How Much You Need To Invest At Every Age | Build A $2,000,000 Portfolio Starting Today
ฝัง
- เผยแพร่เมื่อ 2 ก.ค. 2024
- 00:00 - Intro
00:31 - Current Savings
01:32 - 401k Balance By Age
02:01 - Gen Z
04:03 - Millennials
05:39 - Gen X
08:24 - Savings Need to Hit $1,000,000
08:57 - How Much You Should Have Saved By Age
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Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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Thanks for watching, I appreciate you!
I reached my first 100k in retirement this year (age 43.5) and if all goes well, my plan to retire at age 57 with at or very close to $1 million will work out 😁
That’s awesome! Congratulations
Wow! Same age in FL. Plan on starting next year hard core in IRA/HSA/403b/401a for a 8.3% match, with a little over $50k so far. But only aiming for $600k because rental income. Goal is 52-55. 🤞
Target is ~$3M, not including pensions and SS. We don't need that much in retirement but I always set my goals higher because of the way my brain works. :)
It’s like the way Warren Buffett looks at it, it’s just a game. Do you want to get to a higher number! Good luck!
You also have to remember that the Roth won’t require taking money out for taxes, so having less in your Roth IRA over a Traditional 401k still might be the equivalent (or possibly even better) between taxes and not having to take an RMD on the Roth account.
i'm 45, and because of divorce, then bankruptcy, i'm waaaay behind, (though i am higher than median for gen x). I switched jobs, got a nice bump in pay, and i was just hoping to be able to retire someday. I think these numbers show i can do it, currently putting about 1900/month away. But playing catch up. So if anyone sees my younger self, slap him please!
You’ve got this!
I am genuinely sorry for your predicament but please continue to share your experience with younger men in hopes they consider deeply the risks involved with marriage
@@scottwilly86 And the rewards for marrying the right one, which can accelerate your timeline plenty and make the trip fun along the way. Choose CAREFULLY!
My $3M dividend portfolio pays all my bills multiple times over, I am 52 , retired because I no longer need to work
woah congratulations .
@@Jim-ku9tr thank you
that is an amazing milestone
What's the breakdown on the portfolio? I'm very close to that goal at 42 years old
A colleague of mine & I started investing with $100,000 each into our portfolio and Lanngel Mark doubled it in 8 months, He is finally getting the popularity he deserves. !
Erin I'm becoming addicted to your channel. Good stuff.
My goal is 1.8m at 65, which might be a challenge. I'm 53 with only 4x my annual income invested, but I'm a pretty aggressive super saver, currently investing 42% of income and I increase it every year...and my portfolio is 100% stock funds, so it's definitely doable. Fortunately I have a stratospheric risk tolerance!
Fingers crossed the market is headed in the right direction to help you out
You will get there just in compound interest
Right there with ya. Started getting serious too late in life. We’re investing 4k a month in the market. Aggressive growth and S&P 500💪🏻
Terrific video! You hit all the key points.
Thanks so much!
Great presentation, the S&P 500 is up this year 17% so far, 10.7% over the last 30 years!
The issue here.... especially for younger investors is inflation will make that $2.2 million benchmark for wealth much much larger because $2.2 million will not have anywhere near the same purchasing power as today.
$2.2m is today's dollars, not future dollars. If you factor inflation, $2.2m in future dollars is more.
@@hanwagu9967You basically said the same thing as Arie? 🤷♂️
2M at 2% CAGR is 4.8M in 45 years.
So yes. It will be lower. But that doesn’t mean much.
VTI has a 10 yr CAGR of 11.77%
300/mo over 45 years will give you 4.5M
Great video Erin. The sad thing is that the vast majority of the people who watch your videos have been investing like this for years. The people who need this advice most likely are watching stupid childish videos on TikTok and not videos devoted to financial planning. They should require people in high school and college to watch your videos.
I know! But I always hope that my videos reach, at least a handful of people where it has an impact. People who needed to hear the message, and then decided to do something about it. I know that’s not the vast majority of viewers, but I’m always hopeful that it’s a handful in the minority.
Awesome video. My goal is 2M at retirement, currently 24 and taking advantage of my employer 6% match and I just opened a ROTH IRA that I hope to max out each year. I’m a long ways off but just hit my first milestone of 20k across my entire portfolio.
40 years to go you’ll probably pass 2 M easily. Great job starting early.
As noted, the projections are based on an investment return of 8%, which is possibly realistic over a few decades with heavy emphasis on stocks, but possibly unrealistic over a shorter time horizon and/or with a more balanced investment mix. So many unknowns! But there’s a definite / undesirable outcome of not investing, so it probably makes sense to invest up to one’s comfort level (and with risk tolerance in mind).
Great content and man....these median and average starting balances are frightening! Save your money people!
Always keep saving and investing
Keep preaching these no-nonsense facts of life Erin! Absolutely Love them, and your straightforward approach without sugar-coating anything! People need to realize that spending everything you make is really, really a continual lapse in judgement throughout your life. My wife and I (now at 53 and 54 respectively) both started saving early, years before our marriage in the late 80's...almost to the point of lunacy over the years, more or less making a game out of it. Not going out with friends, buying generics, shopping at Goodwill or Salvation Army, clipping coupons like crazy, second or third hand cars, garage sale tools and yard equipment, off-season trips, always ordering water if we do go out for dinner and no appetizers...and 10% max on tips...and that's only if they really "earned" them. Neither of us were ever "given" anything in life and knew that hard work and determination was the magic key that everyone can put to use. For many, many years we made it a goal to save/invest at least 50% of our monthly pay. I retired at 45 and she retired at 46 (neither of us ever making more than $70K/yr). Now trying to make it worth our while for all those years of sacrifice. Hang onto your hat though, as this is where the irony in this story comes out, and you'll find this part "nonsensical"....we have a little over $2.6M in savings and investments that we should never have to touch the principal on....YET, we still go to Goodwill/Salvation Army, clip coupons, drink water if we go out, drive secondhand cars, and basically still do all the stuff we did during our earning years, and still make a game out of it...and even still put money into savings every month! I can't imagine ever, ever, ever paying "retail" for goods the rest of our lives....what a waste of money! Get ready, even more irony....we never had kids, and as such, have no grandkids to leave anything to, so trying to identify which nieces or nephews we'll leave anything to. By the way, none of the relatives on either side of our family know we have anything saved or invested and they just think "we're just scraping by monthly"....they just see us as the Aunt and Uncle who live "modestly" in a small home and keep to themselves...but they all know we love them to pieces. And as the experts have always stated over history....."NEVER tell any of your family or friends you have money"....we heard this story continually over the years, so we stuck with that mindset. So to stay in this context, all our relatives think we still have jobs, as we always plan visits around theoretical "vacation time", just so they don't get to wondering "how do they get by without working". Yes, we know, not exactly being straight up with them, but it should "keep fences up where they need to be", as my grandad used to say. Getting on the Savings & Investment train while still young helps immensely while developing those first spending habits. Our grandparents on both sides who had been through the depression as kids themselves, taught us that putting money in a "Passbook Savings Account" (not sure if these even exist anymore) and then only using it for emergency purposes will help keep you happy and safe. We had both started jobs in our early teens (that paid minimum wage at $2.75/hr) and started the savings train early on in life...this was the catalyst in the whole deal, because once you save actual "cash"....this mindset rubs off on just about everything else in life you come across by always thinking about where you can "save money", and you're constantly on the lookout for "deals" and "where you can save"....and those "well-worn jeans, T-Shirts, Jackets...and all other Goodwill & Salvation Army finds" are still the rage around our place! Just a few tidbits of info. on us "unemployed 50+ year olds" here at our homestead...and still saving for that "rainy day".
This is the story of the true millionaire next door. Because it seems like people can find any excuse to say, why being frugal or saving money is impossible. But if you are willing to make the sacrifice, the pay off is big. But with that said, I hope you and your wife are making the time to splurge a little and enjoy all your hard work.
That's my husband and I, we love the thrill of a thrift find, or great happy hour. But we do want to be comfortable splurging before we're too old to enjoy and regret. We do have adult kids, no grandkids, they spend what they make!
47 with roughly 320k in a Roth 401k, and 32k in a Roth IRA. Hoping to hit the 2 million mark before retirement at 62. Fingers crossed
I’ve got my fingers crossed for you too
Hi Erin. I really enjoy the way you explain finance. If possible, can you do a video of investing in taxable brokerage vs after-tax contribution in a 401K account? thanks in advance!
Great financial insight 💯💯💯💯
Thanks so much!
Another good vid Erin. Every time I see these retirement values for the US, I get a little more worried for the future US retirees. I know this is just one retirement possibility (the example 401k), but it likely represents, or is a good sub-sample, of Americans as a whole. Also, these "newer" retirement values (2023 Q1 for example) have decreased from a 1-2 years ago likely due to the 2022 market performance, so far 2023 is looking better...but hopefully everyone is in the the long-run.
I feel like so many people in America simply rely on just Social Security in retirement. And unfortunately, it just makes it, so your golden years are quite tight financially. Rather than being golden.
Wonderful video Erin and Congratulations on 40,000 subscribers! This is a testament to your dedication and commitment to bringing us worthy content, amazing editing and fantastic execution.
Not there quite yet, but close!!!
Thanks for the video!
Thanks for watching!
Hey guys! What's up!!! :D
This is really similar to a Google Sheet (that's right, I'm a millennial) that I built to keep myself "on track" to hit a number by an age. Awesome video, as always. Thank you!
I love it!
Great video yo!
Thanks!
One thing to note is that a person doesn’t necessarily have to to have a large sum of money to retire. They just need to make sure they have an income source. Rental income, social security, dividend income, etc…. If a person has $150k saved but has $75k in passive income, they’re likely going to be fine. I’m not suggesting in the slightest to not invest. I just want to pose the idea of having income vs just investment savings.
Very great points!
3 for me and 1.5 for my wife before pulling the retirement parachute rip cords. As a lifetime aggressive saver I'm looking forward to giving myself a raise in disposable income after retirement.
My goal has been $3 million for a long time- cautiously optimistic I’ll reach it, but that’s still 20 years away and a lot can happen by then. For now, I’m on track, I currently have 6x my wages saved and I’m a young gen-Xer.
One thing that helped was being auto enrolled into a 401k in my 20s. I didn’t even know I had that money until I quit.
Also I have a good friend who’s been into investing since we were kids, so we always talked about saving and investing when most of our peers were partying instead, lol.
Now I just need to get my wife on board!
I’m sure your wife will be excited to get on board. Pull out the compound interest calculator and show her what could happen overtime if you’ve got the Excel spreadsheets for all your finances, make sure to share those as well.
Great video Erin! Target age 52. Using e-commerce. What do you use for video editing?
Morning: I’m retiring in March and was wondering if it was necessary or a good idea to roll your 401k over even if you are happy with your investments??
It freaks me out being a boomer that my peers are at this stage in life without the necessary funds to live life well. We have a friend that is supporting his parents as they did not plan well.
Get saving and keep saving. Never touch this money. Invest in side hustles like real estate and the market. Don’t leave it to chance.
I started out very slowly but since turning 55 my income has begun to shoot up and weirdly at 60 I'm a millionaire and by 70 I expect to have doubled that again (at least). Multiple income streams, including royalties, made it possible.
👏👏👏
Hey! We got the “Hey guys, what’s up?!”!!! 😂👍
It’s back!
Started early, I’m 52 and hoping to retire around 60 to 62. Medical seams like it can kill a retirement plan quickly.
Love this video. I am in Gen X. Love the fact that I have more than the average. Unfortunately I am still behind. My plan: Keep working until 75.
😢
That's not a plan. That's giving up on planning.
Make sure to take the time to calculate how much you actually need. Don’t base anything off a video. You see on TH-cam. Run your numbers if you have a pension, Social Security, any other sources of income between you, and perhaps a life partner.
@@ErinTalksMoney Needs and wants are two different things. My wife and I have both been investing in our 403B accounts for over 25 years now. We have watched the growth of these accounts. Our financial planner says that we are well on our way to being able to have a nice retirement. I am not 100% sure about that. We live in Southern California in a high cost of living area. We do own our home, which means we are house rich, LOL Imagine having a half million in equity and it doesn't mean much because debt isn't something that we are willing to participate in. I am still thinking we need to increase our savings to the $3 million mark.
Bummed that from 2014-2020 I had my default 3% invested 401k in target date fund. Found financial channels at 2021 and learned all I could and took immediate action selling what I could and cut off unnecessary spending cold turkey. Now 36, I sit with $67k between my 401k (14.5%) and Roth IRA (max). Mind you I live in the Midwest and make $24/hr so nothing crazy. Just a lot of financial discipline to not waste more time.
If you’ve got financial discipline, you’ll make it just fine. Few people have it.
It sounds like you have a great head on your shoulders! You can’t fault yourself for not knowing things in the beginning.
@@ErinTalksMoney ya, now I enlighten all friends and family with the channels such as this and keep myself in the know when it comes to the economy and how I can balance side hustles to enrich my life without tapping into the main source too much. Doesn’t mean life has to be beans and rice. I still go out here and there and take vacations. But financially, much more tactical with CC, discounts, etc. keep posting great videos!
When you can make good headway on a modest salary, you're actually doing better than most. Good job, now think about how to get a bigger shovel.
Hang in there, you are doing great!
At 27, it took me until I was 24 before I got a job with an employer match. While they only match up to 3%.... I'll take what I can get. They do offer good pay and good insurance for medical, dental and vision. They also have a pension. My debt payoff begins today!
I enjoyed my 20s and 30s. However, if I could do things over I would invest more money.
I spent so much on stuff that really wasn't important. Some things are worth it, and it's worth it to have fun and enjoy life but financial independence is also worth it. So striking a balance is ideal.
I'd say retiring (age 65+) with $2 million will afford you a comfortable life in most places. Reaching that point sooner in life helps because life can throw curve balls. So if you have the chance to make that money before 65 then go for it unless it's too much of a sacrifice today.
You beat me, it took until I was 30 to get an employer with a match. And then, after a few years of working for them, I quit and started my own business so I’ve lost my match.
I think $3 million is a good number but something less than that would be fine. Being mortgage free by retirement would free up a lot of money and add some major flexibility with a sum substantially lower.
Thanks for this.
Can you share what calculators you use to get these numbers.
Hey simple, compounding interest, calculator www.nerdwallet.com/calculator/compound-interest-calculator
Hi Erin,
Would you share the formula calculation to get those numbers for the age groups and starting amount. I'd like to calculate mine to see what I should be saving to reach 1 or 2mil goal.
Thanks
Tom
Simply use a compound interest, calculator www.nerdwallet.com/calculator/compound-interest-calculator
$4 million will be the new $2 million by the time I retire. It’s like trying to hit a moving target.
09:09 is "annual income" pre tax or post tax?.....after all we live on our after tax income..... Thank you!!
Lol can't wait for the 3m video next week. Damn inflation
Target is 5mil I have been super blessed that the company I work for contributes 10% and I match that 10%. Hoping to retire in my 50s
Hi Erin, I recently stumbled on to your video and subscribe to the channel as I found it interesting. You play two roles in each of your videos. I had a question can someone contribute $22500 in 401k along with 6500 in Roth same year or it has to be total of both 401 and Roth =22500. Please reply. Thanks
Don’t forget to always take the employer match if they offer one.
It boggles my mind whenever I find someone who isn’t taking advantage of the employer match. I once had a coworker who otherwise was a smart guy that had a fundamental misunderstanding of the employee match - he thought the 6% match was 6% of what he was putting in… so he thought it was too small to worry about.
Yes!!!!
I'm way behind in my retirement accounts, mainly because I've kept my money liquid so that I can buy rental properties. I'm almost at 50k in cash. My goal is 100k by next June.
Im in here trying to have at least 1.8 mil in my 401k and at least another 1 mil in side etf investments at 52 or 51 years old and about 4.5-5 mil at 59 1/2 when i can take it out
The wife and I started late but I'm not worried I plan on working till I'm 70yrs old because I love my job so as long as health permits I will keep going. I'm 52yrs old and my wife is 41 currently we are putting $1400 to $1600 monthly into her target date fund its at $22k right now and I just started a Roth 401k thru my work putting in $400 a month we both get a match which I plan on increasing mine each year. Our income is $150k yr and growing.
My target is 3M by age 55. BUT my trajectory imo through my investments will be 9-10M by 55. I am currently only 40.
Any data on top 1%, 5%, 10% savers/investors’ balances? These studies often just show an average or median. To effectively benchmark, I’d love to compare to the top band and not the broad average or media. Thanks.
It's a confusing array of numbers and terminology differences.
Fidelity did one of these surveys in 2011, and 42% of more than 1000 investable asset (excluding real estate and retirement accounts) millionaires said they'd need at least $7.5m to feel rich. Average age of that survey was 56yo with a mean $3.5million in investable assets that did not include real estate and retirement accounts. I prefer the investable assets over net worth, although I would have included the retirement accounts but not real estate. note that is individuals.
The 2020 Fed survey, a net worth of $7m put you in the top 5% of families in the US by net worth. Now the problem with that it is net worth, which includes everything from business assets to houses and jewelry. Note also that this is household net worth.
Citing LIMRA Secure Retirement Institute's analysis of 2017 Fed survey for 2016: top 1.6% households have $3.5m or more in investable assets; top 6.6% households have $1m or more in investable assets; and, top 12% of households have $500k or more in investable assets.
Breaking that in wealth groups rather than cummulative (e.g. top %): Affluent category makes up 5% of households having $500k-$999k investable assets, with average household income of $198,300, and average networth $1,498,200 (note the large variance between investable assets and net worth). High Net Worth category makes up 5% of households having $1m-$3.49m investable assets, average household income $323,900, and avg net worth $3,601,500. Mega-Millionaires category makes up 1% of households having $3.5m or more investable assets, average household income $1,357,700, and avg net worth $16,830,000.
Dont for get to adjust for inflation! Gen x might be just fine with 1.5mil but but in order to maintain that same standard gen z will need 3.3mil by the time they retire😬(40 years @2% inflation)
9:00 Fidelity's recommended savings by age always give me pause and makes me grimace. If you retire at 67 with only 10x saved, I feel like it's going to be hard to use the 4% rule. A 4% withdrawal assumes you're living on around 40% of your age 67 salary (before taxes and SS). Isn't that a bit low? I don't ask many late-60's retirees about their spending, so I don't know. Might be interesting to investigate.
When you retire, you won’t be paying payroll taxes, gasoline to commute, no work clothes, so your spending may be lower. Depending on your income, taxes on your social security are at most 85% taxed. Medicare isn’t free, but it’s likely better that paying for it yourself if you get a supplement. Medicare Advantage can bankrupt you if you’re not careful.
The fact of the matter is, most people are not even retiring with 10 acts. Their income saved. So many people have far less than that saved. And can’t even rely on the role of 4% rather they simply rely on Social Security more or less. Being a disciplined saver and investor, definitely put you in the minority.
I hit 130k in my 401K finally. 15 years to go. Between my wife’s and my 401s and our brokerage acct all goes well should be over 2M
How are you calculating these numbers? I would like to able to plug in my current balance, monthly contribution, current age, and goal to see if I am on track.
Simply using a compounding interest, calculator www.nerdwallet.com/calculator/compound-interest-calculator
Interesting video. I’d like to request a transfer to Gen Z. It would mean I’m killing it.
Ha ha, I wish I could do that as well
Enjoy the ride after 5 decades I’m there
Nice!
Love listening to you and I get compounding 8% to reach the 2 million goal but I would like to hear exactly what to invest in! I get the formula but need details. Thanks
You are in a good place to learn much from Erin. I watch most of her videos so I can pass them on to my grand daughters. I am 73 and passed Erin's goal for my age as we have been truly blessed in life. But, for what it is worth, as a rule it depends on your age/timeline/how much time you are willing to devote to investing. I tell my grand daughters to start with the indexes as they are not knowledgeable enough to start picking stocks and they are not yet 20 years old. Beyond that I think everyone has to choose their own poison so to speak. I am 73 and spend 25 to 20 hours a week managing my portfolio on 100% in common stocks. Of all my many friends I only have one (1) who I can discuss stocks with. My wife is my partner in investing and when we get to the point (age) where we can not or are unwilling to put the hours in, we will put everything into the total market index and let it ride.
index funds are great! indexes like the s&p 500, nasdaq, dow jones, russell 2000 are good to look at depending on your risk tolerance. Beyond that, most investment firms offer target date funds. they typically start off investing in stocks and then slowly switch to bonds. my favorite index is the ICE Semiconductor Index (SOXX). it's much more volatile than other indexes, but it has superior 10 year performance compared to other indexes
I’m a huge believer in index funds.
@@ErinTalksMoney I neglected to ask the other day "how much do you already know about CCs?" Like most investment vehicles you sell CCs by the hundred shares per 1 contract and like in corporate bonds which are sold by the 1000's but quoted as 100's. That is why my rule is to have all the stocks I own to be divisible by 100.
What help me and what I recommend to others is to record one's assets and debts on a spread sheet on a quarterly basis: home equity, stock, bonds, 401k, checking/savings, taxable brokerage accounts, annuities, vehicle depreciated value, mortgages, car loans, student loans, and credit card debt. Then you can graph out your net worth and your various asset classes. You can track and visualize your relative asset allocation and make purchasing or investment decisions, such as the best time to buy a new house, when to cut back spending, when to increase investment, etc. The first million takes a looong time and the growth looks linear, but after about $1M to $1.5M invested it starts to grow exponentially.
We're hoping to get there. If we can get there more than a decade before retirement that would be great.
I think keeping track of your net worth overtime is absolutely invaluable. Hang onto all those past net worth statements, there really fun to look back over.
@@ErinTalksMoney I first started doing this by scribbling down my asset class numbers on a page of my check book, but then transferred them to a spreadsheet and then graphed the data using the "stacked area" chart option. This is a great way to visualized the relative proportions of your assets. With a high demand specialty medical practice and frugal spending habits, well under my means, I had three times where I had too much cash in the bank. The first time the graph showed that I could upgrade to my dream house which I bought at depressed 2013 real estate prices with a big down payment to avoid a jumbo mortgage (and has since appreciated 70% in 10 years), the second time the graph told me that I could afford to completely pay off my mortgage early (thus all of those mortgage payments could go into growth funds), and the third time the graph told me I should transfer cash into a new taxable brokerage account which will soon double the principle in size. So an asset class graph is not just fun to look back at historical progress, but is a key financial planning tool for life altering decision making. You can also use formulas to make projections and plug in numbers for anticipated real estate appreciation, stock market fluctuation, account draw downs, anticipated healthcare costs, vehicle depreciation, wage growth or retirement, and the overall effect of Social Security benefits.
So if I have close to 300k at 45 to start I can hit at least the 1.1 million assuming I’m investing 1,500 a month?
Video idea Erin. Maybe individual videos on 401k, TSPs, 403B, 457, etc. Even though my wife and I love your channel, we usually only get entertainment value from most of it but education on specifics would be cool ? I am doing an education system with my 25 year old nephew. The latest one is on a CD...
1. What does CD stand for ?
2. Is a CD a locked in for a certain amount of time ?
-- If it is not, then how can you remove the money ?
-- Is there a penalty for removing early and if so, what ?
3. Is the interest rate locked or adjustable on one ?
4. Where can you buy/purchase a CD ?
5. Is a CD a safe deposit or a volatile deposit ?
6. Which pays better, a CD, a Saving Account, or a Money Market ?
7. How could you lose money with a CD ?
8. What is a CD laddering and is it a good or bad idea ?
After this I will move him onto a Money Market discussion/education. I am NOT a professional like you but just trying to get him some basic level education.
@financeyoutuber26 how about we DO NOT Scammer !
Love the suggestion!
high yield get you there faster
Well done, Erin. Start early sand keep going. We did and are reaping the rewards of "forced scarcity and delayed gratification". If you do the work early, you can ease off the gas later and allow your nest egg to do the heavy work for you. It is surreal that the growth exceeds our contributions and even our income. That is the magical land of critical mass.
I have 3.3% of my retirement money in a 401(k). The rest is in IRAs and a taxable brokerage account. That means 96.7% of my boomer money doesn't factor into Fidelity's 401(k) median. These 401(k) median reports are useless. They need to include IRA and taxable brokerage account balances to get anywhere close to an informative state of retirement readiness.
I'm hoping to reach the point where I can easily live off of $1000 a month in expenses(paid off well maintained house and car, healthy body, large garden and hunting to supplement food costs). Thankfully I have another 40 years until (today's average age) retirement, because I don't even have money for a house down payment. Thankfully I have a fully paid off and well maintained car I intend on keeping for the next 20 years if I can.
One correction: the Schwab question wasn't what amount people needed to feel wealthy, but what net worth could be considered wealthy for a person in your area. Those are two entirely different questions. The amount people felt wealthy was far lower than their actual net worth. Again, it was net worth not $2.2m in investments. To distill this down: what people feel other people need to be be considered wealthy is $2.2m, but what people feel they themselves need is far less at an average of $560k net worth. Schwab also doesn't differentiate between individual and household income and net worth. If you are using $2m/person, then if you are a couple that is $4m. That makes a huge difference. I wouldn't say the Gen X numbers are very unrealistic. We are late 40s and are still dumping $15k/month new money into investments, and that is with me being retired and my sugga momma still working. When I decided to stop messing around and got out of debt, I just continued to live like I was in debt. we lived off the same amount, but instead of giving the creditors the extra money it went into savings. That essentially meant we never lived off of more than 1/2 of one of our incomes. That ensured we could still pay the bills and save if one of us lost a job.
I think $1m or $2.2m just sounds a lot, but if you use the 4% withdrawal guide, $1m only yields $40k/yr and $2.2m yields only $88k/yr. I don't think when Schwab or others ask the question, they really try and distill it into usable data. Schwab's dumbest question was framing it as what do you feel others feel is an amount they would consider wealthy. The issue is that focusing on a generic amount like $1m or $2.2m, which has really no application for what your needs will be or what you want them to be in retirement.
I see you've also discovered the secret of pegging your lifestyle to a dollar amount once you get comfortable and investing the rest for the future. Second most important thing after avoiding debt if at all possible.
Investing $15k/month, 180k/yr? That's awesome dude! What field do you (pre-retirement) and your "sugga momma" work in?
@@brucef1299 wouldn't consider it a secret or discovery. We don't really peg our lifestyle to a dollar amount. The half of one income still allows for lifestyle inflation with income increases.
When i see stats about average 401k balances, it confuses me. Are these average "per account" or are they aggregating balances for people that have changed jobs and may have several 401k accounts?
It is per account, so if people have multiple 401(k) accounts, it definitely will skew the stat
@@ErinTalksMoney thx!
Hi, Erin, I just really, really need the S&P 500 Index to re-attain its record high intraday level of 4,819 from Jan. 4, 2022. Thank you!
Hi!! It will get there! 😊
I felt wealthy when I bought a new motorcycle. I was younger and now I feel wealthy because I do not have work for someone else’s dream.
A typical person in US probably needs about $2million to retire if you exclude social security and pension. At 3.5% thats about $70k a year and adjusting for inflation.
I don't expect to live much past 60 because of family history, so just to be on the safe side, I'm going to assume I'll make it to 70. I could live comfortably on $50k a year, so I could retire at the age of 60 with $500k. That's assuming I don't invest anymore money after 60, and there's no inflation. But if we assume I invest, and I beat inflation by a little bit, I still only need $500k to retire at 60. As long as I don't have any major medical issues before 60, I think it's doable.
What about the people who have pensions? How do u factor in pension to what you need?
Pensions for us cover all living expenses and medical. Our investments have not been needed to live. So live while young, DONT SAVE TOO MUCH IF NOT NEEDED. ENJOY MONEY WHEN U CAN HELP OTHERS.
@@steveenglish6639 currently I am 45 years old and my pension to date is $1300 probably going to be around $2500-3000 by retirement. They also match 100% up to 4% on my 401k contributions
Pensions would reduce the amount you would need in a nest egg, because you would have a guaranteed income source
Great video! What calcultion did you use to determine that a 35 year old with $15,500 saved in retirement can hit 2 million by retirement age if they contribute $1,310/month?
Simply used the compound interest, calculator - www.nerdwallet.com/calculator/compound-interest-calculator
@@ErinTalksMoney great, thank you!
I’m 50 with only $220,00.00 invested . Hoping to get to 2 million by age 65.
Fidelity is confusing at 9:11. They use starting salary. So if 30 years ago I had an annual income of $30 k, I should now have only $240k saved? Shouldn't they have said your CURRENT salary?
The benchmarks of 3x, 5x, etc are intended to reflect your current salary at that age - not just always referencing your starting salary. I hope that helps 😊
I'm sad I'm not 20, but I'm glad at 37 I still have time to make it
Every year I joke when my birthday comes around that I’m sad because I lost another year of compounding 😂
@@ErinTalksMoney Or that you've compounded for an additional year and are closer to your goal!
As soon as I have $1million liquid and debt free , I’m done and going to enjoy my life while healthy and fairly young at 61
I went to a Bogleheads meeting yesterday in Northern Virginia. Try and attend a Bogleheads meeting and do a report.
I understand depending on the age the less they need to save monthly (20 years old, $2500 saved and $400 a month to hit $2 Million).
The question is $2 Million in 45 years.... How much would $2 Million be worth in today's money. Surely, 2 Million in 45 years will not be worth nearly as much as $2 Million in today's dollars.
Yes her math is not right.
Hey Philip! the general rule of thumb is that inflation will cut the value of the dollar in half roughly every nine years. Of course, that is a general rule of thumb, and what actually happens to our dollars depends on what actually happens with inflation.
Based on past inflation, $1 million in 1995 would be roughly equal to $2 million today in 2023.
But if we want to go back down the route of inflation and history, then we also have to consider how incomes have changed. Back in 1995 the median household income was about $34,000. Today in 2023 the median household income is about $75,000 . So as incomes grow, it would be very likely that people would not continue contributing a lesser dollar amount, they would actually increase their contributions towards investments and that’s their ending balance in these accounts would be higher.
The calculations for this video were made in today’s dollars. Simply because that’s the reference point we have. Inflation will surely happen, but we don’t have the exact answer as to what inflation will be over the next 20, 30 or 40 years.
@@ErinTalksMoney what your viewers are saying is the premise that a person only needs to save X to reach 2 million by 65 (the number you started by saying is the current consensus of wealthy) is not valid (due to inflation)
Where else can you put ur money if u can only put in 6500a year in a roth ira acct?
In a traditional retirement plan, the max is $22,500/year & a bit more if you’re older than 55 I believe.
If you have an employer, sponsored retirement, plan available, you could use that, if you are any way, self-employed, you could open a solo 401(k), or an SEPIRA. Or you could simply open a traditional brokerage account.
I think the later you start saving, the more you rely on a bull market.
I'm hoping for better results in 2024.
That’s probably true
I don't know if I would "rely" on a bull market regardless of when you start saving. I think you get yourself into trouble trying to get rich quick, and you will tend to make more emotional decisions (e.g. selling down rather than buying up) rather than sound financial ones. You will tend also to gamble rather than invest.
Hi Erin, if I have 52,000 at 29 and I’m investing 2200 a month what would be my balance at 55 years old?
Here’s a great compounding calculator www.nerdwallet.com/calculator/compound-interest-calculator
at a conservative 4% return (I'm a pessimist, you might get more, who knows the future?), for 26 years of investing, you'll end up at $1.335 million dollars starting from $52k, putting $2200 per month in your investment... Good Luck!
Your math appears to be wrong.
for a young person starting out at age 20 today, their goal isn't the nominal 2.2 million at retirement ..but the purchasing power for 2.2 million.
You need to include in 40 years of inflation at conservatively 3%.
So they should be aiming for 7.2 million
you need 11% return assuming 3% inflation, otherwise, you won't get 2m adjusted for inflation.
Hey Erin, I wonder if you can comment on when our money is “enough”. I have saved aggressively for 10 years but now feel I’ve given up too much opportunities for fun with friends and family.
Funny enough, I actually have a video here on TH-cam literally titled enough. I get the feeling of feeling like you’ve missed out on a lot by saving so aggressively. And I think you have to find a way to have a balance, you have to find a way to not miss out on every ounce of life simply because you’re saving. It’s important to have good moments today, and create memories today, just as it’s important to save for the future. And ultimately what is enough for you, really depends on your personal circumstance.
I am 62 with 1 million net worth. By 65, I hope to have 2 million 😀
It can be done. The first million took over 22 years. The 2nd just under 4 years.
I retired in 2013 with $4M and now it’s $10M. It all depends on how much you spend and inflation.
You got this Darrell!
@@rgood1204how?
Five years ago my wife and I were close and thought $1 million each would be a lot...maybe even "enough" to retire. Now in 2023 we have each surpassed that milestone but now mentally it does not feel enough....maybe $2 million each? Hahaha.... Talk about moving the goalpost...
It all depends on your spending.
Ha ha! Make sure to make time to enjoy your life and all your hard work too!
If I just cut my salary in half, then I will meet my 6x number saved and everything is on track 😂
I enjoy your videos, but I don’t understand why you show the math about how much a 20-25 year old would need to save to have $2,000,000 in 45 years. In 45 years, at 3.2% inflation per year, someone would need over $8 million to have the same purchasing power as $2 million in today’s dollars. Isn’t THAT the number you should be using to give people the most useful, accurate information? What’s the point of aiming to have today’s retirement number 45 years from now when it won’t be nearly enough?
2M in 45 years will be worth nothing for gen Z. They'll need to invest much more than 400/month
If our investments could get 8% or higher after adjusting for inflation, that would be amazing. However, I estimate much lower at 3%.
the S&P 500 has delivered a compound average annual growth rate 0f 10.7% over the last 30 years, It's up this year 17%
It is scary, but you must invest in more risky assets than the S&P 500 if you are 50 or under. Buy real estate, Tesla, Shopify, Sofi, Vertex, etc. These stocks have the potential to double vs. an S&P 500 ETF in 10 years. I invested 10k into Tesla in 2019, and now it's 90k in 4 years. Not everything will do it, but you have to risk it, if you want to get out of the rat race.
no, her chart comparisons assumes 8%/yr return for everyone.
@@hanwagu9967 If you want to wait 30 years. Knock yourself out. Be like everyone else and retire at 62.
I feel like these gems are extremely rare and you have to be lucky to find and invest and stay with them!
@@Fadescape I retired at 42yo with retired income of $400k/yr, so I'm quite sure I've done something right.
@@brandon8531 yeah, gamblers tend to reminisce about that one big win.
Have to start when you're 2 months old
Ha ha! Hopefully you have a parent who is excited to start for ya
Great ❤ video.
The numbers tell it all. Please everyone invest as soon as you have a job. Anything you can, then increase it with every pay raise.
Preach!
$2.2M for someone near retirement is not the same as for a 20-year-old. Using the government's "CPI Inflation Calculator", $2.2M in June 1978 is $10,295,088.96 today. $1M in 2068 won't seem like much. I recommend factoring Inflation into your calculations.
1:14 Kevin O'Leary was paid $15M to trick people into investing in cryptocurrency on FTX.
You don't need to factor in inflation, because they are all being compared in today's dollars, not future dollars or past dollars.
Yeah, this calculation should always be done with today’s dollar - it already accounts for inflation. If you’re using future dollars, you’re doing it wrong..
@prosteeltraining7490 I would disagree - inflation on the $2.2 million should be a consideration. Now vs 2055, $2.2 million will not mean the same thing. Erin's calculations are concluding on having $2.2 million in the FUTURE, while people are saying it takes $2.2 million NOW to feel comfortable.
@@zachhecksel2920 you completely missed the point. “Todays dollars” means the value of the future savings is discounted by the rate of inflation. It already includes inflation in the calculation. What you are talking about are future dollars.
My 3 million goal (in today’s dollar) will end up being closer to 5 or 6 by the time I get there (future dollar), but it will still have the same purchasing power as 3 million does today. That’s the whole point of using it.
@prosteeltraining7490 I still would disagree. Erin is using 8% in her calculations. Average S&P500 return over 50 years is ~10.53% and the average inflation over 50 years is 3.8%, netting a return of 6.73% excluding inflation. That is if you were purely in S&P500 and no bonds etc. Many financial advisors do not recommend this approach and have bonds etc included in portfolios - thus a lower and more conservative approach for the average investor. I don't believe Erin's calculations are accounting for inflation, based on her 8% rate and mentioning "savings needed to hit $2 million by 65" (future).
2.2 million in today's dollars?????? Wow, I guess I need to go back to work! ;) Not happening. Guess I just need to feel not rich.
Ha ha! You enjoy your retirement
Very flawed goal of $2.2M. People need $2.2M in 2022 dollars, not 2057 dollars. In 2055, say, the they would need $9M to retire. How did you miss this big point?
$2.2m is today's dollars. I'm not sure why people confuse the issue.
...or hopefully your parents were wise and invested $3,007 one-time at birth to reach $2M at 65 (10% return). Easiest!
Hey Erin, will you give me 2 million dollars?
if erin had that kind of money, she would not be making vedios
Why?
@@lordabhikingfisher8087 That's not true. She's making videos because she is passionate about finances. So she's sharing what she knows in order to help others.
@@TheFirstRealChewy Help is secondary. Second income steam is the primary motivation. Ask her and she will tell you. ;-) No charily here.
@@lordabhikingfisher8087 charily?