How much should you have in retirement by age of 40?

[Lathum]

I realize it is somewhat of a broad question but wife and I went through our retirement and were very pleased. That being said we were wondering what others think is a good amount to have at this point. Now I am ask g what is a good amount. Not what you have or think you should have. We would like to retire before 60.

[claphamsa]

.5M, well never see any SS and people in our generations wont get pension...

[DaddyTorgo]

The shitty answer is that it really depends on your individual circumstances.

I tried like hell to get a ton of financial advisers to even give me an idea if I was "on track" compared to other people my age and none of them would give me a fucking straight answer.

[Kodos]

If you have anything saved, you're doing better than most people I know. We're not doing as well as my best friend who is a finance guy, but we are doing a good job. Also, my job actually has a pension, so between that and our 401(k)s, we're in decent shape. I told the girl who I share an office with that when you get a raise, that is the perfect time to painlessly up your 401(k) contribution, but I don't think she's listening to me. Ahh, to be 30 again.

[JPhillips]

Originally Posted by claphamsa

.5M, well never see any SS and people in our generations wont get pension...

The worst case scenario has SS paying out over 70% of commitments in perpetuity.

[Desnudo]

How Much Should People Have Saved In Their 401Ks At Different Ages | Financial Samurai

Personally I plan like I won't see a dime of SS or inheritance. If it turns out I do end up with SS I'm sure it won't have kept up with inflation and the retirement age will probably be 80.

Also, it obviously makes a big difference where you plan on living.

[claphamsa]

Originally Posted by JPhillips

The worst case scenario has SS paying out over 70% of commitments in perpetuity.

if you believe you are getting a cent from SS you are crazy

[Desnudo]

I would say if you plan like you will get a cent from SS you are crazy. There's no way the government pulls an entitlement like that completely especially since it's obvious so many people will be dependent on it.

[JPhillips]

Originally Posted by claphamsa

if you believe you are getting a cent from SS you are crazy

So you believe politicians will eliminate the SS tax and then eliminate the most popular program in government history? Even if it gets to a point where it isn't paying out it's commitments, there will still be a lot of money to disburse just based on the FICA tax. SS won't be enough for most people, but it isn't going away.

[molson]

Originally Posted by claphamsa

if you believe you are getting a cent from SS you are crazy

I've heard this sentiment since I was a kid but I don't get it. There will always be money coming in, there will always be some money coming out. The money might not go as far if the economy collapses or something, but it can't possibly become insolvent. And that's not even accounting for the fact that the fed can spend themselves into oblivion.

Social Security Cannot Go Bankrupt - Forbes

As for me, I can't afford to fix my floors or my outdated bathroom, or do the million other things I'd like to do with my tiny house, but my public pension is pretty generous, especially if I'm in the program for the rest of my career, which I hope to be. And assuming my state doesn't go bankrupt, which unlike a fed. entitlement program, is at least theoretically possible.

[Senator]

Trust me. Get a very large life insurance policy for your family.

[cuervo72]

Low end 300k at 40, huh? I've been working since 22 and have been contributing steadily and I'm not sure I have that*. I make well over the mean, too (at least I'm pretty sure I do). I'm sure I could have been putting in a greater percentage, but I still wouldn't think I'd be doing that bad.

Not planning to rely on SS at all. Though I'm also not really planning on retiring any time soon (or, any time) either.

* adding the three accounts, nope.

[jeff061]

That table says a low end of 8 at 23. How many 23 year olds are swinging that. I've been contributing since I was 20 and at or near the federal maximum for years and I'm not sure I'm keeping pace according to that table.

[Desnudo]

They're saying how much you should have saved, not how much people have saved.

[Desnudo]

Originally Posted by molson

I've heard this sentiment since I was a kid but I don't get it. There will always be money coming in, there will always be some money coming out. The money might not go as far if the economy collapses or something, but it can't possibly become insolvent. And that's not even accounting for the fact that the fed can spend themselves into oblivion.

Social Security Cannot Go Bankrupt - Forbes

As for me, I can't afford to fix my floors or my outdated bathroom, or do the million other things I'd like to do with my tiny house, but my public pension is pretty generous, especially if I'm in the program for the rest of my career, which I hope to be. And assuming my state doesn't go bankrupt, which unlike a fed. entitlement program, is at least theoretically possible.

Of course it can't go "bankrupt" since it's pay as you go. It could become insolvent. There are definitely scenarios where SS can't cover its commitments. It's like any pension scheme where you are dependent on future population for current payments. If things don't balance out you either raise taxes or decrease / eliminate payments.

[RainMaker]

I think if you can get $100k in by 40 you're in decent shape. $250k on up is more ideal.

But a lot of it depends on your life situation. If you own a home'that you plan on staying in, that won't be an expense you have to factor in down the road. You also need to factor in your equity in the home into your financial situation. If you don't have kids, you're not going to have to worry about college tuition someday and will have more to squirrel away.

[RainMaker]

And SS is an easy fix. They just raise the cutoff point for what can be taxed. Or start taxing it again at over $250k (which I think was an idea thrown around). They could also tack on a few percent to capital gains if need be. Or outright raise it a percent or two for everyone. There's some other creative fixes I've seen tossed around too.

SS is actually one of the easier problems facing us down the road. I'd worry much more about health care costs.

[molson]

Originally Posted by Desnudo

Of course it can't go "bankrupt" since it's pay as you go. It could become insolvent. There are definitely scenarios where SS can't cover its commitments. It's like any pension scheme where you are dependent on future population for current payments. If things don't balance out you either raise taxes or decrease / eliminate payments.

Definitely, I'm just responding to the idea that those in their 30s and 40s "will never see a penny" form social security. How much of a safety net it is depends on the economy, but it can always be tweaked. It's not going to disappear.

[Kodos]

Yeah, I've always figured they'll raise retirement age to 70 or something like that, but SS will stii be paying out when I retire.

[Galaxy]

Originally Posted by JPhillips

So you believe politicians will eliminate the SS tax and then eliminate the most popular program in government history?

Are 20 and 30-somethings really in favor of SS in terms of popularity? I know don't know one that is thinking about it for their future.

[lighthousekeeper]

Originally Posted by Galaxy

Are 20 and 30-somethings really in favor of SS in terms of popularity? I know don't know one that is thinking about it for their future.

they will be in 30 years.

as the world turns

[cthomer5000]

*hopes the right answer is "not much*

[NobodyHere]

Originally Posted by RainMaker

And SS is an easy fix. They just raise the cutoff point for what can be taxed. Or start taxing it again at over $250k (which I think was an idea thrown around). They could also tack on a few percent to capital gains if need be. Or outright raise it a percent or two for everyone. There's some other creative fixes I've seen tossed around too.

SS is actually one of the easier problems facing us down the road. I'd worry much more about health care costs.

I don't think a single one of those solutions will pass a Republican house or senate, and we won't have democrats controlling both chambers and the presidency for a while, and that's even assuming they have the gonads to implement any of your easy fixes (the first of which I agree with).

People my age (30) I talk assume that SS won't be there when we retire, assuming they think of the subject at all, because the mess only gets worse from here. Not to mention that pensions of any kind are becoming more and more open game for budget cuts.

[Desnudo]

Originally Posted by Galaxy

Are 20 and 30-somethings really in favor of SS in terms of popularity? I know don't know one that is thinking about it for their future.

It'll all be robots by then anyway

[RainMaker]

Originally Posted by NobodyHere

I don't think a single one of those solutions will pass a Republican house or senate, and we won't have democrats controlling both chambers and the presidency for a while, and that's even assuming they have the gonads to implement any of your easy fixes (the first of which I agree with).

People my age (30) I talk assume that SS won't be there when we retire, assuming they think of the subject at all, because the mess only gets worse from here. Not to mention that pensions of any kind are becoming more and more open game for budget cuts.

Things change over time. Obamacare was a Republican idea at one time. Reagan signed a bill that doubled taxes for funding SS.

We'll hit a point where the options are cut payouts or increase taxes. Cutting payouts for the voters that actually show up at the polls would not go over well with any party. There's a reason even today that Republicans won't touch cuts for Medicare or Social Security.

[Lathum]

SS is not something we are considering.

[flere-imsaho]

Bear in mind that by the time most of us retire most of the Baby Boomers will be dead, relieving a pretty big weight on SS payouts.

I still think you should plan as if it won't be there, but I do think it's unlikely that it won't be there.

[OldGiants]

Originally Posted by lighthousekeeper

they will be in 30 years.

as the world turns

This. As someone who will be 65 next month, let me point out what is actually happening to my generation:

1) Savings amounts. No one thinks they have enough; most of us do but haven't figured that out yet due to 'gloom and doom' sorts giving bad advice.

2) SS is nice and I do not plan to start it up until I am 70, by which time I get about a one-third boost to my annual benefit.

3) I will live longer than my father or mother (who is almost 90). So will all of you.

4) Which means you will want to work long past 65. The biggest issue for men my age is boredom. This is particularly true for military retirees whose routines aren't there any more.

5) Much as with that excellent article about oil prices over at fivethirtyeight.com, the only thing y'all can count on about forecasts for your retirement is that they are ALL WRONG. Each and every one of them.

[lungs]

I'm feeling pretty good where I am at. Of course I do things a little differently than all of you, no 401K, IRA or anything like that. I cut my dad a check every month to retire his stock in the farm, increasing the value of my own stock. That should all be bought out in the next few years. Of course then I get to start buying out the land, which is not held by our family corporation.

At 32 years old, I'm pretty well ahead of the pace for dollar amounts I'm seeing thrown around this thread.

[Galaxy]

Originally Posted by Desnudo

It'll all be robots by then anyway

This isn't actually too far off. Less jobs, less people to fund SS.

Originally Posted by lighthousekeeper

they will be in 30 years.

as the world turns

Depends on how strong the libertarian wing evolves with the younger generation.

[Edward64]

I'm not close to official retirement but have thought about retiring early. How much you save is important but don't forget the other side of the equation - how much do you plan to spend.

There are those that say plan for 80% of pre-retirement income. Therefore, your savings @4% withdrawal, pension etc. should equal 80%. I think this 80% is way too vague. In my calculations, assuming house is paid off, kids have finished college etc. I can probably live on easily 50% of my current income. Each person will be a little different.

So my advice is to back into the number. To do that

1) Estimate your "real" retirement living expenses
2) Factor in any income in additional to 401k/IRA savings - annuities, pensions, SSN you think you will have at retirement
3) Assume 4% withdrawal from savings + other income >= (1)
4) Once you know (3) savings at 65 (?) figure out how much you should have at 40