I can tell you that my husband retired at 62 and never made over $50k and had nowhere near $1m in his 401k and we are doing great. He's now 65 and we are living our dream on 50 acres (bought the year he retired). Our previous house was paid off so that helped. We lack for nothing but we are low maintenance.
First, that’s awesome! But it really helps your retirement coincided with a really strong market returns for the past few years. Those conservative estimates, like the 4% rule, exist to help protect against a really rough turn of events. Enjoy your golden years!
Age 63, no debt. paid for house, severance ends next month and the thought of depending on my $2M portfolio keeps me awake at night. My same aged neighbor just retired with less than $100G in savings and seems ok with that. People are just wired different.
I take solace in knowing that in my 40's now, I will never achieve the numbers they speak of. I will put some away and just live the best life I can with what I have at retirement age.
@@rezaphototruth is you can retire and n less if you are healthy and don’t want to leave inheritance. Might be more if both of those become critical path for your plan
35 yo now. 900k net worth. Compound interest is awesome. Although I'm doing great for my age. I won't be trying to achieve the numbers set forth. I'm gonna coast and retire early, whatever I end up with will be enough because I have financial literacy through The Money Guys
As a 61 year old - save as much as you can as early as you can. You’ll sleep better and have freedom and peace of mind later and you won’t regret it, trust me!
You are right sir, I’m 25 and worked 2 jobs for the past 4 years. No more debt and am steadily growing because the more I have invested earlier compounds more and more for my future
having $1M at age of 25 and being able to let it grow would be awesome, even with inflation. Problem is having $1M at 25 is fantasy for most people. It's hard enough to get $1M by age 50.
$1mil at 25 yes you had some crazy good luck or gifted human. $1 mil at 50, nah if you are a reasonable person this can be attained. If you can’t pull it off by 60 you’ve made a lot of bad choices or placed yourself in an unaffordable lifestyle. Yes it would be nice if we all had it all but we can’t. That $12/hr a person would love to have that $22/hr job and they’d love to have the $50/hr job and so on. It’s where are you willing to do what’s right to you
What I think of is if Elon musk didn't become a millionaire until he was 41 what are the chances of a 25-year-old becoming a millionaire that is some really good chance
@@noahclay8632 - huh? Musk was in the South African Musk family - they're quite wealthy. He was born in 1971, his first company sold in 1999 (at age 28), and he got 22 million out of it. Pretty sure he was a millionaire before that. At 41 (2012) he was a multi BILLIONARE (net worth 2 billion), according to Forbes. Source - wikipedia.
As a 31 year old watching this making almost 100k I’m excited to see the 35yo numbers because I will be there in a few years and have been wanting to set a goal exactly like this! Thank you for this awesome content 🎉🙌🏼
This is the most eye opening video you have posted to date, and I've been watching you guys for a long time. I never considered myself a financial mutant, but after reading your book and watching your shows over the course of the last several years, I am starting to think otherwise. I've been truly blessed over my career and I too was fortunate enough to read a couple of classics back when I started my journey (The Millionaire Next Door) and (The Automatic Millionaire). I am Brian's age and am looking to retire at 62 if possible. I haven't taken the "Know your Number" course but if I have the $2.1M lump sum needed to retire at 55 and I am only 50, I assume I should be able to retire at 62 with ~$4M barring any market catastrophes in the next 12 years.
Start saving young. Time is your friend. Same goes for starting a 529 plan when your children are born. 18 years later, you’ve may have enough to put your kids through college without spending more.
wild to imagine making 80k+ in your 20s, I did not make that until age 38 and only hit 110k/yr at 41. I really appreciate the sentiment of this video (it's legitimately high quality content) but it really does cater to high-earners (which I understand is likely to be your client base, nothing wrong with that). you should do one of these based on actual average incomes or average household incomes x age. thanks for the continually great content btw, I did not have a dime saved until 37 and at 41 I am at 175k, your content was a huge guidepost
I loved this episode! I'm 25, gross 85,700 annually and invest 15%. I've been getting anxious lately about needing to get to 20-25% as soon as possible, while trying to save for a house. I also decided that my spit ball number that I need to retire is 5mil (after I went through and accounted for a 3% increase every year during my life time and then 4% withdrawl) Super cool to see them go through the same thought process and come to nearly the same conclusion 😅
Aiming for about 6.5 million at 65 years old for my family. The high number is because I am 25 now and am aiming for about 2.4 million in today's dollars.
Just keep 100% in a broad stock fund such as the S&P500 and every promotion up your contributions until you’re maxed out. No need for bonds for decades.
Yeah I don't have any bonds right now. SP500/International Index makes up about 85% of my portfolio. Focusing on high interest student debt right now in step 3 so not investing too much yet.
@@diligentDawg99 The international funds I’ve looked at have performed very poorly (around 5%) over the long time frame of decades. What’s the 15% of your portfolio invested in?
@glasshalffull2930 yeah they don't do too great, but with vanguard and schwab predicting that changing in the next 10 years I want to at least have some stake. Of that only about 15% is international. The other 15% is about 10% a growth fund to with a good track record in my 401k. The other 5% is a mix of NLR and FBTC (keeping fully speculative investments at a limit of 5%)
I must be mentally synced up with The Money Guy content team. I was just thinking if $2mil was going to be enough by the time I retire (I'm 34). Then I opened up TH-cam and this was the video premiering.
I think 2M should be enough if you measure out your retirement expenses like insurance (home/health) and property tax and food and utilities. Then the leftover is for traveling/fun. I’m shooting for about that and may move to another country to get more bang for my buck
The assumption that a 25 year old with an income of $87k is very unrealistic and skews the data to be more favorable. The median 25-year makes only around $52k
The problem with these calculations is needing 80% of your income in retirement. The goal should be to pay off any car loans and mortgages. Which is usually 35-40% of most people’s income. If you can be debt free at retirement you can maintain the same lifestyle at 60% of your pre-retirement income.
We crossed the seven figure this week. We’re in our 40’s and would like to partially retire in 5 years and we’re aiming for $1.7M. We’d like to spend $55-60k a year.
that is why I start to put $50 a month for my two boys since they were born. their journey starts when they are 1 month old and they have 65 years for their retirement account to grow.
I am not sure why they chose such a high beginning income number for age 25. The median income for ages 25 - 34 is $53k. I feel like using more realistic numbers for most people would be more beneficial.
As someone who is happily retired and 70 years old please know that to be happy and content you need to be healthy and debt free. I haven’t needed to touch my savings after 8 years of retirement. Just don’t retire with debt.
Not too crazy of a number if you're willing to work harder than you are to come up with excuses. I'm 25, haven't made 87k yet but every year with 15-20k of overtime I manage to make 70-75k from my main job and I save as much as I can to invest it in the market so I can hopefully make more money but not have to work as hard for my second main source of income. The goal is to end up making 100k income every year when I'm in my 30s so even if my day job only pays me around 70k, then I just need to invest enough money where a reasonable 10% return can net me 30k yearly.
As a soon retiree, keeping my 401k on course after a rocky 2024 is top priority. I have been reading of lnvestors making up to 250k ROI in this current crashing market, any recommendations to scale up my ROI before retirement will be highly appreciated.
The current market might give opportunities to maximize profit within a short term, but in order to execute such strategy , you must be a skilled practitioner.
Having an lnvestment adviser is the best way to go about the market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I nettd over $220K so far, that made it clear there's more to the market that we avg joes don't know
This is really nice. I worry that I have a couple more years before retirement, and I want to switch to using a financial advisor, I could really use the expertise of this advisor.
We retired when I was 49, my wife 45 with about $800,000. Our expenses dropped by 70% because we moved to a rural area with a much lower cost of living. i would have never considered this move in my 20s or 30s, but it was the best choice and we absolutely love it. Our investments have grown to over $1m in about 9 years while taking 72(t) withdrawals. So having millions of $ I think is misleading.
I get tired of "trolls" talking about inflation like it's just a Boogeyman that's coming to take away your money. Inflation is predictable depreciation, it's not hard to factor it in to your money calculations! Thank you Money Guys for having robust math and making financial knowledge accessible.
There is typically no need to account for inflation in your calculations as long as the stock market returns are equal to your withdrawal rate + inflation. However, inflation will increase the likelihood of failure since deflation is unlikely. And it is going to continue to be a boogeyman as long as the next political regime continues to promote inflationary policies.
Thanks for the video. In the uk most pension funds have lifestyling built into them so as you approach retirement they de-risk and move away from mainly equities. Therefore the expected rate of return is not linear and I don’t expect anywhere near 8% and above. That is something you would need to consider when doing your projections.
Savings rate needs to be 25%. That gives flexibility to retire earlier. Definitely start with whatever you can, but 25% get to it. I wish someone would have told me 25% when I was young.
Plus, if your house is paid off at retirement that’ll alleviate a significant amount of money. Plus, if social security exists 😂 you’ll have that, and if your employer has a pension you’ll have that. Invest well throughout your entire working career and you’ll be fine.
I have so many problems with the first half of this video. 1. Assuming the average 25 yr old makes 87k is insane. That would make the 25 yr old in the top percentile of income earners. They probably live in a big city in CA or NY where rent is insane and other COL expenses are constantly squeezing them. 2. Assuming 3% wage growth yoy is silly. You simply will not get a solid raise every single year. Maybe the very best workers are able to consistently increase their income as they job hop and focus like crazy on their career, but this assumes no job losses, no life changing events, no economic downturns. Also- there is usually an income limit a worker hits in their late 40s to early 50s. To assume they continue gaining yoy raises in perpetuity is ridiculous. 3. Assuming a 25 yr old can start their economic journey with OVER 100 GRAND is insane. And this isn’t 102,000; we are talking about 130 thousand dollars. That simply is impossible without mommy and daddy helping either by supporting you while you save or just funding your accounts. 4. A 5.7M portfolio in 40 years can only give a maintence salary of 70k (today’s dollars) that means this person would have done everything right in their entire life never slipping up or making financial mistakes and yet they STILL only live a modest life barely above their means. 5. There is no debt assumption built into this model. So this 25 yr old very likely has to be degree’d in order to have such a high salary, and no student loans. Another high improbability. Now, I am 25, went to a top business school in the country, and have a wide reaching network of successful 25 yr olds. The ONLY person I know that has over 100k saved is a software engineer that got a huge lump sum bonus for their company that has been mooning recently (a certain gpu company some people might know about). This person was also sponsored by their parents during school so they have no debt. This person also saved over 50% of their income by living in a shit box with roommates. Are we saying here, that in order to be modestly financially successful, you need everything under the sun to go perfectly for you your entire life? This is the most demotivating video on finances I’ve ever seen. The math just doesn’t make sense for me and makes me think I should just blow all my savings on a trip to Bali as I see my other colleagues doing. All of the numbers shown in this video seem completely out of reach and I am in the top echelon of income / salary for my age. Fml
There are many companies that give yearly merit raises. My husband’s is one of them. It can range from 2-4% annually depending on performance, but that has been consistent for the 15 years he has been with them (and that doesn’t include actually salary raises/promotions/inflation raise that was given either).
Yeah their salary assumptions make no sense. The average 55 year old makes between 60-90k a year. Assuming they make 150k is just plain bizarre. These aren't relatable scenarios for most people.
Union guy here. My company hires anyone off the street with no education or experience and gives you a $75k a year job. Contracted raises are 3 to 5% every year and have been that way for nearly 50 years. Yearly profit bonuses coming close to 5 digits on top of that. Low housing costs and cost of living in the surrounding areas.
People are facing a tough retirement. and it's even harder for workers to save due to low-paying jobs, inflation, and high rents. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire in.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether l'll have sufficient funds for retirement.
It's recommended to save at least 20% of your income in a 401k. Joseph Nick Cahill taught me to estimate how much you should save based on your age and income. I've been with him for years now and his decades of experience in the markets translate to chunks of value in so many ways! He has upscaled my portfolio and even got me reading self help books haha
Awesome! I appreciate your viewpoint. I currently earn $600k per year. I have no home or investments, and my job is in New York because I work from home. I need to act quickly or else I'll owe the IRS thousands of dollars come tax season. What should I do?
To better understand the factors that could affect your finances as a beginner. To make the best decision, speak with a financial professional. They have a wealth of information regarding both current events and upcoming developments.
Secure a good financial advisor to help guide you on where to put your money. I have one and my returns are a lot higher. 9% on average on my 401k and 12% on mywife and I’s ROTH. IRA is a bit lower at 9%. Also he recommended that I build up some cash before retirement (that was sitting in savings) by putting it into Tbills that are paying out 5%.
I greatly appreciate it. I'm fortunate to have come upon your message because investing greatly fascinates me. I'll look her up and send her a message. You've truly motivated me. God's blessings on you.
I’ve been trying. 52 y/o. 2x kids in private Westside Los Angeles school. and stay home wife I’m at 1million invested in stock market, and 3million in assets(3 homes) and 1/2 million in bussiness assets. I hope I can x10 my investments by 65. For my 10 million dollar retirement goal. Looking forward to the next 4 years!! Let’s go!!
This is the best video for the average American to gauge where they are in their financial journey compared to where they want to be, along with how to pivot if they want a different outcome than what they’re tracking on today. The BEST video on the internet. Good Job.
This was great! As someone in the 40s range with 1M LNW, this was incredibly helpful. I'm not easing off the GAS but it's good to know that worst case scenario of adding nothing, we're still in good shape
According to Schwab, if you don't have at least 10% of your portfolio in Bitcoin you are going to underperform. Book mark this. Come back in 4 years and read it again
For the sake of argument, cut the yearly salary by half and see what you have. I know, when in my 20s, my salary was 35-45k. My wife was finishing school, getting married, and moving to a new city: so her's was 15-20k. At least half of my savings went to get a house by the age of 26. We were a single income household for most of my 30s and successfully lived on 65k while paying off all debt except mortgage.
This video addresses questions I always think about when it comes to how much I'll need in retirement when we consider inflation. Thanks for putting this out there.
I wish you guys would do a realistic video. I'm 48 and have about 500k invested. I plan on retiring at 60...not 65. We have only 1 life. We don't need 4 million dollars to survive, nor so we need 80% of our income.
@48 with 500K @8% will be 1.26m at age 60 if you dont put anything more in. Keep putting it in and stay out of debt. If you are in any kind of debt, then you dont really have 500K. You are looking at 80-90k income with 2 SS incomes and a 4% withdraw.
You are correct. That is why you need to estimate your actual expenses instead of 80% of your income. So let’s say you calculate a safe withdrawal rate to cover your expenses (maybe 3-4%) … you would need 25-33 times your expenses to retire. The 4 percent rule is reasonable because If the stock market continues to average 9-10% returns and inflation remains 6% or below then you don’t have to worry about running out of money. …….. Another method to estimate how much you need a year: your gross minus the amount you invest. If you invest 30% of your gross then you can also estimate that you would need a little less than 70% of your gross income to replace your current income.
Love this content!!! Thank you so much for this. More content like this, please! These are the answers I’ve been needing for so long, so that I can better plan for retirement. Awesome video!
#1 wealth building tip no one talks about… get that money before you get the kids. 😂 but for reals… I think it isn’t discussed because people find it too controversial.
@@Chris-xt8iowhile I agree that 3% growth is a good number, $50k compounded at 3% per year for 30 years is $118k. Just a math check. It is odd that this comment shows up in many TMG videos though. If one is not making 3% raise per year, they need to be considering alternate employers. Full stop.
If you're not getting an annual raise (i.e. CPI), I would look for another job. Likewise, if you don't get promoted over an extended period of time, I would look elsewhere. 3% is probably pretty conservative when you factor in promotions, which are often a significant instant increase.
It’s important to note that for the 35 YO example, if they are saving ~25%, and they are looking to replace 80% of their pre-retirement income, they would theoretically see a slight bump up in yearly cash because they would be functioning on 80% of their income rather than the pre-retirement 75%!
Thats actually my only critique if these numbers. Right now we are paying our mortgage, daycare expenses, saving for our child to go to college etc. If you take those expenses that will no longer be there during retirement that's about 35% our our income. Then you add the savings rate of 25% of your gross. That means 60% of what we currently spend money on will not be required in retirement. Basically we probably only need to replace 40% of our income to live the exact same way, at least in the younger healthier years. Especially because a large chunk of money is in after tax accounts so we can pull it out tax free. Now of course having buffer is critically important (the stock market could under-perform, old age care in the final years can be expensive etc). But I do think working this plan would actually lead to a significant increase in standard of living in retirement. In other words, it's a good aspirational goal, but I wouldn't panic if you can't quite hit these numbers. For example, if you're starting at 38 and saving 25%, you'll probably be okay still. Goal setting is important, but I wouldn't lose sleep if the numbers are a bit lower.
I’d agree with this… I’m thinking I’ll need less than 50%… once mortgage is paid off and kids are grown, and you’ve been saving 20 to 25%, the 80 percent seems absurd.
I'm 25 and ive watched you guys for a while and know that money becomes less valuable over time because of inflating. That being said, at the opening of the video y'all showed that 1 million at retirement will be equivalent to 300000 dollars today freaks me out. I feel like i need to go multiply my retirement goals by 3
If memory serves the equivalent of a $100k annual income in 2018 should be somewhere around $500k assuming a 4% inflation rate (I'm going from memory so don't quote me on that).
This makes me feel better. Due to life happenstances I felt way behind and was worried I'd never catch up. Based on the 18:17 With 35 years old making 100k needing $382,472 and 24.1%, I'm not far off 38 years old making 120k Currently at $335,000 across all accounts But saving 30.1% (including employee match) Assuming the next few months go well, I'll be upping it to about 60% saving
I hit over 106k investments this year. I'm 26 and have been working for 2.5 years and my goal for retirement is 4-6M. I at least hope that I can get to 1M before 50. I know my savings rate will decrease when I start my family but for now I'm trying to stack as much as I can
If you need 80% of your income in retirement, you have not prepared properly. You should have a paid off house, vehicle and any other large purchase. What are you needing 80% of your income for.
Question: retirement withdrawl strategy - I know MG doesn't spend a lot of time talking about depleting your 401k, but saying 4% is 40,000 as a withdrawl rate tells me that the $1M fund likely isn't being depleted much. What's the math if we assume an annuity increasing by 3% y/y inflation, a 6% return (conservative) on the fund, and we fully deplete between ages 65-95? Might be good for MG to weigh in on retirement income withdrawl strategy .. lots of tax implications and lots of bad information out there
I understand you guys want to motivate ppl with optimistic view but expecting over 8% return throughout 30~40 years every year sounds (to me, at least) like too much of a stretch just because S&P has performed that well so far. Personally I'd be very much interested in going over numbers at 4~5% annual return
I absolutely love this video. I'm 25 right now, so hearing you do all this math regarding inflation adjusted numbers looking ahead to my retirement is super helpful. I've been saving every spare penny I have made since 15 and putting any excess money into the market and it makes me feel good to know that I'm safely set up with what I already have now 🙂
You might not be in a job where you're getting regular inflation type increases, but the overall growth in the median wages suggests their estimate is fair. Also, remember that you're measuring over your entire lifetime, so you don't have to get 3% per year consistently if once it twice in your life you change jobs for a substantial increase, it may still average out to that. It is worth reflecting on the reality of inflation and why your employer effectively pays you less for the same job (with more experience!) over time... The problem might be less with their assumption and more with your employer!
@@think_ffs3934 Wait well as far as I know the median wage has lagged behind housing cost which have doubled in price over the last 30+ years. Original price 160K same house no major changes is now about 400K!!!
I think my biggest takeaway from this is just how badly our governments are controlling inflation. Pretty sad how eroded the dollar becomes in the next 30 years.
They really should specify if they are talking about individual or household income. 80% of Gross or Net income? Is the million in Brokerage, IRA, or tax free Roth? Additionally, they should put SSA income with the investment income. The money guys work with higher income people (upper middle class).
Real talk about savings and retirement numbers. Glad to see shows like this putting the “we surveyed millionaires” stuff behind them and acknowledging the $1M mark isn’t a true end number for realistic retirement today. Love this look 👍
Who said its an end number? Its a heck of a goal that puts a person ahead of 85% of their peers. If you hit it at 45 great, if you hit it at 60 great. You CAN retire at 1M currently. You can retire with less currently. In 30 years, probably not, but you still have to hit that number to pass that number.
@ according to the rule if 25 (multiple your annual costs by 25 to get a “safe” liquid net worth goal) $1M covers $40k costs per year with minimal risk of draw down on principle.
@@User-pu3lcfair, but if you had the working income as a couple to get to a million, you probably get another $40k in social security, which means you're living on more like $80k/year which is above the current US median income, I think. And if you're "only" at a million dollars, you probably don't have an expected standard of living any higher than that. It's not as crazy as you think.
Woot woot! Your "By Age" series are my early Christmas presents! Discovered you all at age 39, and bumped up the savings rate from 10% to 24%. Now 42, a mere 3 years later, I'm really seeing things take off! But life happens - medical stuff, kid stuff, and home renovations - so even though I (begrudgingly) need to take my foot off the pedal and go down to 20%, I'm totally reassured that my money is starting to work HARD for me. Thanks Money Guy Show!
I’ve been watching you guys for donkey years. Could you start to use 55 as the year you stop saving for retirement ? Approximately 1/3 of US residents experience illness or long term unemployment by the age of 55 that totally zaps their ability to wait until 65 to pull on retirement savings. 65 is not a realistic age to need the money. 55 is.
I like the overall thought process and the notion that you should start saving early and get that compound interest rolling right away. However, the hypothetical example is poppycock. Extrapolating that $87.5k is "about halfway" between $50k and $100k is a bit generous. If anything, people will be closer to the $50k. Just use the more realistic numbers to make your otherwise good point. Expecting the average person in the general public to earn $87,500 at age 25 and consistently get a 3% raise all the time until the end of time is WILD. You're going to have spans of time where he will earn less than he used to. Your company goes under and you need a new job now. You may have to take a pay cut. Additionally, you're going to have spans of time where his wages are stagnant for long stretches. That's normal. A democrat will win an election and the economy nosedives and we can't produce anything for 4-8 years because we're too busy robbing producers and paying people to not work. That's normal. Where did you get the idea of 3% wage growth?
What about lower income individuals? im 33 have about 50k in a roth 401k so far and make between 46k-50k anuually is saving 25% which im at right now including employer match enough for me or should i try to save at a higher rate?
You can look up a 401k retirement calculator and do the math. If you are 33 and make 46k with 50k invested while saving 25% the math would support having at least 1.8M by 65, which assumes a 7% rate of growth. If you assume as high as 13% you may have as much as 7.7M. That also assumes no raise for the rest of your life, but if you assume 3% raises the floor becomes 4M and the ceiling becomes 15.5M. Still, these are all just assumptions and things can impact this; job lose, reducing contributions someday, pay cuts or years of no pay increase, lower returns than expected, etc. All I'm showing here is that if you get on a retirement calculator and play with some assumptions with your rate of return and wage growth you can start making some educated assumptions on what you could theoretical end with. So long as you're happy with the floor you know you're sitting pretty well because ideally you're actually more towards the middle of the range you've been experimenting with.
Would like to have this as a calculator. A lot of factors here that would help if we could adjust them to our individual circumstances (age, salary, expected increase, retirement age). Great deeper dive here though
Great show! Thanks for such clear explanations! It would be interesting if this had a Part 2 which takes these target amount at retirement for each age and shows how, even in the worst case scenario (if the stock market crashes on Day 1 of retirement), we can be assured that we will have enough saved based on a reasonable withdrawal rate. I think a concern of a lot of financial mutants is that we will work so hard to save enough, just to retire at the perfect "wrong time" and still run out of money. I assume the Money Guy method takes this into account, so it'd be fascinating to see the math! Even as an engineer who loves spreadsheets, calculating these possible scenarios seems a bit tricky. So I'd love if the Money Guy Team could take on the challenge! 😃
Retirement becomes truly fulfilling when you possess two essential elements: ample financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement.
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retirement.
Serious question here - How many American households have that $200k income? I’m in the UK, and we bring in about £104k/$132k between us. That is officially in the top 11% of earners in this country.
$200k in household income is roughly the top 12% in the US (source: Statista). That stat can be a bit misleading because it includes ALL households not just one's peer group.
@@donaldlyons17 Any relative comparisons of income against an entire population can give a false sense of comfort or angst. The entire population includes Billionaires, homeless people and everyone in between. How does it benefit a Olympic marathon runner to compare their performance against me (a non runner)? Wouldn't it be more appropriate to compare themselves against another Olympic marathon runner?
@@donaldlyons17 Exactly. That's why you should compare against your peers. Two doctors with a total household income of $250k may put them in the top 10% of all households but also the bottom 50% of all two doctor households.
Finished grad school at 34 two and a half years ago, I started from zero because I didn't have anything going on in my early 20s and took 11 years to finish my PhD, but now I make around 170k a year. So far, I have 65k saved in the two years I've been working (it would have been more but I spent the first year building up my emergency fund of 50k to survive a year of expenses), and I'm now saving around 20% of my gross income including the match. It would be more but I have 110k in student loans to pay off.
Locrien, you are on your way to having several million by 60! Just be sure to have your investments in a stock fund such as the S&P500. At your age, no need to have bonds and a lot of the international funds have had poor performance.
I have $3.5 million Roth, 8mdid a major Roth conversion all at once since the 401 k pre tax was $6 million. Roth is best. I take it out for spending money and no tax issues.
Mid life crisis hits those in their 40s because they realize that retirement game is over if they haven’t been diligent with investing in their 20s/30s
Excellent video! Wonderful work as always. In addition, if you used real data for the returns (i.e the last 20 or 30 years) or what if there is a lost decade in there? ( maybe as the worst case scenario)
Excellent video. It would be even better if at every age, not only show what if you had a $1 mil, but also $1 million + save 25% per year until retirement. This would show people who much of a different following the FOO makes.
At 36 now, Joint account with wife (33). Sitting at ~500K liquid retirement funds plus a rental property. I guess this makes me feel better that if we had to slow down, we'd be okay.
Here's a case study for you guys: Bo is 40 with 2 cars valued at 35k paid off, home at 500k with 100k 5% mortgage and a house market increase of 6%, wage of 80k, 4 month emergency fund, and 50k in investments Jo is 40 with 1 car worth 10k paid off, home at 500k with 75k 5% mortgage and a house market increase of 6%, wage of 80k, 4 month emergency fund, and 100k in investments. They ea want a 2 mil net worth by 60. What is the percent of wage needed if they both get a 3% wage increase until 55 and a 2% reduction in earnings from 55-60. Now what would that number be if they had a household income of 150k and a goal of 3mil. (Main comparables: 2 car vs 1 car, 2 incomes vs 1 income.)
I was just watching “It’s a wonderful life” the other day and the main character wishes for a million dollars every day as he walks in the diner back in 1946 and yet still to this day, people praise a million dollars in the exact same light.
Why does the 25 year old have 9.5% expected returns every year until 65? Shouldn’t the rate of return go down each decade to match the other return assumptions for the other age groups? So from 25-35 it would be 9.5 %… 35-45 it would be 8.5-% etc etc The 25 year old would become more conservative with their investments as they get closer to retirement
I can tell you that my husband retired at 62 and never made over $50k and had nowhere near $1m in his 401k and we are doing great. He's now 65 and we are living our dream on 50 acres (bought the year he retired). Our previous house was paid off so that helped. We lack for nothing but we are low maintenance.
B
First, that’s awesome! But it really helps your retirement coincided with a really strong market returns for the past few years. Those conservative estimates, like the 4% rule, exist to help protect against a really rough turn of events. Enjoy your golden years!
Paid off property and social security goes a long way.
That’s right! Live within your Means!! Good for you two!!
While I commend you and your husband for your fiscal responsibility, your situation has zero applicability to today's markets and financial pressures.
Investments are the roots of financial security; the deeper they grow, the stronger your future will be."
The deeper your investment roots, the stronger your financial security will be in the future.
Age 63, no debt. paid for house, severance ends next month and the thought of depending on my $2M portfolio keeps me awake at night. My same aged neighbor just retired with less than $100G in savings and seems ok with that. People are just wired different.
I take solace in knowing that in my 40's now, I will never achieve the numbers they speak of. I will put some away and just live the best life I can with what I have at retirement age.
Yeah and here I am 45 almost bumping into 400k and thinking I am doing well.
You are doing great!
You don’t need 4 million and 225000 cash flow when you retire. I wish they more realistic. You’re going to spend less in retirement than you are now.
@@rezaphototruth is you can retire and n less if you are healthy and don’t want to leave inheritance. Might be more if both of those become critical path for your plan
@rezaphoto keep in mind they are taking about 2064 here!
35 yo now. 900k net worth. Compound interest is awesome. Although I'm doing great for my age. I won't be trying to achieve the numbers set forth. I'm gonna coast and retire early, whatever I end up with will be enough because I have financial literacy through The Money Guys
As a 61 year old - save as much as you can as early as you can. You’ll sleep better and have freedom and peace of mind later and you won’t regret it, trust me!
You are right sir, I’m 25 and worked 2 jobs for the past 4 years. No more debt and am steadily growing because the more I have invested earlier compounds more and more for my future
Exactly. It’s that simple.
having $1M at age of 25 and being able to let it grow would be awesome, even with inflation. Problem is having $1M at 25 is fantasy for most people. It's hard enough to get $1M by age 50.
$1mil at 25 yes you had some crazy good luck or gifted human. $1 mil at 50, nah if you are a reasonable person this can be attained. If you can’t pull it off by 60 you’ve made a lot of bad choices or placed yourself in an unaffordable lifestyle.
Yes it would be nice if we all had it all but we can’t. That $12/hr a person would love to have that $22/hr job and they’d love to have the $50/hr job and so on. It’s where are you willing to do what’s right to you
What I think of is if Elon musk didn't become a millionaire until he was 41 what are the chances of a 25-year-old becoming a millionaire that is some really good chance
@@noahclay8632 - huh? Musk was in the South African Musk family - they're quite wealthy. He was born in 1971, his first company sold in 1999 (at age 28), and he got 22 million out of it. Pretty sure he was a millionaire before that. At 41 (2012) he was a multi BILLIONARE (net worth 2 billion), according to Forbes.
Source - wikipedia.
I have two kids in their 20s. If they had $1 million they wouldn’t make it to their 30s.
@@noahclay8632 Elon was a millionaire at 27 and a billionaire at 41.
This episode is classic money guy gold standard, love it
Definitely one of the best episodes.
As a 31 year old watching this making almost 100k I’m excited to see the 35yo numbers because I will be there in a few years and have been wanting to set a goal exactly like this! Thank you for this awesome content 🎉🙌🏼
This is the most eye opening video you have posted to date, and I've been watching you guys for a long time. I never considered myself a financial mutant, but after reading your book and watching your shows over the course of the last several years, I am starting to think otherwise. I've been truly blessed over my career and I too was fortunate enough to read a couple of classics back when I started my journey (The Millionaire Next Door) and (The Automatic Millionaire). I am Brian's age and am looking to retire at 62 if possible. I haven't taken the "Know your Number" course but if I have the $2.1M lump sum needed to retire at 55 and I am only 50, I assume I should be able to retire at 62 with ~$4M barring any market catastrophes in the next 12 years.
Start saving young. Time is your friend. Same goes for starting a 529 plan when your children are born. 18 years later, you’ve may have enough to put your kids through college without spending more.
34 and pretty close to the lump sum needed for a 35 year old. This has me feeling pretty motivated to keep going.
wild to imagine making 80k+ in your 20s, I did not make that until age 38 and only hit 110k/yr at 41. I really appreciate the sentiment of this video (it's legitimately high quality content) but it really does cater to high-earners (which I understand is likely to be your client base, nothing wrong with that). you should do one of these based on actual average incomes or average household incomes x age. thanks for the continually great content btw, I did not have a dime saved until 37 and at 41 I am at 175k, your content was a huge guidepost
I loved this episode!
I'm 25, gross 85,700 annually and invest 15%.
I've been getting anxious lately about needing to get to 20-25% as soon as possible, while trying to save for a house.
I also decided that my spit ball number that I need to retire is 5mil (after I went through and accounted for a 3% increase every year during my life time and then 4% withdrawl)
Super cool to see them go through the same thought process and come to nearly the same conclusion 😅
If you’re doing this at 25, congrats, you’re gonna make it just fine. Nice work and keep going. You’ll retire very comfortably.
Aiming for about 6.5 million at 65 years old for my family. The high number is because I am 25 now and am aiming for about 2.4 million in today's dollars.
Just keep 100% in a broad stock fund such as the S&P500 and every promotion up your contributions until you’re maxed out. No need for bonds for decades.
Yeah I don't have any bonds right now. SP500/International Index makes up about 85% of my portfolio. Focusing on high interest student debt right now in step 3 so not investing too much yet.
@@diligentDawg99 The international funds I’ve looked at have performed very poorly (around 5%) over the long time frame of decades. What’s the 15% of your portfolio invested in?
@glasshalffull2930 yeah they don't do too great, but with vanguard and schwab predicting that changing in the next 10 years I want to at least have some stake. Of that only about 15% is international. The other 15% is about 10% a growth fund to with a good track record in my 401k. The other 5% is a mix of NLR and FBTC (keeping fully speculative investments at a limit of 5%)
And that was still way less than the target date funds allocate to international.
I must be mentally synced up with The Money Guy content team. I was just thinking if $2mil was going to be enough by the time I retire (I'm 34). Then I opened up TH-cam and this was the video premiering.
You are so beautiful 😍 😊
YT reads minds
YT reads minds
Will it be enough?
I think 2M should be enough if you measure out your retirement expenses like insurance (home/health) and property tax and food and utilities. Then the leftover is for traveling/fun. I’m shooting for about that and may move to another country to get more bang for my buck
The assumption that a 25 year old with an income of $87k is very unrealistic and skews the data to be more favorable. The median 25-year makes only around $52k
As a 26 year old making $53k I was very shocked and disheartened seeing that number initially
The math of getting to 80% still is the same if the number is a bit lower.
I'm 28 and I make 80k a year, I am throwing 24% into my 401k tho
Not if you went to college
im 21 making 110k a year as a new grad nurse , reason why I make so much is bcuz I live in HCOL area , but im still saving a good chunk
The problem with these calculations is needing 80% of your income in retirement. The goal should be to pay off any car loans and mortgages. Which is usually 35-40% of most people’s income. If you can be debt free at retirement you can maintain the same lifestyle at 60% of your pre-retirement income.
We crossed the seven figure this week. We’re in our 40’s and would like to partially retire in 5 years and we’re aiming for $1.7M. We’d like to spend $55-60k a year.
that is why I start to put $50 a month for my two boys since they were born. their journey starts when they are 1 month old and they have 65 years for their retirement account to grow.
As someone turning 25 tomorrow - I loved this episode
Happy birthday🎉🎉🎉
I like how Bo is always excited haha.
Brian, I am so excited!
Never gets old....like the bowling point.
@bgoode652 I love it. It's a great little catchphrase.
Already one of my favorite episodes. Let’s see more like this!
I am not sure why they chose such a high beginning income number for age 25. The median income for ages 25 - 34 is $53k. I feel like using more realistic numbers for most people would be more beneficial.
Could be for a married couple too. They did say they based that number off of their survey respondents.
As someone who is happily retired and 70 years old please know that to be happy and content you need to be healthy and debt free. I haven’t needed to touch my savings after 8 years of retirement. Just don’t retire with debt.
25 making 87,500 is kinda a wild number guys
Yea. That’s what I make at 42 with an engineering degree (no license).
Make some good choices and it’s not so wild. It’s not out of the ordinary for my career field or my husband’s.
Not too crazy of a number if you're willing to work harder than you are to come up with excuses. I'm 25, haven't made 87k yet but every year with 15-20k of overtime I manage to make 70-75k from my main job and I save as much as I can to invest it in the market so I can hopefully make more money but not have to work as hard for my second main source of income. The goal is to end up making 100k income every year when I'm in my 30s so even if my day job only pays me around 70k, then I just need to invest enough money where a reasonable 10% return can net me 30k yearly.
We were hiring engineers above 75k out of college as engineer I and this is utility hiring. I remember a job offer as and engineer very low in pay (
It absolutely depends on where you live! I was making 75k at 25, as someone who lives in a high cost of living area, it isn’t crazy to me.
As a soon retiree, keeping my 401k on course after a rocky 2024 is top priority. I have been reading of lnvestors making up to 250k ROI in this current crashing market, any recommendations to scale up my ROI before retirement will be highly appreciated.
The current market might give opportunities to maximize profit within a short term, but in order to execute such strategy , you must be a skilled practitioner.
Having an lnvestment adviser is the best way to go about the market right now, especially for near retirees, I've been in touch with a coach for awhile now mostly cause I lack the depth knowledge and mental fortitude to deal with these recurring market conditions, I nettd over $220K so far, that made it clear there's more to the market that we avg joes don't know
I appreciate your advice. How can I get in touch with your Financial Advisor, if you don't mind? I am in severe need of financial aid.
This is really nice. I worry that I have a couple more years before retirement, and I want to switch to using a financial advisor, I could really use the expertise of this advisor.
Annette Marie Holt is the licensed advisor i use
We retired when I was 49, my wife 45 with about $800,000. Our expenses dropped by 70% because we moved to a rural area with a much lower cost of living. i would have never considered this move in my 20s or 30s, but it was the best choice and we absolutely love it. Our investments have grown to over $1m in about 9 years while taking 72(t) withdrawals. So having millions of $ I think is misleading.
I get tired of "trolls" talking about inflation like it's just a Boogeyman that's coming to take away your money. Inflation is predictable depreciation, it's not hard to factor it in to your money calculations! Thank you Money Guys for having robust math and making financial knowledge accessible.
There is typically no need to account for inflation in your calculations as long as the stock market returns are equal to your withdrawal rate + inflation.
However, inflation will increase the likelihood of failure since deflation is unlikely.
And it is going to continue to be a boogeyman as long as the next political regime continues to promote inflationary policies.
Thanks for the video. In the uk most pension funds have lifestyling built into them so as you approach retirement they de-risk and move away from mainly equities. Therefore the expected rate of return is not linear and I don’t expect anywhere near 8% and above. That is something you would need to consider when doing your projections.
Savings rate needs to be 25%. That gives flexibility to retire earlier.
Definitely start with whatever you can, but 25% get to it.
I wish someone would have told me 25% when I was young.
Plus, if your house is paid off at retirement that’ll alleviate a significant amount of money. Plus, if social security exists 😂 you’ll have that, and if your employer has a pension you’ll have that. Invest well throughout your entire working career and you’ll be fine.
I have so many problems with the first half of this video.
1. Assuming the average 25 yr old makes 87k is insane. That would make the 25 yr old in the top percentile of income earners. They probably live in a big city in CA or NY where rent is insane and other COL expenses are constantly squeezing them.
2. Assuming 3% wage growth yoy is silly. You simply will not get a solid raise every single year. Maybe the very best workers are able to consistently increase their income as they job hop and focus like crazy on their career, but this assumes no job losses, no life changing events, no economic downturns. Also- there is usually an income limit a worker hits in their late 40s to early 50s. To assume they continue gaining yoy raises in perpetuity is ridiculous.
3. Assuming a 25 yr old can start their economic journey with OVER 100 GRAND is insane. And this isn’t 102,000; we are talking about 130 thousand dollars. That simply is impossible without mommy and daddy helping either by supporting you while you save or just funding your accounts.
4. A 5.7M portfolio in 40 years can only give a maintence salary of 70k (today’s dollars) that means this person would have done everything right in their entire life never slipping up or making financial mistakes and yet they STILL only live a modest life barely above their means.
5. There is no debt assumption built into this model. So this 25 yr old very likely has to be degree’d in order to have such a high salary, and no student loans. Another high improbability.
Now, I am 25, went to a top business school in the country, and have a wide reaching network of successful 25 yr olds. The ONLY person I know that has over 100k saved is a software engineer that got a huge lump sum bonus for their company that has been mooning recently (a certain gpu company some people might know about). This person was also sponsored by their parents during school so they have no debt. This person also saved over 50% of their income by living in a shit box with roommates.
Are we saying here, that in order to be modestly financially successful, you need everything under the sun to go perfectly for you your entire life? This is the most demotivating video on finances I’ve ever seen. The math just doesn’t make sense for me and makes me think I should just blow all my savings on a trip to Bali as I see my other colleagues doing. All of the numbers shown in this video seem completely out of reach and I am in the top echelon of income / salary for my age. Fml
There are many companies that give yearly merit raises. My husband’s is one of them. It can range from 2-4% annually depending on performance, but that has been consistent for the 15 years he has been with them (and that doesn’t include actually salary raises/promotions/inflation raise that was given either).
Yeah their salary assumptions make no sense. The average 55 year old makes between 60-90k a year. Assuming they make 150k is just plain bizarre. These aren't relatable scenarios for most people.
Some of your points are valid, some are not. It is possible but not likely for most.
Union guy here. My company hires anyone off the street with no education or experience and gives you a $75k a year job. Contracted raises are 3 to 5% every year and have been that way for nearly 50 years. Yearly profit bonuses coming close to 5 digits on top of that. Low housing costs and cost of living in the surrounding areas.
@ do they give a 100 thousand dollar signing bonus? or would u just start at 18 and live with parents to save 100k by 25?
People are facing a tough retirement. and it's even harder for workers to save due to low-paying jobs, inflation, and high rents. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire in.
The increasing prices have impacted my plan to retire at 62, work part-time, and save for the future. I'm concerned about whether those who navigated the 2008 financial crisis had an easier time than I am currently experiencing. The combination of stock market volatility and a decrease in income is causing anxiety about whether l'll have sufficient funds for retirement.
It's recommended to save at least 20% of your income in a 401k. Joseph Nick Cahill taught me to estimate how much you should save based on your age and income. I've been with him for years now and his decades of experience in the markets translate to chunks of value in so many ways! He has upscaled my portfolio and even got me reading self help books haha
Awesome! I appreciate your viewpoint. I currently earn $600k per year. I have no home or investments, and my job is in New York because I work from home. I need to act quickly or else I'll owe the IRS thousands of dollars come tax season. What should I do?
To better understand the factors that could affect your finances as a beginner. To make the best decision, speak with a financial professional. They have a wealth of information regarding both current events and upcoming developments.
Secure a good financial advisor to help guide you on where to put your money. I have one and my returns are a lot higher. 9% on average on my 401k and 12% on mywife and I’s ROTH. IRA is a bit lower at 9%. Also he recommended that I build up some cash before retirement (that was sitting in savings) by putting it into Tbills that are paying out 5%.
I appreciate your advice. How can I get in touch with your Financial Advisor, if you don't mind? I am in severe need of financial aid.
Annette Christine Conte , a well-known advisor, and I collaborate frequently. Her name may be looked up online, where you can get in touch with her.
I greatly appreciate it. I'm fortunate to have come upon your message because investing greatly fascinates me. I'll look her up and send her a message. You've truly motivated me. God's blessings on you.
Great episode guys, I really appreciate the enhanced content this year!
I’ve been trying. 52 y/o. 2x kids in private Westside Los Angeles school. and stay home wife I’m at 1million invested in stock market, and 3million in assets(3 homes) and 1/2 million in bussiness assets. I hope I can x10 my investments by 65. For my 10 million dollar retirement goal. Looking forward to the next 4 years!! Let’s go!!
Brian has been cranking out videos like crazy! I love it!
This is the best video for the average American to gauge where they are in their financial journey compared to where they want to be, along with how to pivot if they want a different outcome than what they’re tracking on today. The BEST video on the internet. Good Job.
This was great! As someone in the 40s range with 1M LNW, this was incredibly helpful. I'm not easing off the GAS but it's good to know that worst case scenario of adding nothing, we're still in good shape
We are same scenario. But want to be able to retire at 55.
According to Schwab, if you don't have at least 10% of your portfolio in Bitcoin you are going to underperform. Book mark this. Come back in 4 years and read it again
For the sake of argument, cut the yearly salary by half and see what you have.
I know, when in my 20s, my salary was 35-45k. My wife was finishing school, getting married, and moving to a new city: so her's was 15-20k.
At least half of my savings went to get a house by the age of 26. We were a single income household for most of my 30s and successfully lived on 65k while paying off all debt except mortgage.
This video addresses questions I always think about when it comes to how much I'll need in retirement when we consider inflation. Thanks for putting this out there.
I wish you guys would do a realistic video. I'm 48 and have about 500k invested. I plan on retiring at 60...not 65. We have only 1 life. We don't need 4 million dollars to survive, nor so we need 80% of our income.
@48 with 500K @8% will be 1.26m at age 60 if you dont put anything more in. Keep putting it in and stay out of debt. If you are in any kind of debt, then you dont really have 500K. You are looking at 80-90k income with 2 SS incomes and a 4% withdraw.
You are correct. That is why you need to estimate your actual expenses instead of 80% of your income.
So let’s say you calculate a safe withdrawal rate to cover your expenses (maybe 3-4%) … you would need 25-33 times your expenses to retire.
The 4 percent rule is reasonable because If the stock market continues to average 9-10% returns and inflation remains 6% or below then you don’t have to worry about running out of money.
……..
Another method to estimate how much you need a year: your gross minus the amount you invest.
If you invest 30% of your gross then you can also estimate that you would need a little less than 70% of your gross income to replace your current income.
@@grega2362 I am still investing 20% and home will be paid off. That's what I mean...I don't need 4 million... I'll be good where I'm at.
Love this content!!! Thank you so much for this. More content like this, please! These are the answers I’ve been needing for so long, so that I can better plan for retirement. Awesome video!
I am turning 30 next year, married a year ago. My wife and I are in our prime and I'm excited to be on this wealth building journey with her 😁
#1 wealth building tip no one talks about… get that money before you get the kids. 😂 but for reals… I think it isn’t discussed because people find it too controversial.
@squaresofpaper that is absolutely our plan! Haha. We are both focused on investing and saving for a house or other goals currently before kids.
29 now. When i was 25, I was making 35k with overtime every pay period. 85+ would have been a fantasy. Should reach that mark by 33, though.
These are just examples. Divide by 2 or 3...
Nobody wants to work until they are 65 guys.....
I feel like 3% income growth per year is too generous. I don't see that being a reality for most people
That’s been the reality for like the past 30 years. If you start at 50,000 over 30 years that’s 95,000.
Not particularly uncommon
If you switch jobs every 5 years or so, it's probably conservative.
@@Chris-xt8iowhile I agree that 3% growth is a good number, $50k compounded at 3% per year for 30 years is $118k. Just a math check. It is odd that this comment shows up in many TMG videos though. If one is not making 3% raise per year, they need to be considering alternate employers. Full stop.
If you're not getting an annual raise (i.e. CPI), I would look for another job. Likewise, if you don't get promoted over an extended period of time, I would look elsewhere. 3% is probably pretty conservative when you factor in promotions, which are often a significant instant increase.
@@Chris-xt8ioif that was true the average family income wouldn’t be in the $70k range. People absolutely don’t get 3% raises yearly.
You’d need about $2.1 million in todays dollars to equal what $1 million was in 1994 (30 years ago)
Does the $129k assume no additional saving to get you to the end number? Or are you also supposed to continue saving to get to the $5.7 mil?
Fairly certain they are saying that’s what you need without adding anything
The thing you tell people that say 1 million isn't enough: It's more than you're going to have
"But that will only be like $400K then"
Response: Would you rather have $400K today or not?
Nah... because that might not be true. They may have 10x more than you.
Just don't say anything. Never feed a troll.
I just say you’re right but you’ve gotta hit $1M before you hit $2M-5M+,etc. Then I ask them how many million they have? 😂😂😂
It’s important to note that for the 35 YO example, if they are saving ~25%, and they are looking to replace 80% of their pre-retirement income, they would theoretically see a slight bump up in yearly cash because they would be functioning on 80% of their income rather than the pre-retirement 75%!
Thats actually my only critique if these numbers. Right now we are paying our mortgage, daycare expenses, saving for our child to go to college etc. If you take those expenses that will no longer be there during retirement that's about 35% our our income. Then you add the savings rate of 25% of your gross. That means 60% of what we currently spend money on will not be required in retirement. Basically we probably only need to replace 40% of our income to live the exact same way, at least in the younger healthier years. Especially because a large chunk of money is in after tax accounts so we can pull it out tax free. Now of course having buffer is critically important (the stock market could under-perform, old age care in the final years can be expensive etc). But I do think working this plan would actually lead to a significant increase in standard of living in retirement. In other words, it's a good aspirational goal, but I wouldn't panic if you can't quite hit these numbers. For example, if you're starting at 38 and saving 25%, you'll probably be okay still. Goal setting is important, but I wouldn't lose sleep if the numbers are a bit lower.
I’d agree with this… I’m thinking I’ll need less than 50%… once mortgage is paid off and kids are grown, and you’ve been saving 20 to 25%, the 80 percent seems absurd.
I'm 25 and ive watched you guys for a while and know that money becomes less valuable over time because of inflating. That being said, at the opening of the video y'all showed that 1 million at retirement will be equivalent to 300000 dollars today freaks me out. I feel like i need to go multiply my retirement goals by 3
every MG video -
Brian: poses question
*intro plays*
Bo: Brian I am SOO excited to talk about this
Wife and I have $390k in retirement accounts at 27. Maybe it's time to fund some other goals...
If memory serves the equivalent of a $100k annual income in 2018 should be somewhere around $500k assuming a 4% inflation rate (I'm going from memory so don't quote me on that).
This makes me feel better. Due to life happenstances I felt way behind and was worried I'd never catch up.
Based on the 18:17
With 35 years old making 100k needing $382,472 and 24.1%, I'm not far off
38 years old making 120k
Currently at $335,000 across all accounts
But saving 30.1% (including employee match)
Assuming the next few months go well, I'll be upping it to about 60% saving
I accomplished it with a pension plan and brokerage account before 65 decided to continue working in healthcare.
In you 20s averaging 87k a year… uh… what? That is above national average household income
I hit over 106k investments this year. I'm 26 and have been working for 2.5 years and my goal for retirement is 4-6M. I at least hope that I can get to 1M before 50.
I know my savings rate will decrease when I start my family but for now I'm trying to stack as much as I can
If you need 80% of your income in retirement, you have not prepared properly. You should have a paid off house, vehicle and any other large purchase. What are you needing 80% of your income for.
Question: retirement withdrawl strategy - I know MG doesn't spend a lot of time talking about depleting your 401k, but saying 4% is 40,000 as a withdrawl rate tells me that the $1M fund likely isn't being depleted much. What's the math if we assume an annuity increasing by 3% y/y inflation, a 6% return (conservative) on the fund, and we fully deplete between ages 65-95?
Might be good for MG to weigh in on retirement income withdrawl strategy .. lots of tax implications and lots of bad information out there
I understand you guys want to motivate ppl with optimistic view but expecting over 8% return throughout 30~40 years every year sounds (to me, at least) like too much of a stretch just because S&P has performed that well so far.
Personally I'd be very much interested in going over numbers at 4~5% annual return
I absolutely love this video. I'm 25 right now, so hearing you do all this math regarding inflation adjusted numbers looking ahead to my retirement is super helpful. I've been saving every spare penny I have made since 15 and putting any excess money into the market and it makes me feel good to know that I'm safely set up with what I already have now 🙂
Salaries have not gone up at the rates you suggest, its less than 1%/yr if you don't get a promotion which is over 80% of the population
Mine is 0% increase. I have a few more years of 0 ahead.
yeah but again finance looks for home runs IMO...
You might not be in a job where you're getting regular inflation type increases, but the overall growth in the median wages suggests their estimate is fair. Also, remember that you're measuring over your entire lifetime, so you don't have to get 3% per year consistently if once it twice in your life you change jobs for a substantial increase, it may still average out to that. It is worth reflecting on the reality of inflation and why your employer effectively pays you less for the same job (with more experience!) over time... The problem might be less with their assumption and more with your employer!
@@think_ffs3934 Wait well as far as I know the median wage has lagged behind housing cost which have doubled in price over the last 30+ years. Original price 160K same house no major changes is now about 400K!!!
I think my biggest takeaway from this is just how badly our governments are controlling inflation. Pretty sad how eroded the dollar becomes in the next 30 years.
They really should specify if they are talking about individual or household income. 80% of Gross or Net income? Is the million in Brokerage, IRA, or tax free Roth? Additionally, they should put SSA income with the investment income. The money guys work with higher income people (upper middle class).
I think starting young at 10% is reasonable. After that, if you’re young enjoy your life and 13:12 be adventurous, don’t wait until you’re 65.
One of your better shows. Thanks for the info!
Real talk about savings and retirement numbers. Glad to see shows like this putting the “we surveyed millionaires” stuff behind them and acknowledging the $1M mark isn’t a true end number for realistic retirement today.
Love this look 👍
Who said its an end number? Its a heck of a goal that puts a person ahead of 85% of their peers. If you hit it at 45 great, if you hit it at 60 great. You CAN retire at 1M currently. You can retire with less currently. In 30 years, probably not, but you still have to hit that number to pass that number.
@ according to the rule if 25 (multiple your annual costs by 25 to get a “safe” liquid net worth goal) $1M covers $40k costs per year with minimal risk of draw down on principle.
@@User-pu3lcfair, but if you had the working income as a couple to get to a million, you probably get another $40k in social security, which means you're living on more like $80k/year which is above the current US median income, I think. And if you're "only" at a million dollars, you probably don't have an expected standard of living any higher than that. It's not as crazy as you think.
Woot woot! Your "By Age" series are my early Christmas presents! Discovered you all at age 39, and bumped up the savings rate from 10% to 24%. Now 42, a mere 3 years later, I'm really seeing things take off! But life happens - medical stuff, kid stuff, and home renovations - so even though I (begrudgingly) need to take my foot off the pedal and go down to 20%, I'm totally reassured that my money is starting to work HARD for me. Thanks Money Guy Show!
Can I get a free mug to cook my beans in when im living down by the river in a van? Thx
Sorry, it's not a "tumbler day." :p
Right on schedule!
I’ve been watching you guys for donkey years. Could you start to use 55 as the year you stop saving for retirement ? Approximately 1/3 of US residents experience illness or long term unemployment by the age of 55 that totally zaps their ability to wait until 65 to pull on retirement savings. 65 is not a realistic age to need the money. 55 is.
I like the overall thought process and the notion that you should start saving early and get that compound interest rolling right away.
However, the hypothetical example is poppycock. Extrapolating that $87.5k is "about halfway" between $50k and $100k is a bit generous. If anything, people will be closer to the $50k. Just use the more realistic numbers to make your otherwise good point. Expecting the average person in the general public to earn $87,500 at age 25 and consistently get a 3% raise all the time until the end of time is WILD. You're going to have spans of time where he will earn less than he used to. Your company goes under and you need a new job now. You may have to take a pay cut. Additionally, you're going to have spans of time where his wages are stagnant for long stretches. That's normal. A democrat will win an election and the economy nosedives and we can't produce anything for 4-8 years because we're too busy robbing producers and paying people to not work. That's normal. Where did you get the idea of 3% wage growth?
many in finance think wage increases compound...
What about lower income individuals? im 33 have about 50k in a roth 401k so far and make between 46k-50k anuually is saving 25% which im at right now including employer match enough for me or should i try to save at a higher rate?
You can look up a 401k retirement calculator and do the math. If you are 33 and make 46k with 50k invested while saving 25% the math would support having at least 1.8M by 65, which assumes a 7% rate of growth. If you assume as high as 13% you may have as much as 7.7M. That also assumes no raise for the rest of your life, but if you assume 3% raises the floor becomes 4M and the ceiling becomes 15.5M. Still, these are all just assumptions and things can impact this; job lose, reducing contributions someday, pay cuts or years of no pay increase, lower returns than expected, etc.
All I'm showing here is that if you get on a retirement calculator and play with some assumptions with your rate of return and wage growth you can start making some educated assumptions on what you could theoretical end with. So long as you're happy with the floor you know you're sitting pretty well because ideally you're actually more towards the middle of the range you've been experimenting with.
Would like to have this as a calculator. A lot of factors here that would help if we could adjust them to our individual circumstances (age, salary, expected increase, retirement age). Great deeper dive here though
29:36
Why did the rate of return drop from 9.5% to 7.5% and what impact does this have upon the numbers (substantial, I would think, giving compounding)?
Older people tend to have less aggressive investing strategies; less upside but more appropriate as you're approaching retirement.
Great show! Thanks for such clear explanations!
It would be interesting if this had a Part 2 which takes these target amount at retirement for each age and shows how, even in the worst case scenario (if the stock market crashes on Day 1 of retirement), we can be assured that we will have enough saved based on a reasonable withdrawal rate. I think a concern of a lot of financial mutants is that we will work so hard to save enough, just to retire at the perfect "wrong time" and still run out of money. I assume the Money Guy method takes this into account, so it'd be fascinating to see the math!
Even as an engineer who loves spreadsheets, calculating these possible scenarios seems a bit tricky. So I'd love if the Money Guy Team could take on the challenge! 😃
this has been first thing on my recommended all day, so youtube might be trying to tell me something...
Retirement becomes truly fulfilling when you possess two essential elements: ample financial resources and a meaningful purpose in life. Make prudent investment choices to secure good returns and ensure a comfortable retirement.
Rising prices have affected my intention of retiring at 62, working part-time, and building my savings. I'm worried about whether individuals who weathered the 2008 financial crisis found it less challenging than my current situation. The stock market's volatility, coupled with a reduced income, is making me anxious about having enough for retirement.
Serious question here - How many American households have that $200k income?
I’m in the UK, and we bring in about £104k/$132k between us. That is officially in the top 11% of earners in this country.
$200k in household income is roughly the top 12% in the US (source: Statista).
That stat can be a bit misleading because it includes ALL households not just one's peer group.
@@eddiemalvin Well but why does the income per age matter rather than just the percentage of total household income(s)?
@@donaldlyons17 Any relative comparisons of income against an entire population can give a false sense of comfort or angst. The entire population includes Billionaires, homeless people and everyone in between.
How does it benefit a Olympic marathon runner to compare their performance against me (a non runner)? Wouldn't it be more appropriate to compare themselves against another Olympic marathon runner?
@@eddiemalvin no because each of you are too different....
@@donaldlyons17 Exactly. That's why you should compare against your peers.
Two doctors with a total household income of $250k may put them in the top 10% of all households but also the bottom 50% of all two doctor households.
Finished grad school at 34 two and a half years ago, I started from zero because I didn't have anything going on in my early 20s and took 11 years to finish my PhD, but now I make around 170k a year. So far, I have 65k saved in the two years I've been working (it would have been more but I spent the first year building up my emergency fund of 50k to survive a year of expenses), and I'm now saving around 20% of my gross income including the match. It would be more but I have 110k in student loans to pay off.
Bo, when are you never excited to talk about finance? 😂 Love this show. Keep bringing the content.
Since we are dreaming… how about retiring with 1million dollar Roth Account. :)
I wish. Could someone have a million in a Roth IRA without a conversion right now?
You and I may be too late so it's like dreaming. But for those who are 18 now, this dream will come true
Mid thirties and only started investing in my early thirties. Maxing it out every year and planning on hitting that goal.
Locrien, you are on your way to having several million by 60! Just be sure to have your investments in a stock fund such as the S&P500. At your age, no need to have bonds and a lot of the international funds have had poor performance.
I have $3.5 million Roth, 8mdid a major Roth conversion all at once since the 401 k pre tax was $6 million. Roth is best. I take it out for spending money and no tax issues.
Mid life crisis hits those in their 40s because they realize that retirement game is over if they haven’t been diligent with investing in their 20s/30s
$1M is probably enough if you live outside the USA or in lower tier state, but not in the bay area Comi Cali :) Thanks for the vid boys
Excellent video! Wonderful work as always.
In addition, if you used real data for the returns (i.e the last 20 or 30 years) or what if there is a lost decade in there? ( maybe as the worst case scenario)
Do people actually get 3% raise every year
nope, many people get salary capped as well.
Rarely. And peoples answer to this is “GeT aNeW jOb!”
45 with $55k (was $399k on Jan 1). Planning on retirement at 60 and shooting for $2M. My wife will also get a teacher's pension
Excellent video. It would be even better if at every age, not only show what if you had a $1 mil, but also $1 million + save 25% per year until retirement. This would show people who much of a different following the FOO makes.
Fantastic video 10/10 - thank you!
At 36 now, Joint account with wife (33). Sitting at ~500K liquid retirement funds plus a rental property. I guess this makes me feel better that if we had to slow down, we'd be okay.
Here's a case study for you guys:
Bo is 40 with 2 cars valued at 35k paid off, home at 500k with 100k 5% mortgage and a house market increase of 6%, wage of 80k, 4 month emergency fund, and 50k in investments
Jo is 40 with 1 car worth 10k paid off, home at 500k with 75k 5% mortgage and a house market increase of 6%, wage of 80k, 4 month emergency fund, and 100k in investments.
They ea want a 2 mil net worth by 60.
What is the percent of wage needed if they both get a 3% wage increase until 55 and a 2% reduction in earnings from 55-60.
Now what would that number be if they had a household income of 150k and a goal of 3mil.
(Main comparables: 2 car vs 1 car, 2 incomes vs 1 income.)
The life expectancy of US men is 75 years old.
40k a year is equivalent to working at Walmart in your golden age. It depends on your debt at your retirement age.
Simple math.
Simple math.
Don't retire with any debt.
I was just watching “It’s a wonderful life” the other day and the main character wishes for a million dollars every day as he walks in the diner back in 1946 and yet still to this day, people praise a million dollars in the exact same light.
Why does the 25 year old have 9.5% expected returns every year until 65? Shouldn’t the rate of return go down each decade to match the other return assumptions for the other age groups? So from 25-35 it would be 9.5 %… 35-45 it would be 8.5-% etc etc The 25 year old would become more conservative with their investments as they get closer to retirement
Great content 🎉