Rules of thumb for retirement savings

Quick math says if you've saved 10% of what you've earned starting at age 25, by 35 you'd have a year's worth assuming income stays the same and there's no growth on the savings.

Point: become a hedge fund manager. Wait, what?

Yeah - hopefully you have more, but I guess it is a better start than most people have. I'd say that benchmark might be better at age 26-28 for today's generation who (for the most part) aren't relying on Social Security actually being there to help.

And I'm no specifically saying you should have put away that much - but the value of the account with growth/compounding factored in should be there.

Its not like I'm bitter that I'm dumping money into something I'll never see...

Here are the guidelines [clarkhoward.com] you're looking for:

- By 35, save 1x gross annual salary
- By 40, save 2x gross annual salary
- By 45, save 3x gross annual salary
- By 50, save 4x gross annual salary
- By 55, save 5x gross annual salary
- By 60, save 6x gross annual salary
- By 67, save 8x gross annual salary

Here is another guide [clarkhoward.com] showing how much someone has to save at their particular age to become a millionaire by age 65:

- A 15-year-old teenager can save just $2,000 a year for 7 years. Then, never saving another penny again, the money can grow to be $1,000,000 at 65.
- 25 year olds have to save a little over $300 a month. That's just $10 a day for the rest of their working lifetime.
- 35 year olds have to save $775 a month.
- 45 year olds have to save $1,850 a month.
- 55 year olds have to save $5,700 a month.

Quote from Brian1 : Here are the guidelines [clarkhoward.com] you're looking for: - By 35, save 1x gross annual salary - By 40, save 2x gross annual salary - By 45, save 3x gross annual salary - By 50, save 4x gross annual salary - By 55, save 5x gross annual salary - By 60, save 6x gross annual salary - By 67, save 8x gross annual salary Here is another guide [clarkhoward.com] showing how much someone has to save at their particular age to become a millionaire by age 65: - A 15-year-old teenager can save just $2,000 a year for 7 years. Then, never saving another penny again, the money can grow to be $1,000,000 at 65. - 25 year olds have to save a little over $300 a month. That's just $10 a day for the rest of their working lifetime. - 35 year olds have to save $775 a month. - 45 year olds have to save $1,850 a month. - 55 year olds have to save $5,700 a month.

Not going to disagree with the numbers, but wanted to point out the second guide assumes $10,000 starting balance and 7% return (for the 25 and older. Couldn't find the story for the 15 year old).

Assuming your expenses are below $12k/year, and you get a professional $60k job at 22, and start saving hardcore at a 75% savings rate after taxes, you could retire at age 35, living well on $12k passively per year. Work and save another 5 years if you wanted to, and you can add another $12k passively from invested savings. Total $25k/year in passive returns by age 40.
Retire, or keep working, the choice is yours of course. The less you learn to be happy without the sooner you can retire.

Quote from ViciousTide : Assuming your expenses are below $12k/year, and you get a professional $60k job at 22, and start saving hardcore at a 75% savings rate after taxes, you could retire at age 35, living well on $12k passively per year. Work and save another 5 years if you wanted to, and you can add another $12k passively from invested savings. Total $25k/year in passive returns by age 40. Retire, or keep working, the choice is yours of course. The less you learn to be happy without the sooner you can retire.

None of this is a rule of thumb.

Also, I just find it funny how you manage to live on 12k/year. In two days, my puppy chewed my wife's glasses and then had a vet appt that cost 300 dollars. There's no way a 12k/yr plan could take that into account. But I guess if i lived in a tent in my mom's backyard, I couldn't have a puppy...or a wife...

Quote from zarfus : In two days, my puppy chewed my wife's glasses and then had a vet appt that cost 300 dollars. There's no way a 12k/yr plan could take that into account. But I guess if i lived in a tent in my mom's backyard, I couldn't have a puppy...or a wife...

LMAO. Brilliant.

So there you have it: passive income. Just go ahead and pass on working like it's the black plague and just relax while you earn kick ass returns on some random stocks in some fantasy world with ever-increasing dividen yields in a low-interest rate, high-risk market dominated by computers who's main goal is to stuff your bid before you can even enter it into your account! Thank you sir, I'll have another.

you should save 20 percent of your wages from 21 or your frst job untl you retire

Quote from zarfus : None of this is a rule of thumb. Also, I just find it funny how you manage to live on 12k/year. In two days, my puppy chewed my wife's glasses and then had a vet appt that cost 300 dollars. There's no way a 12k/yr plan could take that into account. But I guess if i lived in a tent in my mom's backyard, I couldn't have a puppy...or a wife...

Why like on $12k/year when you could live on $6k/year? You can hit retirement sooner and tap into that sweet $6k/year annual divestment you set up for yourself!

At my current rate I should have about 8 million in my 401k by retirement. I'm 26 now and should have a years salary in a few years, well before the 35 mark proposed.

I'm working to live, not living to work

Quote from dealsnodeals : you should save 20 percent of your wages from 21 or your frst job untl you retire

I'm doing about 18%, but have thought about raising my contributions.

Quote from nizzy1115 : At my current rate I should have about 8 million in my 401k by retirement. I'm 26 now and should have a years salary in a few years, well before the 35 mark proposed. I'm working to live, not living to work I'm doing about 18%, but have thought about raising my contributions.

Im 29 and already have 3x salary. This is of course 401k + roth ira. I guess i'll be an 8 millionaire too by the time I retire.

These rule of thumb things are useless. They never make sense.

Moar Moar moar.