# how much should I have saved be now? **URL:** \ **Category:** Factual Questions\ **Created:** [May 29, 2009, 2:25am UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987 "2009-05-29T02:25:21Z")\ **Posts on this page:** 18\ **Page:** 2
**Author:** ![drhess](https://avatars.discourse-cdn.com/v4/letter/d/94ad74/32.png) [@drhess](https://boards.straightdope.com/u/drhess)\ **Post date:** [May 31, 2009, 3:57pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/21 "2009-05-31T15:57:13Z")
> [@Early\_Out](#): > > To repeat, if the house you buy has \*also \*increased by six figures, you’re not ahead of the game. I understand that the increase in my condo’s value is reflected also in the increase in the cost of housing around me, but I am likely moving. I’m in DC, so there’s only a few cities where the cost of housing will not be lower. ---
**Author:** ![groo](https://avatars.discourse-cdn.com/v4/letter/g/ecd19e/32.png) [@groo](https://boards.straightdope.com/u/groo)\ **Post date:** [May 31, 2009, 6:51pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/22 "2009-05-31T18:51:45Z")
This is a difficult situation. When I was 39, I “suddenly” became aware that I was $74K in consumer debt (though it was actually $76K), paying over $600/month in interest charges alone. At the time, I had about $100K in my 401K, which was way below where it should have been. However, my salary had just gotten above $100K and I had very low expenses (after I stopped buying stupid crap). I’ve detailed this in other [posts](http://boards.straightdope.com/sdmb/showpost.php?p=7796571&postcount=23), but I dramatically changed my lifestyle and was able to eliminate my debt in a little under four years. As I was paying off my debt, I was also gradually adopting a very low-cost existence, though I still pay for premium satellite channels, and by the time the economy fell apart, my 401K was at $350K, and my savings were at about $25K, which was theoretically going to put me in “extremely humble retirement at 55” range, but I also have a small-but-better-than-nothing defined benefit pension, which may still exist by the time I want to start drawing from it. Now, that assumed SS would still be there in some form (though I’ve always assumed it would be no more than half of what they claim in my yearly statements), and that the pension wouldn’t be zeroed out as the result of corporate hijinx or stupidity, so I only considered that a ‘best-case’ scenario. Then, the economy of the last year and a half has pretty much removed the chance that I can retire at 55 and probably 60, but I think it’s tractable. So, your equity in the condo could be equated to my $100K 401K, but my salary has been on a really good trajectory, so I may have been more fortunate. But you can make headway; it’s just going to be difficult. The various linked retirement calculators above are kind of bullshit, and their only value is in getting you to pay attention to assembling the numbers that are relevant. If we avoid double-digit inflation (which is worrying me), I would not need $3.8M in order to retire, as one calculator indicated, because it assumed that I needed to live off of 85% of my current pay. My target is something in the range of $1.5M or $2M, which is still very difficult, but it’s not impossible. Ultimately, I don’t think horrendous inflation (or, really, any aspect of the screwed up economy) make things tragic – pretty much everyone is in the same boat, and you won’t feel awful working into your late 60s, as everyone is going to be doing that. IAC, keep your expenses low, take advantage of any opportunities to increase your pay, don’t have any expensive addictions, don’t think you can buy a (whatever) that will make you happier, have healthy habits and diversify your investments. That’s not going to guarantee that you can make it, but it can’t hurt. What I can guarantee is that if you think it’s hopeless right now, it’s going to be hopeless. ---
**Author:** ![Zsofia](https://avatars.discourse-cdn.com/v4/letter/z/7bcc69/32.png) [@Zsofia](https://boards.straightdope.com/u/Zsofia)\ **Post date:** [May 31, 2009, 7:20pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/23 "2009-05-31T19:20:50Z")
> [@drhess](#): > > I understand that the increase in my condo’s value is reflected also in the increase in the cost of housing around me, but I am likely moving. I’m in DC, so there’s only a few cities where the cost of housing will not be lower. If you end up with a lot of choice in where you move to, cost of living and housing should definitely be a factor for you. If you can get a similar salary in, I dunno, Des Moines as you can in San Diego, you’d essentially be making money by buying a house in Des Moines. Potentially a lot of money. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [June 2, 2009, 12:28am UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/24 "2009-06-02T00:28:20Z")
My advice is to ‘panic a bit’ and ‘save a lot’… It can be done. I’m sort of in the same boat as groo. I don’t quite have 1300 DVDs but I’ll make you a deal on a few hundred LaserDiscs :smack: All in all, I do have a fair number of geek toys (love Fry’s too). At 41, I realized that I had a new job, a 45k IRA and 140k 30 year mortgage. No savings, it all went into the down payment on my first home. Net worth - minus 95K… I went in to mild panic mode an started the following strategy (with hopes of retiring at 55): 1. Refi as soon as I could for 15 years and paid an extra bit (as much as 1k) each month if I could. - that paid off the mortage in about 8 years. 1. Realized that my company was putting away 15% of my pay in a profit sharing program. That later changed to a 401K and I kept it at 15%. When I turned 50, I started the extra ‘catch up’ contributions. 2. Made the maximum post-tax contribution to my old IRA. 3. All bonuses went into a savings account. Each time I got a raise, I figured out the difference in take home pay and routed it to the savings account. - I figured out later if I needed to spend it… (hint I drive a 17 year old car) 1. At 45, the savings account went into a brokerage account with a reasonable advisor helping me - I have ridden the market down twice now… It does come back, just takes years. (Still down maybe 25% from the 2007 peak) Did I retire at 55? No, I finally got married at 54 🙂 We did a major remodel which depleted things a bit and I figured that I needed more to retire on since there were now two of us. So, here I am at 60, nearly retired (laid off) and the online Monte Carlo calculators like [this](http://www3.troweprice.com/ric/ric/public/ric.do) one tell me I have a 99% chance of making it to 95 at our current level of expenditure. Next week, my financial guy will tell me what his full work up tells me… I’ll be happy with 80%. ---
**Author:** ![Zsofia](https://avatars.discourse-cdn.com/v4/letter/z/7bcc69/32.png) [@Zsofia](https://boards.straightdope.com/u/Zsofia)\ **Post date:** [June 2, 2009, 12:44am UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/25 "2009-06-02T00:44:23Z")
Wow, congratulations, **jasg**. It sounds like you were really able to follow through on a plan and be disciplined about it! You should be seriously proud of yourself. (It should be cheaper married anyway - I mean, you only need one alarm clock, right?) ---
**Author:** ![smee\_goan](https://avatars.discourse-cdn.com/v4/letter/s/f07891/32.png) [@smee\_goan](https://boards.straightdope.com/u/smee_goan)\ **Post date:** [June 2, 2009, 1:14am UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/26 "2009-06-02T01:14:02Z")
9-11 taught me, never again trust E-Trade, ect… Politicians have the PERS, same as me- a lowly bus driver, and that plan will never die, Thing is, wifey had a quarter million dollar bill at Cleveland Clinc, and doing the same three months in a nursing home,… so…, **If the house was paid off, and she never leaves the nursing home** , well, i never paid more than the equity line minimum, and homes in Cleveland, 🙂 , I just hope she gets out, but I kept my hazmat class A in case I need to drive a 18 wheeler again… bubba ---
**Author:** ![muttrox](https://avatars.discourse-cdn.com/v4/letter/m/a8b319/32.png) [@muttrox](https://boards.straightdope.com/u/muttrox)\ **Post date:** [June 2, 2009, 12:42pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/27 "2009-06-02T12:42:32Z")
> [@drhess](#): > > I’m aware that the windfall of the equity is not real until I sell, but I don’t see how lucking into six figures of equity (after just 8 years of owning) isn’t worth something. No? Assuming that you can realize that entire windfall by moving to a lower priced market, you still don’t have very much. There is a rule of thumb about how much money you need. If you want to keep your pot of retirement money intact, you should spend ~4% a year. 4% of $120,000 is $4,800 a year, or $400 a month. $400 a month is not nothing, but it’s not enough to live on. This assumes that you’re trying to keep that pot of money intact. You could also gamble that you will live for _x_ years in retirement and take more out each year with the goal of dying with $0 in the bank. Also on the plus side, you could move now. Take the 120K and invest it. Let’s just randomly say that you realize an average of 5% gains on it over 25 years. That gets you to about $400,000. Taking 4% of that a year is $16,000/year, or $1350 a month. Not too bad. Except we haven’t figured in taxes. And inflation means that $1350 a month isn’t worth as much as it is today either. ---
**Author:** ![muttrox](https://avatars.discourse-cdn.com/v4/letter/m/a8b319/32.png) [@muttrox](https://boards.straightdope.com/u/muttrox)\ **Post date:** [June 2, 2009, 12:51pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/28 "2009-06-02T12:51:39Z")
You need to read and learn. A lot. Read books, read websites, read the Straight Dope… drench yourself in information. If you are uncomfortable with calculators, you will need to get past that. There is no way to do this without understanding a lot more about finance and financial math, and understanding a lot about yourself and your needs and wants and what life might reasonably bring you in the next 25 years. FWIW, [here](http://www.muttrox.com/index.php/2007/04/financial-book-recommendations/)are my top 5 financial books. There are also message boards at Vanguard, the Bogle boards, the Motely Fool, etc. Your bank will be simply delighted to tell you everything they can. There are great blogs out there. You might try The Simple Dollar and Get Rich Slowly, both of which focus on people starting out. You’re going to get a lot of good advice here. But this is almost like those “I am not a lawyer” disclaimers. No one can do this work for you, you need to study until you can do it for yourself. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [June 2, 2009, 4:38pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/29 "2009-06-02T16:38:59Z")
Good stuff muttrox - especially the ‘get rich slowly’ and the inflation caution. I was stunned when I started out and found that had I fully funded an IRA from ages 20 to 35 and stopped - I would have been ahead of the game compared to starting at 35 and continuing until 65. The flip side of that, inflation is important - try adjusting your current salary by %3 per year until you hit 65 - it is a scary number. When I started my savings plan, I found ‘advisors’ recommending inflation adjusted annual withdrawals of 5-8% in retirement and calculators that supported that. Now, after the 2 crashes of the last 10 years, as you say, 4% is the new number. I’ll stick to that because I shudder at being impoverished in my 90’s. Like many of us boomers, I don’t really expect to hit 95 - but my father didn’t expect to hit 90 and he did a couple of months ago - and is in good health… As you pointed out, IANAFA - I am not a financial advisor - just a guy who spent a lot of time playing ‘what if’ in spreadsheets and online calculators - and saved hard… ---
**Author:** ![Zsofia](https://avatars.discourse-cdn.com/v4/letter/z/7bcc69/32.png) [@Zsofia](https://boards.straightdope.com/u/Zsofia)\ **Post date:** [June 2, 2009, 6:00pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/30 "2009-06-02T18:00:42Z")
By the way, my grandparents outlived their savings by a country mile - they expected to move to Florida and die in their 80’s, they had it all planned, they didn’t come from long-lived families, and here they are - my grandfather died very expensively at 91 and my grandmother is 94 and looks apt to live to 600 or so. The only thing that could kill her at this point is pneumonia, which I’m sure will, eventually, but it could be ten years. Keep in mind that those last years will be expensive years - the assisted living for Grandpa was a huge hit in their budget that they just didn’t expect. He was always afraid of having a stroke, because his mother had one and he took care of her for ten years before she died, and he thought he was home free after he got to be much older than she had been and never had one. He was wrong. The only reason my grandmother is squeaking by (with help from her kids, of course, although she fights it) is that she doesn’t need the assisted living help, so she could go into independent living, which is much cheaper. That’s just luck - she broke her hip several years ago and was flat on her back with a bone infection for a whole year. In other words, you have no idea what’s going to happen, and it’s probably going to cost a lot more than you think. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [June 3, 2009, 5:00pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/31 "2009-06-03T17:00:41Z")
drhess, here are two fairly approachable online tools - both are good for playing with numbers and dates. A Fidelity [Snapshot](http://personal.fidelity.com/planning/retirement/content/myPlan/index.shtml) A Fidelity [Quick Check](http://personal.fidelity.com/planning/retirement/quick_check.shtml?refpr=ret1) The later requires that you set up an ID on Fidelity, but I think anyone can do it for free, without opening an account. There are many, many other tools out there. Have fun. ---
**Author:** ![Hakuna\_Matata](https://avatars.discourse-cdn.com/v4/letter/h/a88e4f/32.png) [@Hakuna\_Matata](https://boards.straightdope.com/u/Hakuna_Matata)\ **Post date:** [June 3, 2009, 9:38pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/32 "2009-06-03T21:38:35Z")
I was talking to **jasg** via private message and had sent him this link to this other website I go to, and he suggested I might post it here. This is a website inspired by those people who want to be Financially Independent, Retire Early–FIRE. And it has some good forums and just general knowledge on this topic. Hope you enjoy the site 🙂 > **[Early Retirement & Financial Independence Community](https://www.early-retirement.org/forums/)** > > An online community to exchange knowledge about FIRE (Financial Independence and Early Retirement), discussing all aspects of early retirement including planning, challenges, rewards, expense management, investment strategies, and more. Start... ---
**Author:** ![drhess](https://avatars.discourse-cdn.com/v4/letter/d/94ad74/32.png) [@drhess](https://boards.straightdope.com/u/drhess)\ **Post date:** [June 5, 2009, 6:01pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/33 "2009-06-05T18:01:24Z")
Thanks all. Retiring early is not something I’m going to plan on. Fortunately, I’ll likely end up with work (after I finish this darn dissertation) that I will very much enjoy and should be fairly secure in from now (age 40) to 65 or even 68-70. I guess my real gamble was that 3-4 years of substantially reduced wages and raiding all my savings to get the extra degree will pay off with 20-30 years of expanded earnings in a more secure job maybe in a cheaper local. ---
**Author:** ![Snowman154](https://avatars.discourse-cdn.com/v4/letter/s/7bcc69/32.png) [@Snowman154](https://boards.straightdope.com/u/Snowman154)\ **Post date:** [November 6, 2010, 2:19pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/34 "2010-11-06T14:19:40Z")
For me, that magic number is not important because I can’t really control it. I try to control spending, but we all need to live. What is important is to control what I can by saving as much as I can to tax deferred accounts, and I believe the magic number will take care of itself. Max out your 401K well beyoned the company match to the current $16,500 allowed annually or $22,000 if you’r over 50, Invest in IRAs if you qualify, etc. Basically look for any opportunity to put money away before taxes, so the money you would have paid to Uncle Sam works for you by earning tax free interest. Everyone knows about 401Ks and IRAs, but one opportunity for increased savings (and tax reduction) that is often overlooked is the Health Savings Account. This in effect is a supercharged IRA. Tax free in, tax free earned interest, and tax free out provided the money is used for qualified expenses. For most of us, a large chunk of expenses as we get older will be medical expenses, so why not pay them tax free? You can contribute up to $3,050 tax free per individual a year into an HSA account, and most employers have a workplace contribution plan. Over 20 years, thats $61,000 in Tax Free money, not counting the compounding tax free interest you will earn. Over 20 years thats over $15,000 (@ 25% tax rate) in income tax savings alone! The only caviat is you have to belong to a High Deductible Health Plan (HDHP). It’s certainly not for everyone, but if you’re healthy it may be a good way to sock away some tax free money. One can always go back to a traditional Health plan after a few years, and will have the money they saved available for future expenses. And you don’t “use it or lose it” like traditional Health Reimbursement Accounts. The money is yours until you decide how best to spend it. Bottom line is if you’re going to eat cat food, now is the time to do so. Save everything you can before taxes and live and eat better later. ---
**Author:** ![Zulema](https://avatars.discourse-cdn.com/v4/letter/z/db5fbb/32.png) [@Zulema](https://boards.straightdope.com/u/Zulema)\ **Post date:** [November 6, 2010, 2:45pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/35 "2010-11-06T14:45:27Z")
Seriously. He didn’t ask everyone how much better off everyone else is. I know a lot of people who are 40 and still owe hundreds of thousands on a mortgage, owe on newer cars, just got divorced, have crappy health insurance and high medical bills and kids to put through college. You have plenty of time to save if you live frugally. If you were born after 1960 your retirement age is 67 but there’s nothing to say you have to stop working completely then. A lot of people use the same time you have left to seriously save because life has left them savingsless. I’m not saying this is good but it’s not the end of the world either. Your equity in your home is a big deal, using it wisely can be your secret to getting ahead more quickly. It’s too late to change where you are now so don’t dwell on it, as **Snowman154** suggests; take advantage of before tax savings, control your spending and you’ll be saving as much as possible. ---
**Author:** ![coremelt](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@coremelt](https://boards.straightdope.com/u/coremelt)\ **Post date:** [November 6, 2010, 3:33pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/36 "2010-11-06T15:33:06Z")
this whole system of pay your mortgage off over 25 years then put x away per year is a trap for people with no imagination. You are far better off investing the money that you would into a mortgage into a business of your own. Quite simply if you have only a tiny bit of imagination and are not afraid of a little hard work the returns will be far better. As for retirement… most people who are creative and imaginative never really retire, they keep doing consulting or freelancing or whatever on projects that they want to work on so the money doesn’t actually run out. Plus you can always go live in a far cheaper country, I have met retirees in India / Indonesia, etc… while some countries will get more expensive to live there will always be somewhere cheaper to go and live… ---
**Author:** ![Zulema](https://avatars.discourse-cdn.com/v4/letter/z/db5fbb/32.png) [@Zulema](https://boards.straightdope.com/u/Zulema)\ **Post date:** [November 7, 2010, 12:41am UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/37 "2010-11-07T00:41:25Z")
One often overlooked strategy for housing is to buy a duplex, live in half and rent the other half out. Eventually you own the whole thing and you’ll have a good income from the other side. Owner occupied gets homeowners rates on mortgages too. You can hardly give a duplex away in the older part of town here and rents remain pretty high. ---
**Author:** ![drhess](https://avatars.discourse-cdn.com/v4/letter/d/94ad74/32.png) [@drhess](https://boards.straightdope.com/u/drhess)\ **Post date:** [January 4, 2011, 5:09pm UTC](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987/38 "2011-01-04T17:09:23Z")
> [@Zulema](#): > > Seriously. He didn’t ask everyone how much better off everyone else is. > > I know a lot of people who are 40 and still owe hundreds of thousands on a mortgage, owe on newer cars, just got divorced, have crappy health insurance and high medical bills and kids to put through college. You have plenty of time to save if you live frugally. If you were born after 1960 your retirement age is 67 but there’s nothing to say you have to stop working completely then. A lot of people use the same time you have left to seriously save because life has left them savingsless. I’m not saying this is good but it’s not the end of the world either. > > Your equity in your home is a big deal, using it wisely can be your secret to getting ahead more quickly. > > It’s too late to change where you are now so don’t dwell on it, as **Snowman154** suggests; take advantage of before tax savings, control your spending and you’ll be saving as much as possible. Thanks! Very well-rounded response. And I hope you are rigt! [Previous page](https://boards.straightdope.com/t/how-much-should-i-have-saved-be-now/497987.md?page=1)