Am I on track for retirement?
Yes, you are doing quite well. Most people futz around and don't take this seriously until they are 40. The average balance of 401K of people in their 50s is something incredibly low like $150K. And that's the folks who have a 401K, many don't! The average for everybody is something like $30K. At retirement, you could take the money out, buy an annuity and get monthly checks until you die. $150K would currently get you an annuity of $785 a month (or $9420 a year). $30K would get you $157 a month (or $1884 a year). Here's the deal. You work for 30-40 years putting money in. You also learn to live on roughly 80% of your income. Then when you retire, you take money out from the retirement money, other savings, social security benefits, etc. Your expenses *may* go down if you aren't working (you don't have to pay for nice clothes or pay for parking). You will need to live on this money for another 30-40 years. But you aren't replacing 100% of your income, only the 80% you were successfully living on. I started low and eventually got my savings rate to be 15% of wages. I had some matching funds and also put money into IRAs at the end of the year. I ALSO put similar amounts into reducing debt and/or savings. By having other savings, I never risked touching the retirement money even if I lost a job or bought a house. Let's see at 25, I had $1050 in an IRA and a net worth of -$8K (school loans). At age 30, I had saved, cumulatively $7K into the retirement accounts and had a net worth of $42K. At 40, I'd added, cumulatively, $80K into retirement savings. At 50, I'd added, cumulatively, $150K into retirement accounts. At 50, the $150K had grown to $300K. I am now looking at retirement having retirement accounts of over $600-$700K. I also have other savings that are about the same. I could buy an immediate annuity at age 65 and get $75K a year for life.
As stated, it's not an easy question to answer. However, the simple answer is that it is about cash flow. Assuming you have little to no debt then something less net income than what you need when working. For instance you really don't need two cars when both ( or one ) husband and wife are not working. ( or better yet, move to a place where you can walk or ride a bike or public transit). Kids may be on their own, so less food and other consumables. Your wardrobe gets simpler and less expensive. Move into a smaller home in a low cost area with less variable upkeep costs. Etc Etc. Planning for retirement is something you should start when you are in your 20s, not your 50s.Personally I plan on retiring with no debt, a "second career" to keep me busy likely a newer car to last another 10-15 years and 80-90% income replacement.
You are still young and have a long way to go.One thing that you can do is set up your own personal IRA, and try to contribute as much as you can each year.If you have access to a 401K, and not everyone does, that is also a great savings vehicle.Check out some Scott Adams videos on YouTube. He suggests not to focus on goals, as you are doing with your 55 numbers.Instead of a goal, create a SYSTEM that will help you move the ball forward. Your system could be changing how many times you dine out per week. Or how often you buy a new car. Or seeking out overtime work.You establish your system, and you adjust your day to day spending, and behavior based upon your system. It works. I am 71. I have been retired for about 7 years. We are not rich, but we had a system to save as much as we could, and we started at about 30.Try to buy appreciating things like property or houses. And not so much on depreciating things like cars and toys.At 55, you may love your job and are making good money. When you retire depends so much on your job, your partner, your health, where you live. your savings and so much more.Don’t focus on 55.Live a good life now, but follow your system.Get advice from a financial planner, if you need that.Seek out folks that are older than you, that you can befriend, who have had successes and failures. These older folks usually are more than happen to share their lessons learned. I am.I often talk with younger men and women, and share some of my lessons, such that they do not need to make the same mistakes, that I made.Don’t abuse your credit cards.Work on establishing good credit.If I can help, ask me any specific questions that you have.My name is Bob.
One crore is a huge amount when you see it all at once.But, when it comes to spending your life after your retirement with it, say 45 (as you've specified), it all depends on what type of standards you want to maintain or say how do you utilise that amount.For some it can be a pretty decent amount for the rest of their live but for some it may seem otherwise.It all depends on perspective or point of view.On the other hand if we talk about human nature, we are never satisfied. We always have greed for more. And this greed is never ending. So, you can never say if it's a good amount or not to be utilised for rest of the life.
Okay: the first thing I'd recommend is to get an understanding of your budget. If you're unable to save money from your salary, then you have no chance. $130k/yr is a fine salary, so I'm going to make a few assumptions and you can correct them if you wish. (1) You can invest $25k/yr. This requires living as if you earn $105k/yr instead of $130k, which is still more than double the median household salary in the US. (2) You invest $18k/yr in a 401(k) at work and your employer matches $4k/yr. You also invest another $5500/yr in a Roth IRA and $1500 in a taxable account at Vanguard or something(3) Your income increases at the rate of inflation (2%) and your contributions do as well.(4) You invest in something like the Vanguard Target Retirement 2040 Fund. That's the fund that's closest to when you'll be 65.With these assumptions, you'd probably end up around $1.6M at age 65 (but because of inflation, it'll feel like a little less than $1.1M. This won't quite be enough on your current lifestyle -- I'm guessing you're taxed $30-40k, so maybe you're living on something like $80-100k/yr. If you can ratchet that down to $70k or so (in 2015 dollars; it would be expected to rise with inflation), then you can get there. Of course, more investment and less spending is always going to be helpful.I created a rule of thumb for retirement called the F.T.I., or "F&*% This Index" -- once it's over 1000, you can tell your boss "F&*% This" and retire. :-)FTI = Age * Net Worth / Yearly ExpensesIf you're married, you'd want to average your age with your spouse's age, and you'd want to subtract any known future expenditures from your net worth (most likely example would be college educations for your kids). Yearly expenses shouldn't include taxes or investment spending that you do, either.So if your expenses now were $70k and inflation took that to $108k by age 65, then you'd need $1.7M for your FTI to be greater than 1000. It'd be close!It's just a rule of thumb; you'd want to pay closer attention to the details when you're actually making the decision whether or not to quit your job. It also assumes that you plan to spend your wealth down to nothing (or close to it) by the time you die; you wouldn't be planning to leave an estate to your heirs.
I am sorry to burst your bubble but probably a lot more than you realize. I would say a minimum of 2–3 million. Most every financial planner will say that if someone wants to retire at 65 they can safely withdraw 4% of their savings a year and most likely won’t run out of money. Since you want to retire at 55 that should mean you can withdraw about 3% of your money which should let it last that extra 10 years.Now let’s say you save 1 million. Withdrawing 3% would allow you to live on $ 30,000 a year. Well, that might sound like an amount you can live frugally on but lets not forget that we are talking 20 years from now and if you factor in inflation that 30 grand a year would be about the equivalent of 12 grand a year now. Could you live on 12 grand a year? I doubt it. Even if you withdrew 4% a year it still isn't enough to live on once you factor in inflation. Three million would let you live on an inflation adjusted 36 grand. As inflation reduced the purchasing power of your savings you would be old enough to collect social security. With the shortfall in Social Security the qualifying age to collect is likely to go up so you may not be able to collect that until you are 70 or older.
What Is Considered A Good Net Worth At Age 28?
If you don't have any debt other than a mortgage, then $25,000 to $50,000 would be a very good start.
I'm 27 years old and i was in the same state of mind that you were when I was 24. Let me tell you something, it is just wrong to think about how much saving you should have when you are 30 years old. Here is why: At age 24 earning $60k/yr, it is far easier to get new skills and get extra $20k in salary than saving $20k from your existing salary. Invest in your market value. I had more money when I was 25 compared to what I have today. Between 24 and 30 you buy a car, buy a house, get married etc. Each of these things cost a lot of money. So instead of keeping tabs on savings, Maintain the following two metrics - 1: How much money can each month save / invest each month. and 2: What are my financial goals? How much money can each month save / invest each month? This is the most important metric. Reducing the cost of living goes a long way, saving will begin to happen all by themselves. Make sure you account for non-regular expenses. Such as your annual vacation with your college friends / spouse/ family.What are my financial goals? You really only need money to spend it. So make your goals with timelines: you need $5000 for your wedding in say 5 years. $30k-$50k for your first Condo / House in 3 to 6 years?.One of the most important financial goal is to have caution money in case you lose your job. Think Youll be able to find a job in 6 months? then you should have enough cash to support 6 months worth cost of living. (This includes any monthly payments on car/ house etc.) Have a dream to visit other countries / places? Make a tangible goal. You would be able to define how much money you will need, and at what age.Most important: Write down your expenses. Maintain a spreadsheet and document your daily expenditure by date and catagory. You should be able to tell at the end of the quarter, how much money did you spend on Eating out. You are a data analyst. Use your skills to analyze your own expenses. Let your skills work for you, not just your employer.