What is an average retirement a/c worth in America ?

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stimulacra
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Re: What is an average retirement a/c worth in America ?

Post by stimulacra »

Average 401k balance by retirement age is about $200k, median balance is $65k.

Most people without a 401k, 403b, pension or equivalent plan depend on social security, a paid off home, and whatever taxable investments they might have.

Bogleheads is skewed. It's an investing forum with an eye towards retirement. People with more modest incomes and balances are also more likely to just lurk on the site and not actively participate.

25 times annual expenses is one good rule of thumb. I've heard some folks advise 30x. Finance gurus like Dave Ramsey advises 10 times annual income. Is he selling a magical fantasy number to people that would be hopelessly discouraged 25x expenses? Or is 10X a mental tipping point that gets most people to 25 in short order? Or maybe he knows something about the life expectancy of his listeners?
Marseille07
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Re: What is an average retirement a/c worth in America ?

Post by Marseille07 »

Zillions wrote: Tue Mar 23, 2021 8:21 pm
Slacker wrote: Tue Mar 23, 2021 7:46 pm Some of the most popular posts here are full of outliers and should not be used to assess the average, median or mode of family finances.

I take it as quite a few "humble bragging" about their $350k silicon valley salaries with $200k RSUs and buying $2million homes with $1.5 million networth at age 35 and very much enjoy the entertainment of getting to be a fly on the wall, but never use these posts to compare my family to. I will scan through these posts (and others) looking for any little tricks I may have missed out on or forgotten about to apply to the situation of my family.

Actually, there was one that stuck out to me where I read posts telling an OP that a 300K salary in Silicon Valley for a 2-income family was "serious career mismanagement", I about fell off the chair reading that. I would be on my knees, thanking the good Lord, if my family was grossing anywhere near 300K in income per annum.

My issue is that we - spouse & I - did bungle our finances when we were young and had time on our side. When we finally woke up, it was almost too late but then the bull market helped some. We don't hope to get that lucky. Most of my angst is the constant fear we won't leave enough for our son to live off of, after our time. That keeps me up many nights, aside from constant guilt that I screwed up my career so that I could stay home and take better care of him. I did try to go back to work but there was too large a gap on my CV plus I really am not that high IQ to begin with.

So, to see 6 figures in their 20s and millions in their 30s makes me feel inadequate and a real loser, UNTIL I saw that calculator posted above. I have to consciously remind myself that some of these threads are from the very well off. Also, I really am grateful that we have what we have. It could have been 100x worse.

Also, thank you all for your kind words. I really needed to read some of your feedback today.
I think you're taking some posts too seriously. Also, you aren't competing with others; personal finance is personal. You don't need to feel behind or jealous of others.
finite_difference
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Re: What is an average retirement a/c worth in America ?

Post by finite_difference »

My NW was basically 0 until 29. And that’s only because my parents paid for college.
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OnTrack
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Re: What is an average retirement a/c worth in America ?

Post by OnTrack »

TheNightsToCome wrote: Tue Mar 23, 2021 6:42 pm
dqydj.com has what you want:

https://dqydj.com/net-worth-by-age-calc ... ed-states/

For example, if you were between 45-49 with $500K net worth (excluding home equity) in 2019, then you were in the 81st percentile in US. This is 2020 data but based on 2019 net worth, the most recent data available at dqydj.com.
FYI, I was wondering if the calculator above was for individuals, households or something else? Apparently, it is based on PEU. That basically seems to mean an individual or a couple plus dependents.

"Most of the data in the survey are intended to represent the financial
characteristics of a subset of the household unit referred to as the
"primary economic unit" (PEU)."
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Bernard
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Re: What is an average retirement a/c worth in America ?

Post by Bernard »

FACT is, the overwhelming majority of Americans have very little in retirement savings. Many people don't think about saving for retirement before it's too late. That's where SS comes into play. Let's say you get the average of $1,400, and your spouse gets the same. Then you are at $2,8K minus 2x Medicare, so roughly $2,500 per month. If you have a paid-off house, and that's really essential, you should almost be able to live off of that amount. But let's say you need another $1K per month, so $12K per year. Times 25 that's $300K. If you have $1M by the time you retire, you can spend $5,5K per month for as long as you live. I personally think that's pretty good.
jarjarM
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Re: What is an average retirement a/c worth in America ?

Post by jarjarM »

Zillions wrote: Tue Mar 23, 2021 8:21 pm
Slacker wrote: Tue Mar 23, 2021 7:46 pm Some of the most popular posts here are full of outliers and should not be used to assess the average, median or mode of family finances.

I take it as quite a few "humble bragging" about their $350k silicon valley salaries with $200k RSUs and buying $2million homes with $1.5 million networth at age 35 and very much enjoy the entertainment of getting to be a fly on the wall, but never use these posts to compare my family to. I will scan through these posts (and others) looking for any little tricks I may have missed out on or forgotten about to apply to the situation of my family.

Actually, there was one that stuck out to me where I read posts telling an OP that a 300K salary in Silicon Valley for a 2-income family was "serious career mismanagement", I about fell off the chair reading that. I would be on my knees, thanking the good Lord, if my family was grossing anywhere near 300K in income per annum.

My issue is that we - spouse & I - did bungle our finances when we were young and had time on our side. When we finally woke up, it was almost too late but then the bull market helped some. We don't hope to get that lucky. Most of my angst is the constant fear we won't leave enough for our son to live off of, after our time. That keeps me up many nights, aside from constant guilt that I screwed up my career so that I could stay home and take better care of him. I did try to go back to work but there was too large a gap on my CV plus I really am not that high IQ to begin with.

So, to see 6 figures in their 20s and millions in their 30s makes me feel inadequate and a real loser, UNTIL I saw that calculator posted above. I have to consciously remind myself that some of these threads are from the very well off. Also, I really am grateful that we have what we have. It could have been 100x worse.

Also, thank you all for your kind words. I really needed to read some of your feedback today.
I remember that thread. The reality is that even in bay area, median household income is not that close to $300k (except for a few specific zip codes). A large swathes of Bay Area consists of older retirees that bought their houses before the price went insane and live off a modest pension/social security. Prop 13 help keep the property taxes down and CA’s progressive tax rate help limit their impact. I have several relatives retired happily in Bay Area with <$500k retirement portfolio. It’s all about managing income stream and expenses.
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Harry Livermore
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Re: What is an average retirement a/c worth in America ?

Post by Harry Livermore »

OP,
My wife and I made a relatively middle-class income for many years, truthfully a little above but it feels like less in the NYC metro area. I had a short stretch of pulling in a lot of money which we were able to use to our advantage but has not been the norm over the long term. I've always been self-employed, and have seen lots of ups and downs along the way. Luckily, we are frugal folks and resisting "lifestyle inflation" has been relatively easy. My wife is a teacher with very humble beginnings, and helps keep me grounded (the guy with grandiose plans)
I started hitting home runs by being at the right place at the right time in my business, a little bit of smarts and a lot of luck. I was already in my 40s when this happened* and I had some very high income years from 2008 to about 2015. Since then, my business has changed a bit for the worse but I can still usually pull off a pretty high income in a non-COVID year. Nothing like those interim years though.
We scored in the 95th percentile on the calculator on that DQYDJ website, FWIW.
To the extent that I'm proud of anything, it's that when I hit the high income years, I did not run out and buy a boat or a $100K sports car. Each and every year, I maxed out my small company plan, and any leftover money went into taxable and our savings. I put $10K into each of our 3 kids' 529s for many years. We were also saving for a bigger house; our kids were getting bigger and a 2BR 1500 sqft house for 5 people was becoming a challenge. When we had amassed a pile of money for a downpayment, we decided to try and have a go at being landlords and renting out the smaller house, with the plan of perhaps going back there in early retirement.
TL/DR:
I guess the point is, some of this is patience, some of this is luck, and some of this is discipline. Are either of you entrepreneurial? Can you start a side business? Have you looked at your budget to find some things to DIY? I'm pretty handy around the house and that has saved us thousands over the years. My small town does not provide trash pickup, so everyone has a private vendor for that; that's what I do at the rental for the tenants. But for our residence, I take it to the transfer station. I have dutifully loaded up the car with a big black bag and the blue bin every Saturday for the past 30 years. I estimate that this has saved us upwards of $20K in that time. I have found several other areas that are easy saves (we have long purchased used cars, we did not have cable TV for the entire 17 years we lived at the other house, I mow my own lawn and do my own fall cleanup, I paint interiors and exteriors myself)
Is there a way for you to combine those forms of arbitrage? Boost income and cut expenses.
Cheers

* I mention my age because you are worried about a certain amount at a certain point in your life and want to show that some of us have not had a hockey-stick chart. Even if your chart rockets up at 50, you'll be better off at 70!
livesoft
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Re: What is an average retirement a/c worth in America ?

Post by livesoft »

Zillions wrote: Tue Mar 23, 2021 8:13 pm
livesoft wrote: Tue Mar 23, 2021 7:11 pm ...
OK, but if you think that is typical, then you have a different definition of typical than I do. Do you read the posts of people without such assets?
Where are these threads?
First-time poster asking for help yesterday: viewtopic.php?f=1&t=344023

Such threads are almost a daily occurrence.
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DoTheMath
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Re: What is an average retirement a/c worth in America ?

Post by DoTheMath »

Zillions wrote: Tue Mar 23, 2021 8:34 pm
DoTheMath wrote: Tue Mar 23, 2021 7:05 pm
JD2775 wrote: Tue Mar 23, 2021 6:46 pm
Zillions wrote: Tue Mar 23, 2021 6:37 pm I'm looking for some reassurance, and to better manage my expectations.

My family's networth is less than a million (not counting my daughter's Coverdell).

I see posts here from people in their 30s with 1.5 million in investments, people in their 20s with 6 figures in assets etc, "windfalls" in the millions etc, & frankly I'm getting nervous with our situation. It gives the impression that we're terribly behind & might never be able to retire.

What is the size of the average of retirement assets in America for those in their mid to late 40s? We're now aggressively maxing out our Roths & one 401K. Anyone else out there between 45 to 50 with less than a million in assets (not counting education a/cs) but feel you'll make it to a million+ in the next 20 odd years ?

Thanks.
Ummm, I fit that category but I think Ill reach 1 million in the next 5-6 years, not 20.

I think the average American mid to late 40's has far less saved for retirement than you think they do. Don't use this forum as your gauge
+1

I'm not sure when we crossed over the million mark (sometime in the last year, I guess), but I expect to hit two million in ten years or less. It's really true that once you're over 500k, account sizes start to accelerate to a shocking degree. Pretty soon new contributions are for lack of anything better to do with the money rather than their actual contribution to account growth.

Bogleheads can be misleading, but if you read more closely you'll see plenty of not-yet-millionares and late-starters. See: viewtopic.php?t=328722, for example.

It sounds to me like you are on track towards your goals. You can post details here if you want feedback on if your trajectory is going to get you where you want to be.
Does this include home equity? We're heavily invested in the 3-fund portfolio and are renters. If this doubles in the next 10 years (assuming a 7% return after accounting for inflation) we should be millionaires, too.
No. We live in a LCOL area so the value of our house and its appreciation isn't a big factor for us.
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Ramjet
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Re: What is an average retirement a/c worth in America ?

Post by Ramjet »

livesoft wrote: Tue Mar 23, 2021 6:52 pm
Zillions wrote: Tue Mar 23, 2021 6:47 pmI understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
From reading Bogleheads.org for almost 15 years, I do not agree that millions in investments in one's 30s is typical on this forum. Far from it.
It might not be typical, but there are many out of touch Bogleheads. Lots of doctors and tech people on this forum from HCOL areas like NY and CA. Are you really saying that it's rare to see someone with millions in assets asking if they can retire or if they can afford a million dollar house? The OP's statement might not be entirely accurate but you can take his point
livesoft
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Re: What is an average retirement a/c worth in America ?

Post by livesoft »

Ramjet wrote: Wed Mar 24, 2021 9:45 am It might not be typical, but there are many out of touch Bogleheads. Lots of doctors and tech people on this forum from HCOL areas like NY and CA. Are you really saying that it's rare ...
C'mon you know there is quite a spectrum from "typical" to "rare" unless English is not your native language.

Bogleheads does tent to attract nitpickers like myself though.
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rockstar
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Re: What is an average retirement a/c worth in America ?

Post by rockstar »

stimulacra wrote: Tue Mar 23, 2021 11:44 pm Average 401k balance by retirement age is about $200k, median balance is $65k.

Most people without a 401k, 403b, pension or equivalent plan depend on social security, a paid off home, and whatever taxable investments they might have.

Bogleheads is skewed. It's an investing forum with an eye towards retirement. People with more modest incomes and balances are also more likely to just lurk on the site and not actively participate.

25 times annual expenses is one good rule of thumb. I've heard some folks advise 30x. Finance gurus like Dave Ramsey advises 10 times annual income. Is he selling a magical fantasy number to people that would be hopelessly discouraged 25x expenses? Or is 10X a mental tipping point that gets most people to 25 in short order? Or maybe he knows something about the life expectancy of his listeners?
10x income for me is roughly 33x expenses. I think, it's a good conservative number for a 3% withdraw rate. Of course, as your income goes up over time, you're constantly playing catch up.
Marseille07
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Re: What is an average retirement a/c worth in America ?

Post by Marseille07 »

jarjarM wrote: Wed Mar 24, 2021 3:08 am I remember that thread. The reality is that even in bay area, median household income is not that close to $300k (except for a few specific zip codes). A large swathes of Bay Area consists of older retirees that bought their houses before the price went insane and live off a modest pension/social security. Prop 13 help keep the property taxes down and CA’s progressive tax rate help limit their impact. I have several relatives retired happily in Bay Area with <$500k retirement portfolio. It’s all about managing income stream and expenses.
Yeah I just don't get how some posters come out of nowhere and start telling people how low their salaries/savings are. These posts don't help anybody in any way.
kgressler
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Re: What is an average retirement a/c worth in America ?

Post by kgressler »

I always enjoy seeing these threads. Some may see them a repetitive but It really helps reassure me. While I think we are behind because we started so late we are pushing hard to get across that goalline. We are just about to turn 48 and with just about 12x our expenses saved in Roths and 401k's.
We significantly grew our income the last 7 years and started to set aside 40k to 42k each of the last 6 years and should this year as well.
Our goal is to find a way to retire by 60 and then if need be work part time to cover some expenses till her small pension and Medicare kicks in at 65.
I dont know how realistic this is but we have a few years to go and we can reevaluate our circumstance and see where we are. We are thankful for where we are because just 10 years ago we had problably less the 10-20k saved in retirement.
M633
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Re: What is an average retirement a/c worth in America ?

Post by M633 »

OP: I've been hanging out with the NBA Players Association and now it just seems like my basketball skills are so inadequate. I feel like a loser.
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Quirkz
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Re: What is an average retirement a/c worth in America ?

Post by Quirkz »

Zillions wrote: Tue Mar 23, 2021 8:21 pm Most of my angst is the constant fear we won't leave enough for our son to live off of, after our time. That keeps me up many nights, aside from constant guilt that I screwed up my career so that I could stay home and take better care of him.
This line stuck out for me. I know as a parent it's normal to think about the kids, but if you have a long, full life, your son could easily be 50, 60, or 70, before the two of you are gone. Unless you're in a situation where you *know* your son won't be able to take care of himself as an adult, that probably shouldn't be your primary motivator for planning your own retirement. I mean, it's great to be able to provide a hand, but living his life, managing his career, and saving for his retirement ought to be on him, the way your life, your career, and your retirement is on you.
Ivygirl
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Re: What is an average retirement a/c worth in America ?

Post by Ivygirl »

stimulacra wrote: Tue Mar 23, 2021 11:44 pm Average 401k balance by retirement age is about $200k, median balance is $65k.

Most people without a 401k, 403b, pension or equivalent plan depend on social security, a paid off home, and whatever taxable investments they might have.

Bogleheads is skewed. It's an investing forum with an eye towards retirement. People with more modest incomes and balances are also more likely to just lurk on the site and not actively participate.

25 times annual expenses is one good rule of thumb. I've heard some folks advise 30x. Finance gurus like Dave Ramsey advises 10 times annual income. Is he selling a magical fantasy number to people that would be hopelessly discouraged 25x expenses? Or is 10X a mental tipping point that gets most people to 25 in short order? Or maybe he knows something about the life expectancy of his listeners?
I am one of Mr. Ramsey's listeners. What is it you suspect this says about my life expectancy?
balbrec2
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Re: What is an average retirement a/c worth in America ?

Post by balbrec2 »

Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
Account is typically abbreviated as acct.
Ivygirl
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Re: What is an average retirement a/c worth in America ?

Post by Ivygirl »

Zillions wrote: Tue Mar 23, 2021 6:37 pm I'm looking for some reassurance, and to better manage my expectations.

My family's networth is less than a million (not counting my daughter's Coverdell).

I see posts here from people in their 30s with 1.5 million in investments, people in their 20s with 6 figures in assets etc, "windfalls" in the millions etc, & frankly I'm getting nervous with our situation. It gives the impression that we're terribly behind & might never be able to retire.

What is the size of the average of retirement assets in America for those in their mid to late 40s? We're now aggressively maxing out our Roths & one 401K. Anyone else out there between 45 to 50 with less than a million in assets (not counting education a/cs) but feel you'll make it to a million+ in the next 20 odd years ?

Thanks.
If you are looking for another point of comparison I don't mind being one. My net worth at age 46 was basically zero. Ten years later I have $151,000 in retirement accounts, $22,000 in an HSA, $40,000 in home equity, and $10,000 in cash. My income for those 10 years was $50k to $56k. I'm in a low cost of living area. I'm not likely to make $1 million but I am going to be just fine.

I'm not deterred from posting here because my income and assets are moderate, but I do skip the "what do I do with my spare million dollars" threads. Money is boring, it's humanity interacting with money that is interesting.

If any late-starters or moderate-income folks are lurking and reading: follow the Bogleheads plan, it really works. You don't have to have ancestors that came over on the Mayflower, you don't have to work in tech, or even have ninja negotiating skills to get big raises or fancy jobs.
jarjarM
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Re: What is an average retirement a/c worth in America ?

Post by jarjarM »

Quirkz wrote: Wed Mar 24, 2021 11:50 am
Zillions wrote: Tue Mar 23, 2021 8:21 pm Most of my angst is the constant fear we won't leave enough for our son to live off of, after our time. That keeps me up many nights, aside from constant guilt that I screwed up my career so that I could stay home and take better care of him.
This line stuck out for me. I know as a parent it's normal to think about the kids, but if you have a long, full life, your son could easily be 50, 60, or 70, before the two of you are gone. Unless you're in a situation where you *know* your son won't be able to take care of himself as an adult, that probably shouldn't be your primary motivator for planning your own retirement. I mean, it's great to be able to provide a hand, but living his life, managing his career, and saving for his retirement ought to be on him, the way your life, your career, and your retirement is on you.
OP have specific posts on special need trust so I suspect that's exactly the reason why he is worry, which I think we can all understand as parents.
deltaneutral83
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Re: What is an average retirement a/c worth in America ?

Post by deltaneutral83 »

I would probably aim for 25x post tax annual expenses plus any social security as I get to 65. This benchmark often publicized probably assumes no debt, and all kids are out of the house and independent. It is also very likely at a 4% withdrawal rate one would leave some behind to heirs. You won't read too much about that on here but you will read a lot about the 2% failure rate or whatever it is because that's our BH nature. Truth is one will be able to cut expenses to not wind up on your kid's couch eating cat food. I don't particularly care for the term retirement, I just say no longer earning an income, but before age 60-65, I would probably increase my post tax annual expense and try to get it as close to 33x expenses as possible, and the earlier you go the more likely you have dependents that still factor into your expenses (college being the biggest).

Just a guess, but at certain income levels, I bet 70% of Americans don't have anything saved and every other day is a financial calamity just to eat. Next 10% is probably a hybrid of paycheck to paycheck and having some left over at various points that immediately is spent on consumption. Of the probably 20% who make enough year to year and are able to save for their golden years, I bet half don't. It really only boils down to one's own annual expenses as it relates to retirement. Someone with HHI of $450k in the Bay Area with private schools/not living in a shoe box/CA taxes/slightly undisciplined might be in worse shape than someone with HHI of $100k down south with decent public schools in a suburb and is moderately intentional with their money. I still can't believe real estate in some areas.
aerosurfer
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Re: What is an average retirement a/c worth in America ?

Post by aerosurfer »

Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
Maybe not necessarily just high NW people here, but people who have a better vision for how their money works and savings goals to get there.... which in turn can make success breed success in other avenues of their life.
wolf359
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Re: What is an average retirement a/c worth in America ?

Post by wolf359 »

goonie wrote: Tue Mar 23, 2021 7:34 pm
New Providence wrote: Tue Mar 23, 2021 7:19 pm Why do you want a lot of money anyways? If you read these posts, as you say you do, you will also notice that the main goal is not to spend any money. There may be lots of millionaires in here, but most of them will never spend their money. If your plan is not to spend it, then you shouldn't worry too much about having it.
LOL

The Bogleheads Hoarders Guild has many members. I think there's a special badge or ribbon that gets placed on your tombstone if you're the richest person in the graveyard. Dying while working also earns a prize. Points get deducted if you retire before 60. Retire before 50 and your membership is revoked.
There's a real lesson in the humor. It's true that some of the Bogleheads achieved their goals by having a high income. But it's also true that some of them were frugal and managed their resources wisely. The best path is to be both frugal and have a high income.

For many people, the frugal mindset precedes the high income. Once you aren't living paycheck to paycheck and have a chance to breathe, you can take more career risks. Those risks may have a positive impact on your income.

However, I think this is the wrong question. Comparison is the thief of joy. My circumstances and mindset have nothing to do with yours.

What is the number that will meet your needs, and how long will it take you to get there?

The fact that someone else got there faster, or with more assets, has nothing to do with you. That should not make you miserable, any more than the fact that a random internet stranger went bankrupt should make you happy. (If that brings you joy, then you should be perusing Wall Street Bets instead of Bogleheads.)

What you can learn from the success stories is how people did it, and if any of their paths could be adapted to your toolkit, to improve your own finances.
tibbitts
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Re: What is an average retirement a/c worth in America ?

Post by tibbitts »

RyeBourbon wrote: Tue Mar 23, 2021 9:32 pm
tibbitts wrote: Tue Mar 23, 2021 7:07 pm
Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
A/c isn't "account" anywhere else, so you might want to edit the title to avoid snarky comments like "less than the average retirement heat pump."
https://www.accountingcoach.com/blog/what-is-ac

Definition of a/c
In accounting, a/c is the abbreviation for account.
Wow that's surprising to me: I don't remember ever seeing it used. Has that always been the abbreviation, vs. say, acct(s)? Would accounting textbooks from, say, 40 years ago, have used that abbreviation? If so I can't believe I wouldn't have seen it in all these years, but maybe I've just forgotten. In any case thanks for the correction.
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Gort
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Re: What is an average retirement a/c worth in America ?

Post by Gort »

Triple digit golfer wrote: Tue Mar 23, 2021 8:49 pm
csmath wrote: Tue Mar 23, 2021 8:46 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
25 times annual spending needs after considering what a discounted pension/SS will cover right?
Yes. If you need $80k and a pension and SS will cover $30k, you need $50k a year from your portfolio, so $1.25 million would be 25x that.
What does *discounted* mean? Thanks.
wolf359
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Re: What is an average retirement a/c worth in America ?

Post by wolf359 »

aerosurfer wrote: Wed Mar 24, 2021 12:25 pm
Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
Maybe not necessarily just high NW people here, but people who have a better vision for how their money works and savings goals to get there.... which in turn can make success breed success in other avenues of their life.
I don't think most people here are 30-something multi-millionaires. I think the last survey I recall (when those were still being run) was that most Bogleheads are on the older side. The Census data bears this out as well. The wealthier households in the US are generally headed by older people who have had more time to accumulate their wealth.

But yes, BH forums tend to be populated by people who have assets and are trying to learn how to invest them (by definition, those with a higher net worth than average.)
wolf359
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Re: What is an average retirement a/c worth in America ?

Post by wolf359 »

Gort wrote: Wed Mar 24, 2021 12:36 pm
Triple digit golfer wrote: Tue Mar 23, 2021 8:49 pm
csmath wrote: Tue Mar 23, 2021 8:46 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
25 times annual spending needs after considering what a discounted pension/SS will cover right?
Yes. If you need $80k and a pension and SS will cover $30k, you need $50k a year from your portfolio, so $1.25 million would be 25x that.
What does *discounted* mean? Thanks.
Example: When including Social Security in my income estimates, I reduce the amount of Social Security income by 25%, anticipating that I will be receiving only 75% of the promised amount. This is because the annual Trustees report states that Social Security will be reduced by 25% or so around 2030, should no reforms be made by Congress.

Similarly, many pensions are underfunded, and might not provide the full promised payout over your entire lifetime. It might be similarly reduced, or discounted, to allow conservative planning to occur.
jarjarM
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Re: What is an average retirement a/c worth in America ?

Post by jarjarM »

wolf359 wrote: Wed Mar 24, 2021 12:46 pm
aerosurfer wrote: Wed Mar 24, 2021 12:25 pm
Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
Maybe not necessarily just high NW people here, but people who have a better vision for how their money works and savings goals to get there.... which in turn can make success breed success in other avenues of their life.
I don't think most people here are 30-something multi-millionaires. I think the last survey I recall (when those were still being run) was that most Bogleheads are on the older side. The Census data bears this out as well. The wealthier households in the US are generally headed by older people who have had more time to accumulate their wealth.

But yes, BH forums tend to be populated by people who have assets and are trying to learn how to invest them (by definition, those with a higher net worth than average.)
A quick browse of the networth progression thread agrees with you. Most 30-something aren't multi-millionaires. And that thread already have significant selection bias to begin with in BH universe.
matti
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Re: What is an average retirement a/c worth in America ?

Post by matti »

Hello. I'm 27 and have $74 million in the bank. Can I retire early?
stoptothink
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Re: What is an average retirement a/c worth in America ?

Post by stoptothink »

Marseille07 wrote: Wed Mar 24, 2021 10:39 am
jarjarM wrote: Wed Mar 24, 2021 3:08 am I remember that thread. The reality is that even in bay area, median household income is not that close to $300k (except for a few specific zip codes). A large swathes of Bay Area consists of older retirees that bought their houses before the price went insane and live off a modest pension/social security. Prop 13 help keep the property taxes down and CA’s progressive tax rate help limit their impact. I have several relatives retired happily in Bay Area with <$500k retirement portfolio. It’s all about managing income stream and expenses.
Yeah I just don't get how some posters come out of nowhere and start telling people how low their salaries/savings are. These posts don't help anybody in any way.
I don't bother to share my salary on here anymore because I was told, multiple times, that I was lying; either about my job title or how little my compensation was. Was really eye-opening because I have a ~90th percentile income for my age and make quite a bit more than the large majority of my friends, family, and peers.

Once you get past the subset of this board who can't even comprehend how someone could get $0 in financial help from parents for college (and literally work their own way through) and how a senior management level job at a large corp could have total compensation less than half their annual RSUs, there is so much to learn. Even though I've been here for years, it still annoys me sometimes.
snowman
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Re: What is an average retirement a/c worth in America ?

Post by snowman »

matti wrote: Wed Mar 24, 2021 12:52 pm Hello. I'm 27 and have $74 million in the bank. Can I retire early?
No, you cannot! Have you accounted for health insurance till Medicare? How about taxes? Is your spouse employed? Do you want to see your (future) kids watching you NOT working? What are you going to do every day, all day long? Do you really want to be parasite on the society? What do you parents think of your plan?

I say you keep working at least till 60, save half of your income, then post back with your updated numbers. You should be in much better shape by then.
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Harry Livermore
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Re: What is an average retirement a/c worth in America ?

Post by Harry Livermore »

wolf359 wrote: Wed Mar 24, 2021 12:50 pm
Gort wrote: Wed Mar 24, 2021 12:36 pm
Triple digit golfer wrote: Tue Mar 23, 2021 8:49 pm
csmath wrote: Tue Mar 23, 2021 8:46 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
25 times annual spending needs after considering what a discounted pension/SS will cover right?
Yes. If you need $80k and a pension and SS will cover $30k, you need $50k a year from your portfolio, so $1.25 million would be 25x that.
What does *discounted* mean? Thanks.
Example: When including Social Security in my income estimates, I reduce the amount of Social Security income by 25%, anticipating that I will be receiving only 75% of the promised amount. This is because the annual Trustees report states that Social Security will be reduced by 25% or so around 2030, should no reforms be made by Congress.

Similarly, many pensions are underfunded, and might not provide the full promised payout over your entire lifetime. It might be similarly reduced, or discounted, to allow conservative planning to occur.
I do the same.
Additionally, when calculating my net worth, I plug in the business' assets at 50%. I also discount the average of tax assessor and Zillow's valuations on each property by 20%.
And I am aiming for 33x expenses, rather than 25x, in our investments.
Hedging I guess...
Cheers
goonie
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Re: What is an average retirement a/c worth in America ?

Post by goonie »

snowman wrote: Wed Mar 24, 2021 1:09 pm
matti wrote: Wed Mar 24, 2021 12:52 pm Hello. I'm 27 and have $74 million in the bank. Can I retire early?
No, you cannot! Have you accounted for health insurance till Medicare? How about taxes? Is your spouse employed? Do you want to see your (future) kids watching you NOT working? What are you going to do every day, all day long? Do you really want to be parasite on the society? What do you parents think of your plan?

I say you keep working at least till 60, save half of your income, then post back with your updated numbers. You should be in much better shape by then.

And what if you get wiped out in a lawsuit? Or get a disease that costs $50 million to treat? The list of things to worry about is endless.

Retirement application...REJECTED.
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Quirkz
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Re: What is an average retirement a/c worth in America ?

Post by Quirkz »

jarjarM wrote: Wed Mar 24, 2021 12:19 pm
Quirkz wrote: Wed Mar 24, 2021 11:50 am
Zillions wrote: Tue Mar 23, 2021 8:21 pm Most of my angst is the constant fear we won't leave enough for our son to live off of, after our time. That keeps me up many nights, aside from constant guilt that I screwed up my career so that I could stay home and take better care of him.
This line stuck out for me. I know as a parent it's normal to think about the kids, but if you have a long, full life, your son could easily be 50, 60, or 70, before the two of you are gone. Unless you're in a situation where you *know* your son won't be able to take care of himself as an adult, that probably shouldn't be your primary motivator for planning your own retirement. I mean, it's great to be able to provide a hand, but living his life, managing his career, and saving for his retirement ought to be on him, the way your life, your career, and your retirement is on you.
OP have specific posts on special need trust so I suspect that's exactly the reason why he is worry, which I think we can all understand as parents.
In that case, then absolutely I do understand that priority. I'd imagine unusually large life insurance policies might be an important part of that plan, then, but I'm also out of my depth beyond that. There's a lot of big estate and trust planning things to figure out.

So then back to the original question, it's still okay to not be a millionaire by 30, and be on a path that will meet the goals. Just plan carefully and realistically, and reassess regularly to make sure you're on track and you can do fine.
LateStarter1975
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Re: What is an average retirement a/c worth in America ?

Post by LateStarter1975 »

Zillions wrote: Tue Mar 23, 2021 6:37 pm I'm looking for some reassurance, and to better manage my expectations.

My family's networth is less than a million (not counting my daughter's Coverdell).

I see posts here from people in their 30s with 1.5 million in investments, people in their 20s with 6 figures in assets etc, "windfalls" in the millions etc, & frankly I'm getting nervous with our situation. It gives the impression that we're terribly behind & might never be able to retire.

What is the size of the average of retirement assets in America for those in their mid to late 40s? We're now aggressively maxing out our Roths & one 401K. Anyone else out there between 45 to 50 with less than a million in assets (not counting education a/cs) but feel you'll make it to a million+ in the next 20 odd years ?

Thanks.

Always try to remember this quote when you read those outlier posts on Bogleheads…. "Comparison is the thief of joy"
Debt is dangerous...simple is beautiful
ddurrett896
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Re: What is an average retirement a/c worth in America ?

Post by ddurrett896 »

matti wrote: Wed Mar 24, 2021 12:52 pm Hello. I'm 27 and have $74 million in the bank. Can I retire early?
Only if you drive a 15 year old Toyota Camry.
H-Town
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Re: What is an average retirement a/c worth in America ?

Post by H-Town »

matti wrote: Wed Mar 24, 2021 12:52 pm Hello. I'm 27 and have $74 million in the bank. Can I retire early?
Yup. We found DFV's burner account.
Time is the ultimate currency.
LateStarter1975
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Re: What is an average retirement a/c worth in America ?

Post by LateStarter1975 »

finite_difference wrote: Wed Mar 24, 2021 12:02 am My NW was basically 0 until 29. And that’s only because my parents paid for college.
My NW was negative $30,000 at age 35! I'm 46 now and I'm not complaining.
Debt is dangerous...simple is beautiful
Independent George
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Re: What is an average retirement a/c worth in America ?

Post by Independent George »

LateStarter1975 wrote: Wed Mar 24, 2021 1:38 pm
finite_difference wrote: Wed Mar 24, 2021 12:02 am My NW was basically 0 until 29. And that’s only because my parents paid for college.
My NW was negative $30,000 at age 35! I'm 46 now and I'm not complaining.
I went from $145k at age 30 (2007), to -$15k at 31 (2008). I never want to go into negative numbers ever again.
phxjcc
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Re: What is an average retirement a/c worth in America ?

Post by phxjcc »

Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
No, this place is not normal.

The rest of the world thinks "I have x so I can only spend Y".

Boglehead says I want to spend Y so I need to save 33*Y".
dboeger1
Posts: 1411
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Re: What is an average retirement a/c worth in America ?

Post by dboeger1 »

phxjcc wrote: Wed Mar 24, 2021 4:11 pm
Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
No, this place is not normal.

The rest of the world thinks "I have x so I can only spend Y".

Boglehead says I want to spend Y so I need to save 33*Y".
Not that this is a desirable model to emulate, but MANY others don't even do that. Many will say, "I can finance y where y>x, so I'll spend y and complain later that the things I want above y are unaffordable because of the system". I realize this may sound overly harsh to people legitimately struggling (I've been there myself), but it's amazing how homeless people survive begging for a few bucks a day, yet you'll hear from fairly typical families with incomes, homes, kids, government benefits, etc. that they absolutely cannot afford anything but the bare necessities. More often than not, they have nice TVs, phones, gaming systems, cars, babysitters, clothes, high-margin packaged foods, and credit card debt. I've met lots of people like this with a fraction of my wealth, and almost everything they enjoy on a daily basis is stuff I put off for years so that I could prioritize long-term investments. There's a real anchoring bias among the middle class that the things people grew up with should just be easily affordable because they're "normal", even though that's not always the case.
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CyclingDuo
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Re: What is an average retirement a/c worth in America ?

Post by CyclingDuo »

Zillions wrote: Tue Mar 23, 2021 6:37 pm I'm looking for some reassurance, and to better manage my expectations.

My family's networth is less than a million (not counting my daughter's Coverdell).

I see posts here from people in their 30s with 1.5 million in investments, people in their 20s with 6 figures in assets etc, "windfalls" in the millions etc, & frankly I'm getting nervous with our situation. It gives the impression that we're terribly behind & might never be able to retire.

What is the size of the average of retirement assets in America for those in their mid to late 40s? We're now aggressively maxing out our Roths & one 401K. Anyone else out there between 45 to 50 with less than a million in assets (not counting education a/cs) but feel you'll make it to a million+ in the next 20 odd years ?

Thanks.
Don't worry too much about having to be in the top 1% in every state. Or just move to a state where you qualify. :mrgreen:

Here is what it takes to be top 1% in all 50 US states...

https://windfalldata.com/blog/what-it-t ... ery-state/
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
edgeagg
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Location: WA-US

Re: What is an average retirement a/c worth in America ?

Post by edgeagg »

Frankly, why worry about others? Just do your forward projections at your target retirement and desired spend. Portfolio visualizer and cfiresim should be of great help.

Bogleheads is not at all representative of the "retirement interested" population. There are some folks here who have more than 10m and are worried about being destitute :-).
ea
mikejuss
Posts: 2833
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Re: What is an average retirement a/c worth in America ?

Post by mikejuss »

Zillions wrote: Tue Mar 23, 2021 6:47 pm
Jack FFR1846 wrote: Tue Mar 23, 2021 6:41 pm The ultimate goal is to have on the order of 25 times your annual spending in liquid assets at retirement. Average would not help unless your spending is indeed average.

What does a/c mean?
A/c is account.

I understand that lifestyle matters. My question is if the millions in investments in one's 30s are realistic for most families or if BH forums are more likely to be populated by those with a high net worth.
Please bear in mind that the main driver of Bogleheads' wealth--of anyone's wealth--is their income. What's realistic for you is relative to your income (and your ability to save). Do your honest best to earn, save, and invest prudently, and try not to worry too much about not having millions in your thirties.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
asap
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Re: What is an average retirement a/c worth in America ?

Post by asap »

CyclingDuo wrote: Wed Mar 24, 2021 4:44 pm
Zillions wrote: Tue Mar 23, 2021 6:37 pm I'm looking for some reassurance, and to better manage my expectations.

My family's networth is less than a million (not counting my daughter's Coverdell).

I see posts here from people in their 30s with 1.5 million in investments, people in their 20s with 6 figures in assets etc, "windfalls" in the millions etc, & frankly I'm getting nervous with our situation. It gives the impression that we're terribly behind & might never be able to retire.

What is the size of the average of retirement assets in America for those in their mid to late 40s? We're now aggressively maxing out our Roths & one 401K. Anyone else out there between 45 to 50 with less than a million in assets (not counting education a/cs) but feel you'll make it to a million+ in the next 20 odd years ?

Thanks.
Don't worry too much about having to be in the top 1% in every state. Or just move to a state where you qualify. :mrgreen:

Here is what it takes to be top 1% in all 50 US states...

https://windfalldata.com/blog/what-it-t ... ery-state/

Why so high in Hawaii and California? Real Estate?
jarjarM
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Re: What is an average retirement a/c worth in America ?

Post by jarjarM »

asap wrote: Wed Mar 24, 2021 5:04 pm
CyclingDuo wrote: Wed Mar 24, 2021 4:44 pm
Zillions wrote: Tue Mar 23, 2021 6:37 pm I'm looking for some reassurance, and to better manage my expectations.

My family's networth is less than a million (not counting my daughter's Coverdell).

I see posts here from people in their 30s with 1.5 million in investments, people in their 20s with 6 figures in assets etc, "windfalls" in the millions etc, & frankly I'm getting nervous with our situation. It gives the impression that we're terribly behind & might never be able to retire.

What is the size of the average of retirement assets in America for those in their mid to late 40s? We're now aggressively maxing out our Roths & one 401K. Anyone else out there between 45 to 50 with less than a million in assets (not counting education a/cs) but feel you'll make it to a million+ in the next 20 odd years ?

Thanks.
Don't worry too much about having to be in the top 1% in every state. Or just move to a state where you qualify. :mrgreen:

Here is what it takes to be top 1% in all 50 US states...

https://windfalldata.com/blog/what-it-t ... ery-state/

Why so high in Hawaii and California? Real Estate?
I always wonder where the windfall data come from, it's different than the fed survey of consumer finance where most of the research data was based on.
seawolf21
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Re: What is an average retirement a/c worth in America ?

Post by seawolf21 »

Fido report aggregate 401(k) balances by zip and age.

https://communications.fidelity.com/wi/ ... -stack-up/
User avatar
CyclingDuo
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Re: What is an average retirement a/c worth in America ?

Post by CyclingDuo »

stimulacra wrote: Tue Mar 23, 2021 11:44 pm25 times annual expenses is one good rule of thumb. I've heard some folks advise 30x. Finance gurus like Dave Ramsey advises 10 times annual income. Is he selling a magical fantasy number to people that would be hopelessly discouraged 25x expenses? Or is 10X a mental tipping point that gets most people to 25 in short order? Or maybe he knows something about the life expectancy of his listeners?
If Ramsey is actually advising 10 times annual income, he is in line with the big financial firms that use that same metric. Fidelity, for example, uses the 10X multiple of salary and is based on taking SS at FRA of age 67 and the household not having a pension.

Image
https://www.fidelity.com/viewpoints/ret ... -to-retire

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
jarjarM
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Re: What is an average retirement a/c worth in America ?

Post by jarjarM »

seawolf21 wrote: Wed Mar 24, 2021 5:31 pm Fido report aggregate 401(k) balances by zip and age.

https://communications.fidelity.com/wi/ ... -stack-up/
Interesting link. Thanks for sharing.
rockstar
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Re: What is an average retirement a/c worth in America ?

Post by rockstar »

Sometimes this site reminds me House Hunters and the ridiculous budgets.

https://www.countryliving.com/life/ente ... ny-tweets/
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