How much should you have saved for retirement so far by age?
The average household income is about $50,000 in America, but that takes into account ALL age groups.
Here’s what it looks like as an average household income of Americans by age:
BENCHMARKS FOR RETIREMENT SAVINGS
If we take this model and take a look at estimated required retirement savings, we can be a little more accurate and have average benchmarks for what you should have saved by retirement:
Age 35 = $77,376 saved (1X your salary)
Age 45 = $235,551 saved (3X your salary)
Age 55 = $377,585 saved (5X your salary)
Age 65 (retirement) = $604,136 saved (8X your salary)
YET, MOST PEOPLE ONLY HAVE $25K SAVED!
It’s no wonder that people are delaying retirement until the age of 80 because they simply haven’t saved enough to retire:
While respondents said they will need a median of $300,000 in total savings to support themselves in retirement, the average amount saved is only $25,000.
Only 22% say they have calculated the amount of money needed for retirement — whereas 75% of respondents said they guess.
So to put it in perspective, 75% of people are guessing that they need about $300,000 saved for retirement (median number taken from all age groups), but they only have $25,000 saved.
Even more frightening news:
Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts less than $30,000 in their retirement accounts. (Via)
For those NEARING retirement age, they still had less than $30,000 saved.
If you aren’t freaked out by now about your retirement (at any age that you’re at), you should be.
IT IS NEVER TOO LATE TO SAVE!
It isn’t rocket science.
It’s discipline, it’s boring & painful (at first!), and it’s work.
- Figure out your net income
- Build a preliminary budget based on your net income, based on what you think you spend
- Track your actual expenses; they are surely higher than what you’re estimating
- Review your budget each month against what you actually spent
- Trim your expenses (or be more realistic in your budget)
- Save at least 10% (I prefer 15% – 25%)
- If you still have a gaping hole in your budget, then make more money
- The younger you start, the better it is, otherwise you’ll have to work later and later