next moves need to be.That is really what I meant.
I find this board interesting. I did not realize that it is for 20 somethings………there are some very bright young people here. My advice to you 20 somethings……..have fun, live within your means……AND DON’T GET DIVORCED!
Good luck to you all in your careers and endeavors.
I’m a 23 year old 2008 college graduate making 50-55k a year with my first job. I started about 4 months ago and have $4,000 saved in a money market account. Any advice on how to proceed with saving/investing?
Chris,
Until you understand much of the financial hurdles and issues with investing, the best advice I can give you is to purchase indexed mutual funds that own the market (S&P, DOW, Foreign) using Indexed Mutual Funds. These mutual fund returns beat 75% of the professionally managed mutual funds. Why? Because index funds require no active management and their fees are substantially less than 1%. Do some research on Indexed funds and how they compare to actively managed funds. Google for articles by John Bogle who was the brains behind indexed funds. He was the founder of Vanguard Mutual funds but I’m not suggesting you go to Vanguard because many mutual fund companies offer Indexed mutual funds.
This is close approximation to Warren Buffet’s “Buy and Hold strategy” because there is limited trading on your behalf, only to the extent that you purchase additional shares but rarely sell. Limited cost means less commissions for investment advisors which means you keep more of your money! The stock market average return for the last 70+ years is between 11-12%, with no 5 year period ever losing any money. This is not SHORT TERM investing but “Buy and Hold” investing. Forget you invested it and let it grow, but limit the amount of expenses you pay.
You should only pay for financial advice if you need it. When you turn over your money to an actively traded fund (i.e. let your advisors manage your investments), they will charge you on average 2% or more a year for the priviledge of “managing” your investment. When I say that index funds beat 75% of actively traded funds I’m saying that 2,250 Mutual fund returns were equal to or less than indexed funds. By saving on the expense you will save over 70% of your return over the 40+ years you will have until you retire.
I’m now 60+ and my net worth is around $1.6 million, but it could have been substantially more if I knew then what I know now.
Good luck and God Bless.
I agree. I am 48, retired from the Army at 42 and financially independent. I have $400K in savings and own two homes. All I can say is look for inexpensive well known established mutual fund companies (Vanguard) and compare operating expenses. I started saving at 20 years old and nothing compares to compound interest. Time is on your side if you are young. You must be aggressive when your young.
I say thank you for your service but dang how much of are tax payer money are you guys really making?
Mike, Thanks for your support. Being in the Active US Army, I was paid 100% by yours, mine, and all tax paying Americans, tax dollars. Now my retirement pay comes from tax dollars too. I also have my investments that pay dividends and rental income. I made a conscious decision on my career, I rolled the dice and came out alive, a little beat up, but hey I was a warrior. Veterans benefits are slowly being whittled away though. A promise was made and now the situation is changing for some of us.
As the value of a 401k drops, the American savings for retirement will dwindle even further.
Feel like I’m at the low end here…I’m 26, have an income of about $30k, RothIRA of $2.5k, savings $3.5k and most of that is because I am one of those boomerang kids that recently came home to take care of my ill widowed mother and get her house in order.
Before, I lived a missionary life traveling and making enough to put a dent in my educational debt. It’s now down to $6.5k!
Thankfully I have no revolving credit debt either. But you that have gone before me in the comments certainly have your ducks in a row.
:O)
26 years old, Debt free, $60k in 401k, Make too much for Roth IRA. Not a bad problem to have and I wouldn’t invest in one anyways if I could since I would rather pay taxes on it later when I’m not withdrawing nearly as much from the retirement acct as I am making at my job now (especially when you factor inflation in).
I just recently got married and the hubby brought an additional $200k in retirement savings to the table. We’re on the same page when it comes to saving.
I just retired at 58. Wife will probably work several more years although just part-time.
I have a pension of $7,000 a month that will drop to $5,000 when I start collecting SS of $1750 a month at 62. Wife will collect only about $550 a month in SS due to not working for many years.
I currently have $500,000 in my IRA and my wife has $20,000 in a 403B. Last year I bounced back from the crash and ended up 36% for the year. As I don’t need to draw much at the present I have left the money 100% in stocks which my financial advisor manages. Besides high dividend stocks like KMR ($4.40 a year) and LINE (9%) he uses a lot of options with puts to protect me on the downside.
My company gave me the opportunity to buy health insurance for life which I jumped on. Max out of pocket for any year is $1,500 for both of us.
Overall I feel pretty good about our future although my wife still worries. She would like to see me go real conservative but my point to her is we are covering all of our income needs right now so we can afford to be aggresive.
I am 52 and have saved $2,140,000. I am independently employed and will not get SS. I will try to work until I can no longer handle it…hopefully into my 70s. I wish we could do away with SS and let people take care of themselves. People have been brainwashed into believing that we cannot buy a house, send our kids to college, or anything without government intervention or redistribution of wealth. I started working at 22, making only $20,000 a year. Today, I earn about $350,000 a year and at present try to save about $120,000 per year after taxes and living expenses. I do not want government’s help and wish that people would learn to live within their means and work hard. I lived in a small apartment until I was in my 30s. After having kids I moved into a modest house. I rent, and I rent below what I can afford. I spend wisely and put my children first, my wife next and myself dead last. Regarding the future of the US, I think we all could learn from the Chinese at this time. Ironic though, they are communists and are acting more like capitalists than we are.
Any advice to the great unwashed besides working hard..What business were you in and where do you see the future. You are
sitting on top..cheers.
John… You comments are right on the mark. I was glad to hear you rent a modest house. I have always lived below my means and never take a handout. My friends have always put me down because I rent an apartment and never bought a house. They didn’t realize that I took the money I would have expended on maintenance, taxes, and interest to the banks, and invested it… My choices have worked well for me. More people should stop listening to the government, friends, real estate agents, and brokers when it comes to home ownership. Now I’m doing well, and my friends can’t stop getting on my case, because they all think I’m rich… which is their perception… not reality. The only differnce between me and them, is that I have liquidity, and they can’t sell their bathrooms to pay bills.
I am 51 and didn’t start saving until almost age 49. I have managed to put away about $20,000.00 which should be $25,000.00 over 20 years. I have scrimped it together with making certain rules for myself like a $100.00 per month and $5.00 for everyday worked and $2.00 for weekends. I have put any extra money I received into CD’s like $600.00 for stimulus check which actually I turned in $660.00 with buying a King-Soopers gas card, changing homeowners inusrance, any refunds I get like this week I got $153.00 from my escrow account due to lower property taxes, I save all my change and every 6 months goes into savings, I round-up on writing checks which accumulates extra money, I’ve opened up bank accounts that gave me money too, I put any extra money from a bill I thought would be more into savings, All of these tricks have allowed me to save $20,000 in close to 3 years. I am getting out of credit card debt so that will allow extra money in the future to be saved. I hope to have home and student loan paid off by age 70. I will have to wait to 70 to receive SSI so I get more. With about $1,500 SSI, savings and no debt I believe I should make it. Of course I plan to keep going on this for at least 19 more years. I am self-employed so get no company plans. I waited toooooo long. Scrimping though is better than doing nothing and being hopeless. Its great all the young people are saving now good for all of you!
You are screwed should have saved more, that’s why this econmy is in the shape it is in. It people like you that have caused so much damage.
What a mean comment.
Cherion is well aware of her situation and is doing her best to rectify it. She took the time to post her story as a warning to others, to help them avoid her mistakes.
It sounds like she has enough problems without some jackass named Kevin blaming her for the collapse of the economy.
I’m 25,
I’ve saved up about 20k in my 401k and about 20k in cash.
I think my employer matches something like 1/4% on the first 6% (random), but i put in about 10% a year.
Between me and my significant other (she has about the same as I do) we hope to pass 140k total this year (fun goal!). It would be quite the stretch and would require quite a nice bonus come bonus time but “shoot for the stars” right?
We’ve recently started budgeting out all our lunches and dinners for the week on sunday (including slow cooker sunday), and have found we’re saving quite a bit more now. Hopefully we can keep it up.
For those who asked about using a financial advisor.
I work on one of the largest advising teams in the country. We handle personal accounts of individuals with a minimum of $25,000,000. Unfortunately, unless you have at least $100,000 you are going to have trouble finding a good advisor unless you have a family member in the business that can help you. An advisor who takes on accounts of less than $100,000 has to have at least $1,000 accounts to make a decent living. You tell me how 1 person can manage investments for 1,000 different people. It is impossible for them to do a good job. We have a 7 person team working for 40 clients. If you have less than $100,000 my advice is to do some homework and invest in some good mutual funds. Hope this helps.
i am 27 and work at a university so I have a defined benefit plan. Hubby was unemployed for 6 mos last yr and started a new job in July so this July he can start contributing to a 401K and we plan on putting at least the 5% they match(can’t give up free money). after the 6 mos unemployment our emergency fund has $10K in it. I just paid off my car and his will be paid off in a few months. We own a condo and NO CREDIT CARD debt. I think we are doing pretty well since my ex hubby basically took all my money and blew it before our divorce. My goals from here are to max his 401K to the match and then put max in Roth IRAs for both of us. Right now we haven’t been able to dump alot of extras in savings since we have furloughs at my job (6 days and maybe more)
My hubby is a debt load convert. When we met in 2006 he had 7500 in credit cards, 20K on his car owed and not current on payments. He loves not being stressed about money as much as he was.
I’m 46 divorced, unemployed, moved back in with parents, no retirement savings, no usable skill, hang around local college stalking young college girls.
These stats are sad but so true. I am a retirement consultant and that is pretty much my whole job to try and encourage people to save for retirement and help them with investment options etc. It is UNBELIEVEABLE how low of a priority this is for so many people.And it is not always a matter of not being able to afford to save. It drives me insane. The really sad thing is that I meet with people who are even in their 40′s and 50′s who are like “well… I don’t know if I want to do that…” SERIOUSLY? So attempt to pay your mortgage with the pennies that social security will offer you, depend on your children to support you financially or work for the rest of your life. Scary….
I’m 26 and currently have about $105k in retirement savings. I max out my yearly 401k and Roth IRA contributions and then funnel extra into mutual funds and CDs. Even with all the savings, I earn enough that I can enjoy traveling a little (which is nice).
Basically, I want to squirrel as much into savings now before I (eventually) get married and have kids. I’m fairly certain having a family will limit how much I can save. Plus, I’d like to be able to retire early enough to enjoy myself without worrying about finances later in life. I’m also toying with the notion of starting a 529 plan…no kids yet, but I understand you can change the beneficiary pretty easily.
Open an IRA CD yesterday at $6,000.00 which will give me a $296.00 tax refund along with the $400.00 making work pay credit. So of course the tax refund will go into savings along with the $400.00 less in taxes I expected to pay. Buying a little stock on my own to hopefully help boost some retirement savings. Buying stocks low and will plan to sell when they get higher. Scary though with the stock market so not putting alot of money into it.
23 years old. Just started my first full time job.
6k in a old 401k. Gonna move it to a Roth IRA. Currently contributing 3% of ~60k salary with 100% employer match and will max out my Roth IRA.
Really wondering what the people that are in their mid 20′s and making 100k+/year do for a living…
Bryan: Visit bars every night, eat out or order in, dryclean their clothes, buy high-end cars with loans, and travel overseas multiple times a year, according to one person I know in that situation who lives and spends sanely. (Despite their living in a generally overpriced area, she and her husband already own a house and are paying down the mortgage, to those coworkers’ astonishment.)
Hi. This is a perspective from someone who started at age 33 and is now 57. My wife and I have done okay–now holding about $500K despite suffering through some brutal market downturns. There are several demonstrable reasons why we are where we are and I thought I’d share both good and bad. First, the good: My rule #1 DO NOT BUY MORE HOUSE THAN YOU HAVE TO and its accompanying rule: don’t buy for status (and certainly don’t try to keep up with the Jones’s). I bought a fixer-upper at age 24 in a working class neighborhood close to downtown and the major expressways. Thirty-three years and ( now)close to a $100K household income we are still here. Our taxes are low(er) for the general area ($250 per month) and the house has been paid off for many years. I think too many people get caught up in the equity game and the mortgage never goes away. We have a lot of disposable income because we kept our housing impulses at bay. Rule #2 Pay off credit cards every month. Rule #3: take out a home equity line of credit if you need to fiance something large, like a car or an education. The rates are usually lower. Rule #4: max out your IRA, 401K, etc as your top priority every year, ESPECIALLY if there is employer matching. Rule #5: get into low-fee equities (that’s low sales charges and/or low carrying charges that are part of a major umbrella group (so asset allocation and rebalancing can be done at no additional cost). Rule #6 Avoid any temptation to take the money out once it’s been paid in. Lastly, avoid dangerous, highly speculative investments, whether in real estate, stocks, or commodities. Develop a consistent strategy for your long-term investments and apply it. The only major screw-up for us was to plow a ton of money into a tech startup we knew nothing about. That cost us $40 or $50K. There is no shortage of people whose job it is to get money out of you. Find a good, honest advisor and stick with a moderately conservative long-term growth strategy (much as you’ll want to wring someone’s neck when the markets reverse). Good luck.
Saving for retirement, even small amounts; add up to a real thing over time. It’s all about making saving a habit and not letting go of this one. As a Financial Planner I saw what “smart” savings can do to people. By “smart” I mean you should never turn down free money Uncle Sam gives you. Read more and look at a simple example here – http://www.peoplesfinancialadvisor.com/personalfinance/?p=20
Thanks for listening,
Bob Schumann, CPF
Another one fashionably late to the party-
I’m 23, 2008 grad, $85k salary.
In my first 2 years working I:
Paid off $55k student/auto loans
Put $25k in a company 401k with $9k non-vested match (worth total of $41k now)
Put $10k into Roth IRA (worth $11k now)
Put $10k into ING for emergency savings
Accumulated almost $10k in savings (going be invested once I decide where)
And lived off of the rest after taxes/SS/Med.
I learned recently that my parent (both in their 50s) have nowhere near adequate retirement savings. They may even be those elderly Walmart greeters (mentioned above) or moving in with their children some day. Watching them struggle with this (some due to poor planning, and some to a poorly dealt hand outside anyone’s control) has really lit a fire under my ass to make sure I don’t end up in the same situation.
Coming from a modest college life made it very easy to save- I don’t miss any of the money I’m putting away because I never got used to having it in the first place! I have just continued living within the means I was used to and comfortable with. Actually, I was at a loss for plans when I ran out of debt because paying it was such a no-brainer… now, also maxing pre-tax IRA and Roth limits, I have to do research to come up with other ways to save. I also know that there will be times in my life where I won’t be able to contribute nearly this much, so I wanted to get a jump start.
Ready? Set? Compound!!
Thanks to G.E. and all who have commented- I have been learning and laughing all evening!
I am 25 and i have 12k in my 401k. Not bad for someone who only makes 25k a year while going to school full time.
That’s a great start. You keep that going thru your working years and you will have a tidy retirement account.
I didn’t start a retirement account until I was 34. I’m 57 now. During that time in between, I’ve accumulated 400K in 401K, retired and now recieving a nice pension, and the wife even has her own 401 going. I’ not touching my 401 until I’m 60,,,then I’m going to camp in every campground in the U.S. (that’s all I want to do!)
So it’s NEVER too late to start. Better to start early like you did. Keep it up!
37-179,000 in 401K, blend of pretax and a Roth 401k. I schedule an automatic 1% annual increase in the Roth 401K. Cannot max out yet since I have 3 kids and a mortgage, etc…. Have college savings accounts for each kid with scheduled monthly deposits into 501c. Additionally have around 60,000 in a cash balance pension.
I save because I want to enjoy my life after retirement and don’t want to wind up poor and uncared for when I can no longer work. Don’t want to be like one of those fools who blames everyone else because I am broke and can’t afford my medicines, to eat, travel, etc……
37 years old, DH 45
No debt. Including house, IRAs, 401K, savings, investments, we just topped 1 million. DH has a nice pension (rare, huh?) and tons of unrestricted and restricted stock options. According to the sweet, innocent SS statement we get for our birthdays, we should get $4,000 a month combined.
We are doing great, but I still feel anxious and know we should be doing better.
Americans are not prepared for retirement at all. To make matters worse, companies are looking for ways to save money anyway they can. Getting rid of guaranteed health care and retirement are two things they are looking to get rid of. Each individual will be responsible for their own.
I’m 23. My husband and I have a combined balance of 170K in our 401K. He is 32.
About to turn 37: Make a little over $200k / year. Currently have a 401k of about $145k, stocks of $16k and about $8K in two 529 plans (3 and 5 year olds). I am now maxing out my 401k and get a 4% match (company skipped matching for the past few years). I have 2 big bonuses and stock grants in the next few years so I hope to push further faster. I also have my first house as a rental (great tax shelter) and while I owe about 107k on it, even in the current market its worth about $240k.
I really want to be done with work. That is my goal. Well that and opening a microbrewery to make a small fortune out of a large one.
I was feeling good about my position until I got on this board. =)
47 woman recently divorced with 20k in Trad/Roth IRA’s and 30k in 403b with lousy 1% company match. I make 62k/yr and contribute 10% in 403b and $80 per month in my Roth. I need to do something different but not sure what…
increase your 401K contribution. It will also put you in a lower tax bracket, so you won’t be missing as much as you think from you paycheck. You’ll get used to it,,,,,that old saying, “if you don’t see it, you won’t miss it.”
sorry,,i meant increase your 403
I’m always thinking about how much money I should have when I retire. What my life will look like later down the line. But for right now I’m trying to enjoy what I have to the fullest without putting a dent in my pocket. Especially now these days, almost everything costs an arm and one leg. I am contributing to my savings every month for any emergency, even for a retirement fund. But realistically I don’t think any amount of savings will ever be enough, it just depends on how you manage all your expenses or investments when the time comes.
I know what the statistics say about average retirement savings but clearly they must have left a zero or two off of the number. Look at the comments, obviously most people make six figures right out of college with no advanced degree, and are millionaires by the time they are 30.
I’m 28, make around $40,000 a year in the military. I contribute %8 to a TSP account which is not matched, and I also contribute $350 to a Roth IRA. I have $9,000 in the TSP and $32,000 in the IRA. I will have medical benefits, and be collecting a pension when I retire from the service at the age of 41, hopefully I will be able to find another career and contribute more. It amazes me to see how many of my comrades have no idea, or interest in saving money for the future. I am a little behind but I still believe I have time to catch up and take care of myself. I think more people need to do this, stop relying on everyone else to take care of them and take responsibilty for themselves. I’m impressed after reading all the posts, some of you definatly have it figured out. I guess your dream job pays a little more than mine, congrats to all of you.
I am 58 years old. I have $273,000 in a 401-K; $15,000 in a Roth IRA, $7,000 in an ING Roth IRA and $3,500 in an individual stock account. When I retire, God willing, I will have a company pension of approximately $3,200 and Social Security of $1,400. At present I am contributing $1,000 monthly to the 401-K and earn $81,000 yearly. I would like to work another two years.
I forgot to mention that I used to contribute $2,000 to my 401-K, but after 9/11 here in New York I decided that life is not guaranteed to anyone and therefore, spend some, save some. Of lately, I have gone on a spending spree (clothes, shoes) and I am also getting dental implants that is very expensive. For some reason, I always feel very guilty when I splurge on myself and had not done so for years until this year. In addition, I have a home that is worth about $350,000 with a HEL of $132,000. At the height of the housing market it was worth over $400,000.
I plan to contribute all my increase in the Spring to the 401-K. We also get a bonus of about $4,000 minus taxes. The company matches 3% when I contribute 6% of my income to the 401-K.
I am 28 and I have $47,000 saved in my 401k. I have student loan debt however (at various rates up to 6.7%) and want to pay that off. I want to know if I should stop or cut back on saving in my 401k and try to pay off the debt first or should I continue to put in 15%.
Oh I make between 60-78k per year
I am in my 50s. The amount in my IRA and 401k is less than the sum of all I have contributed in the past 30 years. The idea that people will make a 5 – 10% annual return (the assumptions made in all those retirement calculations) is a complete joke.
The reality is: Every 6 – 12 years all the gains you have made in the interim will be wiped out in a crash.
I am 26 and in the military. I am one year from getting out and trying to find a job in the “real world”. I am also one year from completing my MBA. Up until about 2 and a half years ago I was much like most americans and didnt even think about savings. I bought expensive cars on high interest loans, all types of other senseless toys, and didnt save a dime, racking up about 27K in debt, very much living in the now. Then I met a practical girl, and started to think past right now and realized I was being an idiot. So I changed.
I currently make about 65K and have no debt, including no college loans. Me and my fiance (she makes about 50K) have made it a point to save aggressively for retirement. I got out of debt last year in January and since then I have built a pretty complex system of budgeting, saving, and investing.
My goal was to have 50K by Dec and we exceeded that by 4k. We will have just over 60k by the end of this month, we are saving about $5500 a month. My goal for next december is 115K, that will be tough though with a wedding in the middle. Going to need some great gains in the market ot get there too.
First we saved 20K as an emergency fund, then maxed out IRAs, and invested in some balanced mutual funds as a short term investment towards a house in 2 years.
It definately has been an experience learning how to save, and I still feel very behind, especially after reading some of these posts but I hope that by living well below our means for at least the next five years we will make up much of the lost time. I hope to have over 350k by 30. Wish me luck and good luck to each of you on your retirement quests!
Matt- Some of the posts above are “keeping up with the Joneses”, except reversed into a race of high income and saving. Based on your post, you’re doing great in setting up a financially comfortable and independent future.
Matt- Congratulations! You will have a lot of life “options” when you are my age 52. You are obviously very bright.
I’m 25.. almost 26.
~$8k in employer cash pension
~$10k roth ira
~$26k 401
Single, no kids, etc…
Lynn- as far as paying off your debt or contributing more to savings, you should ask yourself if you think you’re going to earn more than 6.7% on your savings… or close to it. If you want a sure ‘return’ than I would pay off the debt. Once you pay that off, then just start funelling the money to your savings.
45 – late starter due to raising a family and getting married too early and paying for college myself as an adult. Still, I have about $350K total saved. No credit card debt, but do have a $250/mo car payment and a typical suburban mortgage. Frugal, but could do better. My advice to the younger crowd is save something every paycheck, and do not even consider inheritance, home value or social security as your safety net. The first two can disappear in a flash, and we all pretty much anticipate social security to disappear within a few decades.
There are many tough decisions in life, and many that are easy. The cliche one step forward and two steps back seems to accurately describe my retirement savings attempt. At 45 years of age, single parent, I’ve expeienced the large corporation staff reductions numberous times, and have to make the decision, do I want to feed the family, or throw some $$ into the 401k, after a considerable amount of time unemployed and savings depleted, that 401k is the only way your paying for food, gas, utilities, etc. With the 401k gone and another attempt at rebuilding my financial future, the current salary barely covers the basics. (I am very frugal) There is nothing more unrealistic that attempting to save when you are living paycheck to paycheck. I welcome any realistic and constructive pieces of advice.
39 years old, $305,000 saved for retirement. Have saved since I was 25. Self employed and continue to put about $3200/month away into Simple IRA’s, Roth IRA’s and an HSA for me and my wife. Should have about $6,000,000 – $7,000,000 saved by 65. Keep plugging away.
Encouraging to see the 20 somethings on here who get it. My dad had a long talk with me when I was picking my first job out of engineering school. Taught me to look past salary and look at total compensation – insurance cost/coverage, 401k contributions of the company and the individual and pension worth. I picked my employer based on that. Insurance for the company was a B+, there were better. But my 401K and pension made the deal. After 9 years I get 10% from my employer with no matching. I give another 10-15%. After doing this for over 30 years I have gotten my savings up to around $2,300,000. I make $250,000 now. I also have a pension that is worth about 55% of my last years salary if I work till I am 59. I know I am blessed and not many companies have this package, but you can do well with other packages as well. Live within your means, save 15-20% a year, buy a stretch house at 30 and stay put. Having college for your kids covered is an awesome feeling and having enough for retirement, but you need to start with that first job!!!
My husband and I are 32 and expecting our 2nd child. Between IRAs and 401Ks we have $160,000. We’ve saved up $35,000 in liquid cash, and are hoping to increase that to $40,000 before I leave the work place for a few years – child care is expensive, and I’ve hit the 10 years out of college mark where time is becoming more valuable than money. In my time off, I don’t want the nest egg to go too far under $25,000 (6 months of bills & food) – so I’ll use that as a gage on how much time I can afford – thinking 1 – 3 years.) We can live a slightly decreased lifestyle on my husband’s income comfortably (camping instead of international travel / less dining out) – only consumer debt we have is our mortgage, and our cars are newish and in good condition to last several more years (I’m hoping 5 – they are a 2007 and 2008).
We hope to achieve 2 – 2.5 million by age 65. When I return to the work place, we’ll focus on our investments more and increase our savings from about 8 – 10% to proably 20% I think. I’ll probably also start doubling up on the mortgage to pay it off early (owe $275,000) on a home we purchased in 2009 – currently valued a little over $300,000, but it was close to $400,000 before the housing market crashed in 2008.
How much should I convert to a Roth IRA? We haven’t done this yet, but think it’s a smart idea.
I am 62 and have maxed out my 401k for 3 decades + “catch up” contributions since age 50. Of course, it was hit hard in the 2000-2001 downturn.
About 7 years ago, I pulled all of my 401k funds out of equities and put them in a “Capital Preservation” account that earns about 3-4% a year.
My logic is this: Over the past 7 years, my holdings are up a total of around 22%. Factor in the market downturns, lost capital and even with strong gains these past two years, stocks are under performing a steady, slow gain in bonds and cash.
I have more than 1,000,000 in the 401k, about $250,000 in other pre-tax accounts and $150,000 in various individual stocks and mutual funds. We have around $175,000 in post-tax savings for college for our three children (2 in college, 1 in high school) and emergencies. The house was paid off 2-3 years ago. We have Zero credit card debt due to salary income.
This year, we bought a condo at the University where my oldest daughter is a junior. A 2-bdr/2 1/2 bath modest unit, it is the closest housing to campus. We paid cash. The bank where I have done business for 30 years offered me an 11.9% home equity line to pay for it…my credit is excellent but bank didn’t want a short-term loan on the books. I didn’t even bother negotiating and borrowed what extra was needed from my 401k to be paid back in 2 years. Best investment I’ve made in years. I’m looking to buy a second unit but they rarely come on the market in this small, tidy complex.
We’re holding on to our over-sized house until the housing market recovers, then we’ll consider moving to something smaller. We’re actively looking for a retirement/income property right now, but I’m hesitant to take on a $300k mortgage given my age and uncertain employment future. They just had a round of layoffs at work and, of course, most of those hit were over the age of 55, earning higher salaries.
My wife wants to consider buying something out of state, but I think owning a rental property hundreds of miles away is impractical, and risky.
I intend to work part-time in retirement beginning in a couple years. I’ve done the math. Even with all of our savings, it’s not going to be a “care free” retirement. We’ll have to watch the budget and be prepared to help out our 3 children.
Thank goodness I got married late — to a woman who has two degrees in accounting!
I’m 19 and just started saving. I don’t have a lot, but hopefully after reading through this, researching everything I need to know, and figuring out all the right things to do with my retirement money, I’ll be well off when I’m old, married and retired.
Just wintering if the conversation has continued?