Exact Amount To Invest Each Month To Hit Fidelity’s Benchmarks
ฝัง
- เผยแพร่เมื่อ 23 ก.ค. 2024
- Spreadsheet: docs.google.com/spreadsheets/...
Fidelity How Much Should I Have Saved / How Much Do I Need To Retire Resources: www.fidelity.com/viewpoints/r...
00:00 Intro
00:40 Multiple Of Income
02:09 Percentage Of Income
03:53 Savings Rate - 21 Year Olds
05:00 Savings Rate - 25-35 Year Olds
06:08 Savings Rate - 40-50 Year Olds
07:17 Spreadsheets
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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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At age 40 I was in debt and worked hard to pay it off. I had it paid off at 42 and remarried to someone of similar thinking. Combining our incomes we started saving vigorously about 30% of our pay. At retirement at age 56 we were saving 50%. She chose to work three more years which padded our nest egg a bit more. Now we’re 67 and comfortably retired and able to help family and others. Being debt free was key and living below our means was also key. We saved in taxable, Roth and traditional IRA accounts for flexibility. Life is good.
All these folks on here boasting about the thousands they save and invest monthly, but they make 150 - 200K a year? That's nothing to boast about. You'd have to be a fool to not save that much when you make that much. It should be expected. I'm glad you're not pissing your thousands away, but I have the most respect for the lower-middle income folks that are squeezed a lot tighter and still manage to save and invest what they can. You don't see them on here boasting about the $100 cash they saved monthly last year, or the 6% per paycheck they can afford to put in their 401k, out of their 40K annual salary.
My wife and I both save 15% toward 401ks. 15 year mortgage with 4 payments left. 55 and 50 years old. Collectively we make 180k.
You can retire very soon
Thanks Erin! I’m a music teacher and my wife is also in education. We invest 15% of our income into a Roth 401k. So it equates to $15,000/year after taxes. They give us a match of 3.5% which goes into an after tax traditional 401k.
Last year, after my daughter obtained her first job as an electrical engineer, she told me she was going to plow almost all her disposable income into paying off her school loans, which are about 30k. While I support paying off debt, I did talk her into investing in her company's Roth at the level to get the 100% matching funds. My pointing out that she could immediately double her money convinced her. When her debt is payed off, I've encouraged her to follow your guidelines. Thanks, Erin!
Love that’s she’s getting that match! You never want to miss it! And I love that she will be debt free soon!! 😊
I’m 54. Between 401k and Roth IRAs, we save about $2,500/month.
Love excel and financial spreadsheets, thanks Erin! Another good video!
It's interesting that Fidelity focuses on 10X as a goal. It makes sense in that a lot of people have a late start or did not save as much as they may need. I just hope more people start at a younger age since doing that makes the compounding so much more effective. Thank you Erin, you are a positive influence and I like your content a lot.
I agree! Start young - it’s much easier!!!
Yeah, I personally think 10x is a bit low. Based on the 4% rule it would only replace 40% of your income. I believe Fidelity is assuming you'll only need 40% from your portfolio. They're factoring in social security, your house being paid off and no longer needing to save for retirement.
Thanks for this video. I love the depth it goes into Fidelity's benchmarks and the hand extra document is always great to have!
My wife and I saved 43% of our income last year and hope to do the same this year.
Great video as always, Erin! Thank you! We each try to save at least 30% and should reach the 10x goal by retirement.
Good morning Erin- Last year I started contributing 30% in my Fidelity 401k. Around November/December I had to adjust down to 6% to avoid contributing more than 22,500. I get a company match of 6%. Ironicaly just before your video aired I was on my Fidelity account readjusting it back to 30% for 2024. I am 48 and on track to be over 10Xs my incoming in about 2 years.
Jeff
Good morning Jeff! That’s awesome, congratulations!
Why adjust it back up instead of trying to keep it level all year? Unless your income is too high you could try to max out a Roth IRA for 2023 before the April tax deadline.
@@jdmulloy I already max out my Roth separately with post tax dollars. My 401k is pretax.
@@jdmulloy Yup, I just divide the # of pay periods by $30,500 (I'm old) and that is my withdrawal rate. Set it and forget it!
Because my pay changes- I work OT. So I can’t set it and forget it.
Great video again Erin! I actually run the 'How America Saves' reports for Vanguard (crazy long process) but people really need to do what they can and realize every little bit helps when saving. Starting in investing is not difficult, getting started and understanding it is probably the hardest part. IMO
Thanks for the spreadsheet!
This video was insightful. It's good to know that you don't need a real aggressive savings rate even if you start a little later. I'm 36 and just starting to invest more consistently. My savings rate is only about 4 percent now, but I hope to gradually increase that with time. I agree that our savings rate will fluctuate over time. It's good to sock away a lot when you have the chance.
4% is at least 100% better than 0%. Keep at it and you'll be looking great in now time!
My suggestion is increase it quarterly by .25%-1%. Each month, look at your planned spending looking for ways to save. Even 10% from each category would help meet the increase quarterly. There are a lot of great ideas floating around.
Thanks Erin! This is the kind of video that encourages folks to start as soon as possible. The sooner you start, the easier it will be.
Although I'm ultra conservative in my assumptions about return rate, I can stomach using 6% (I use 3%). Many studies note that while the market mght return 6%, the rate investors usually get is at least a couple of points less because of their own bad behaviour, chasing returns up (greed), and selling when down due to fear. Assume a lower return to be safe and force yourself to invest more, then make sure you don't succumb to fear and greed (just ride out the market, don't let your emotions undermine your hard work), and you'll end up getting where you want to go faster!
Finally, I know not everyone can make plenty, but that's the best place to focus your efforts. It makes upping your savings rate so much easier, you can get where you want to go faster, and with lots less pain. We save easily 60-70%, even with modest lifestyle creep, cause we always grew the size of our shovel.
Great video, love your content! Sad to say I didn’t really start saving seriously until my mid 30s so I’m super aggressive about it now. Luckily as a content creator myself, the additional income has allowed me to save around 30% from my day job, and I’m maxing out my HSA this year!
Love that!! Having a side gig really helps to up that saving rate - I’m in to same boat. PS I just went to check out your channel, AMAZING review of the iPhone, very helpful. I just subscribed! 😊
I am 40, I am a former national guard soldier and wanted to thank your husband for his service. I am an accountant and wanted to tell you your videos are great. I like lessening to your videos because your voice is great and I agree with everything you're saying. My wife and I have a 10 year old son and are currently millionaires.
Please keep making videos I listen to them when I am working lol, makes my day go by with a smile on my face. Please tell your husband thank you for his service. I pray your family is doing well. A loyal follower... Shawn
Had to drop down to 7% savings this year due to inflation and my salary not keeping up. Maybe I can start to increase in a few months when annual raises and bonus kick in, fingers crossed. My company is matching an additional 4.8% currently which is helping for sure but I really want to be in a place where I can max my Roth IRA, H.S.A. and the 6% to get the full company match in my 401k. Hoping for some positive changes this year.
I’m 52 and have 10x my income saved. Would retire now if it weren’t for insurance costs.
10x your income is only good depending on what you make!
Yup, it’s healthcare gonna keep me working…
@@lowstringc Thats a bad reason to keep working. Go on the exchange and you can find cheaper alternatives than what you pay through your work....at least we did!!
This is only a problem for Americans. You can retire outside the USA, which is my plan. Health insurance and medical bills are significantly less out the USA. Costs 70 to 90% less for better care. Americans are being robbed by hospitals and pharmaceutical companies!
@@hrollinsnycunfortunately due to the worldwide aging demographics, it's likely that accessing healthcare will be a problem no matter what country you go to.
Great video!
Great content as always.
Much appreciated!
Just have to say love your channel, hope you and your family are doing well. My annual savings rate is 15% a paid off mortgage. Now just exploring To save more or fulfill some small dreams... Have a great day.
Thank you so much! We are doing well, I hope you and your family are as well! 😊 I think 15% is a rock solid interest rate!
Thanks as always for breaking down the numbers and giving helpful advice Erin!
Great info, love the videos. I'm a single income household with a stay at home wife, two boys, a dog, and two cats. We average $3,000 in savings each month between retirement, and brokerage accounts. It isn't easy. The beginning of 2023 we bought a brand new house then two months later bought 80 acres so we dipped into our accounts some, but since we were over saving for many years, we were able to do that. Since i graduated college, we have been averaging 18.27% (love spreadsheets) savings rate with some years as high as 27.16%. I would rather hit age 60 and be told that i have more than enough to retire, than have to work until 70. keep the videos coming, and ya der eh from WI.
I’m with you….60 sounds much better than 70. Sounds like you have quite the full house…I’m trying to take my husband into another dog at the moment. He told me I have to wait until our baby came pick one out…so I spend a considerable amount of time each day trying to teach him to point ☝️ 😂
@@ErinTalksMoneyyou are so funny
@@ErinTalksMoney LOL. Puppies are tough with young ones. I have a 6 year old and a 2 year old. Puppies like to bite which can be a struggle. My dog is 4 month yellow lab. At least he is open to the idea.
I hear you, and that's the same argument my husband makes as well, he wants to wait until Jameson is about 5 or so. And I always reply with the same response "but look how cute he is" 😂 Steve knows my goal is to have 3 dogs - one day I will wear him down.
Wao you are doing Amazing!!!😮
You rock, Erin!
I'm 27 and currently save 17% and increase it by 1% each year. Current retirement savings are about $30k, which I'm pleased to know is well above the median for my age since my income has been fairly low until recently.
Hoping to start saving more outside of retirement accounts as well. I think investing and patience will be the only way I'm ever able to afford a home.
Do as much Roth as you can
Thank you so much for the spreadsheet. This is the first time I have gotten something without requesting my email. I'm glad I ran into your channel, very informative. Helping my youngest invest, who just entered the work force. Please suggest long term accounts for 20 year olds.
I hate having to give my email for everything too 😊
I’ve been planning a getting started video, so hopefully that’s up within the next month!
@@ErinTalksMoney thank you
Average savings rate of 20% over past 25 years (age 25-50), this includes company contributions and rental house principal payments, believe I’m on track to retire at 55/56, saving and investing over 30% now
Another great video! I didn't begin saving seriously until I graduated from graduate school at the age of 32. I then started saving about 20-25% - not so much for retirement, but because we were coming out of the 82-83 recession and I was afraid of unemployment. We slowed things down when we moved to Southern California for three years as the cost of living is much higher there. Things ramped up after we left and we stayed with 10-20% until I retired at age 63 with about 16x of what I was making at the time. Interestingly, as I start to take MRDs this year, I'm thinking of saving about 20% of it. It would be interesting to see what the median earnings multiple Americans retire with and at what age.
Thanks for the spreadsheet! Something I can piggy back off of🤙🏽
My savings rate in 2023 (between me and my wife) was 23% That was maxing out a Roth for both of us, and 401k contributions for the rest.
One other thought, was if you have 10x your income saved by 67, and using the 4% rule, you'd be able to take out about 40% of your income from these funds in retirement. Combined with social security, and the fact that you aren't needing to contribute to your savings any more, that would likely provide a roughly equivalent income in retirement.
Luckily, with relatively high income (had big jump after MBA), saving ~30% income (essentially saved most of the income jump and stayed that way 3 yrs now)
I know what I'm doing this Friday night! 🎉 Thanks for the resource. I'm 32 and I averaged a 30% savings rate last year. It has been lower and it has been higher throughout the years.
30% is fantastic for a modest income when you're still young! Keep plugging away and think LONG term. You want to grow your shovel size, keep improving your skills and expanding the avenues to make income, and work with others that can help. Thinking bigger and more holistically will help to avoid the tendency of savers to micro manage, think smaller, and squeeze themselves to death. Bigger shovel means a faster and more enjoyable path to FI, and beyond.
Very good video and the assumptions are extremely conservative which is good. The other item not mentioned is no consideration for an employer match so it’s certainly possible the 21 year old only contributing 7.5% might be getting a 5% match or something so their total contribution is much higher and thus achieving their 10x income goal sooner than expected.
In my lower 40s and doing 20% and employer matches 8%. Balance currently sitting at 5x income with a about 15-18 more years before I plan to retire (goal imove to part time work starting in mid 50's, retire at 60)
Even 7% at 21, I barely made enough to pay rent, food, and gas. Let alone invest. But I'm starting now at 35.
That's most people 😊
Good luck working until age 67 doing any physically demanding jobs
That's good. I'm on my early 30s. I own a two story house with 4 bedrooms and 2 bathrooms. Great kitchen. I don't worry about paying rent and monthly mortgage. Single and with no kids. I usually save 50% monthly.
Age is 33 and Currently save 10% between a roth and my 401k plus my work matches 100% up to 6%. While its not bad started later so will bump it up once i hit 40.
9:45 Our savings rate for 2023 was 90% (but that was an extreme year of maxing out a 457b and two ROTH accounts and some T-Bills). I expect that we will hit closer to the 24% range in 2024.
Thank you so much for this Erin! I started at 31 and feel really good because luckily I can save 15%
Started investing in my 401k at 22 with a salary of 55k.
29 now, married, 3 kids, single income household salary of 140k and I'm up to 150K in my 401k.
This year I just opened a Roth IRA. Now I put 7% in my 401k, with a 7% match (total of 14%). Then I'll be putting $6500 in the Roth IRA annually.
Savings rate of 12.3% without pension contributions. When I add my pension I have just above a 22% savings rate.
This year I'm going a little bit crazy, I'm 29 an almost starting to save for retirement. My plan for the year is:
- 22% on my 401k
- 11% to my Roth IRA
- 10% to my HSA (savings for the entry of a house)
So I took that $583 per month, and did a FV for different ages, using the historical S&P 500 rate of 9.3%, if you had started at 20 you would have about $5,000,000 at 65, but if you started at 30, less than $2,000,000, at 40, $650 000, and at 50 a little over $226K So as you know, starting early is so much more important than what you contribute when you are young. You need to prime the engine. It will then run even without you. Good video. BTW, this exercise is really ez with the FV formula in any spreadsheet, just remember to use a negative number on PMT, or the result will come out as a negative number. Also this number is just a guide, as you really should do a monte carlo analysis to get a better idea of future portfolio value.
Not sure EXCEL's future value calculator is able to take a varying input. Her assumption of a 2% annual increase in income would necessitate actually setting up the schedule, like she showed.
Also, with that schedule setup, you can apply simple statistical distributions to have EXCEL run that Monte Carlo instance for you.
@@michaelpantano3324 her calculations were to solve a different question. What would you have to save percentage wise based on starting salary and growth. Mine was simple using the Ira max. You are of course right simple fv function would not calculate. But excel could be used for all sorts of scenario planning. The biggest drawback is wo montecarlo you can not do sequence of risk analysis.
6:45 Those figures only work if contributing to a pre-tax account; otherwise, $40k may be what you save, but your remaining could be far less than $60k. (thanks for putting Pre-Tax at the bottom of the slide) Too many sources on the internet seem to say that if you are going to invest the max amount, then that's what you will invest, but fail to acknowledge that such a number may only be feasible in pre-tax because a family still has to pay their bills.
Where is the excel spreadsheet? Would love to check this out. Thank you!
Do you have a financial health spreadsheet
Does this 15 percentage included pretax saving(401k) as well?
Keeping a consistent savings yet is tough. Life happens to people - they buy a house, do a Reno, have kids, send kids to college, health costs, etc. I think people should save more when they can and when they're saving less due to other costs, not sweat it so much.
Since my income varies greatly each month, I don't really save a specific % of my income reach month. I stream as a second job, and 100% of my streaming money goes straight into my investment account (about $3k - $4k month.) On good months where I make a higher income at my regular job, I'll typically put some money aside from that into my emergency fund.
Hey, I have a finance question. What is the best way to submit the question to you?
From age 23-30 savings rate was 7%. Age 30-35 savings was 15%
Age 36-39 savings was at 7% and at age 40 back closer to 15 %
Plan to retire at age 43-45. Which is realistic for me
Fidelity suggests using 10x your (gross?) income for full retirement age when you would be eligible for social security. Financial Independence suggests using at least 25x your annual expenses for a 4% withdrawal rate, and it does not factor in Social Security. I think Fidelity's rule of thumb is there to just make it seem simple, but using gross income not a good idea in my opinion, because your net income can be drastically different from gross income, especially if you factor in your retirement savings that are no longer needed once you retire. I think that using your projected expenses, not your projected income is the better method.
This is interesting. When I run the numbers, the 10x of income leads to roughly same number as the 4% withdrawal rule
10x by 67 was probably based on inflation adjusted.
So you might have 18x, but it is equivalent to 10x after adjustment
That 40% savings rate is on target, or even a bit low, for people in the FIRE movement.
My salary during those periods was 60k-70k
90k-100k
100k-120k
Last year I made 212k and now I’m at roughly 160k
I started at the age of 33 at 10% and went up to 14% at 36. Currently, I'm at 15% and I'll be 37 in 3 months.
My goal is 20% by age 38.
most people don't plan to fail, they fail to plan
Do you offer financial coaching?
Hi Erin, why only assume 6% rate of return when the market routinely return around 10%?
She’s accounting for inflation
There is always one thing I get confused about. When the question arises of Saving, is it the percentage of someone's Gross Income or Net Income (after Taxes).
Also with the Goal, I am going to assume that Social Security will still be around, but maybe not as much as they say someone will have today. Still, I imagine for the majority of Americans, income from Social Security makes up a large percentage of their monthly income that cannot be ignored.
Why did they pick 10x income? How did they get to that number?
Keep in mind that even if you cant save the required amount, being able to even save 50% of the amount is a big deal.
I retired at 62 and am in my retirement journey12 years now. Fortunately, I was a good saver/investor from early on and am in good shape. I have followed you for some time now, a subscriber and enjoy both your content and style of presentation Erin. You do a nice job. I would underscore for everyone to start early, the earlier the better, and take advantage of any employer match!! Larry, Central Valley, Ca.
I've averaged a 52% savings rate over the last 5 years. I plan to keep it around 53% for the foreseeable future baring any unexpected events. Saving/investing extra $ gives me peace of mind against things like my car suddenly exploding and needing to buy a new one.
That's impressive! Are you trying for FIRE or do you just want to be able to pay cash outright for big ticket items?
@@roguered706 Thanks! The current plan is to FIRE between 50-54 depending on when I can get my pension, but that could change if I get married/have kids, which would be nice.
I feel like I'd like a video on those that want to retire at 50. How much income or residual funds do you need to actually retire.
Use the excel workbook she created, adjust the numbers accordingly to your scenario or what your trying to see!
I’m retired at 63. I’m spending down my assets slowly. I have a State Retirement, Social Security, Roth IRA, and 2 regular IRAs, plus money from the sale of my home. One IRA and the Roth IRA are inherited. I have to take a minimum amount which I do. I have no debts. I’m comfortable. I am still able to save about $500-$600 mo out of my income. I retired at 55. My health insurance is through my State Retirement. And then will double at 65. Not looking forward to my health insurance doubling. I did a stair step model.
55 - state retirement and savings
58 - sold my home
59 - inheritance - required withdrawals
62 - Social Security
I’m frugal and my needs are few. I’ve been working on Swedish cleaning. My son is set. He has no interest in my stuff except for a very few things, so out it goes. He will just get my car and money. I found out I was born with a congenital heart condition at 62 but was suffering from it since 55. It will continue to deteriorate. You never know what life will hand you. But I’m at peace and enjoying my time.
What do you think of the guideline of 10x income at retirement age? That doesn’t seem like nearly enough. They must be assuming an 8% withdrawal rate? For 80% income replacement. Seems like maybe 20x would be a more realistic guideline?
I use 25X annual expenses and tax for my end goal, not based on salary
Fidelity is factoring in that an individual would be also receiving social security at the time - I have a video called Fidelity rule of 45% that covers the withdrawal they expect if that helps 😊
I’m 36, single, never married, no kids, debt free, with a $108k/yr income. I invest 34% of my income. I currently have $271k invested for retirement ($99k Roth, $51k Roth 401k, $17k HSA, $104k taxable brokerage). I’m aiming to retire at 59 and a half. If investment returns remain the same I project I’ll have a bit over $8M then, or 80x my income just before 60.
Ill be 33 next week🥳 and just under 5× my income saved
2023 I saved just over 65%
I started late. I'm trying to overshoot so that I can catch up and surpass those Fidelity benchmarks. I'm 36 and have saved up 1.75x my income. I'm putting 32% of my income into retirement (401k, Roth 401k, Roth IRA, and HSA) with the hopes of hitting 3x my income by 40 and surpassing those benchmarks in my 40s.
That Fidelity savings benchmark is great if you plan to retire at 67. Is there a similar chart if you want to retire at earlier ages?
I need to save 100% - know what I mean !!!
Depends on the month my savings rate is about 10 -50%
I save 16% plus I get company match of 9%
9% is amazing! The most Ive seen is 6%
@@adry729 it was 4.9, but when the company froze out pension they added an additional 5% for those over 50
I'm assuming on your spreadsheet under "savings per mo" that is actually per year? Or else investments would grow by at least x12 of what is on there.
Correct me if I'm wrong. But, for example, in cell D6 with an income of $45k, a savings rate of $3,375 per month would be $40.5k per year, a 90% savings rate. Could it be the video creator's personal savings rate is so high, the "savings per month" was a bit of a Freudian slip. Perhaps a bit out of touch with what is reasonable for someone making $45k.
Good catch, I used it on my end - so that should now reflect in the link for everyone 👍
Current savings rate is around 45% (including retirement and general funds), but that's about to go way down as we have child and go to one income. The good news is that the aggressive savings thus far puts me on track to be able to retire comfortably at 55.
Started late at 30 trying to catch up with a 18%. At 40 I’m only at 2.20X and have done 27% the last 2 years. I’m concerned.
Do not wait to save. Save where you can everywhere.
7:17 Engagement for Erin. We're still here.
I have been saving 25% of my income for the past 7 years. But my income has only started to go up in the past 5 years. I have 10x my old salary from 7 years ago. 😂
Ha same for me. I have over 10X my salary at age 28, but I am 35 now and almost have 3X my current salary
I save at about 15% but only started when i was 50 and i am way behind and will not make it
, as I am 60 now. I save in RRSP and TFSA in Canada.
We're in Canada too. Don't forget we have universal health care, and it looks like we'll also be getting dental and drugs too, so those programs should help lots. Not perfect by any means, but still saves you lots.
@@dstevens518 Ottawa
I have a mix of a pension, a 403b and a Roth IRA. I just did the math yesterday on my 2023 contribution rate and it came to 38.5%- slightly under my goal of 40% but still a new high for me and I'm proud as heck. I started in my early 30's but didn't really amp up the savings till about 5 years ago. My 2024 goal is 42% 🤞
Interesting formula. It would definitely get easier to do this as your income increases. You have the previous savings (stocks, bonds, and cash) providing interest, dividends, etc. But on the other hand, people at the latter ages (60+) are entering retirement and not working as hard as they focus on the next chapters of their their lives. I guess the message is save and invest early and put your assets to work if you want to have money for a great retirement.
Say 3x of income for age 40. Is the income at the age of 40 or the starting income ?
The big question is "is that as a single or a couple" The Fidelity page doesnt say!
I’d imagine it’s household income, regardless if married or not.
Not sure if this math works for lower income families. We are a single income family. At our early sixties and we have at least 20x of income saved. Not because we have money, it is just because our income is low.
Does saved=net worth? If no, what types of assets would be excluded? Thank you.
Net worth is your assets less your debts. So, your assets would include your savings plus the value of other assets like your house. Your debts include things like your mortgage, student loans, car loans, credit card balances and so on.
@@user-fb7wq2zy6k so “amount of annual income saved”, means net worth according to your annual income?
Your net worth is everything your own minus everything you owe. The number that fidelity is referring to as a multiple of income is simply investable assets….so money in brokerage accounts, 401ks, IRAs, etc. so their multiple of income would not include non-investable assets, like a home, vehicle, assets like that. hope that helps! 😊
@@ErinTalksMoney it does, thank you.
?? age 67, 10X saved based on your age 30 or age 67 income??... 10X one's age 67 income could be as about 100X one's age 30 income.
Exactly, this guideline is flawed for this reason. Also, the amount you have saved depends on your expenses in retirement, not your income.
First comment!
26.25%
if you save 100% of your income for 10 years you will have 10x ur income
So even though I am retired I guess even I have a savings rate, as I spend far less than what my portfolio, SS, and option selling generates. But as I said in my earlier post, saving some when your are young, because of the power of compounding is really IMO really is so much more important. I was smart, I started to invest in my 20s, contributed to the 401Ks, but also save some in standard brokerage accounts. I don't think I had a regular or large savings rate, but what I did do, is not spend windfalls. Rather invested them. For example, when I received a bonus, or when I made money on a RE transaction I didn't blow that money.
Thanks for the video. Wonder why people don't use actual numbers rather than percentages to plan their retirement? Seems like it would be better to hit numbers rather than random percentages of annual salaries throughout your life...
Agree. And people's salaries may vary up and down. But consider the source of this rule. A company that wants you to invest money with them so they can get their cut. So everytime you get a raise and invest more, they get a raise for their cut.
An individual should but a general audience has many very different numbers. Percentages are sufficiently generic to work for most people. It’s not like there’s one ideal amount for everyone to save since we’re all used to different lifestyles.
Normally I love your videos, but I have a problem with how you ran this analysis.
Assuming a 2% paycheck growth for the whole career is artificially affecting the results. Unless you literally work the same job for 40 years and only get cost-of-living raises, most people will progress through a career and get step-up raises along the way, which means the final years’ income (and therefore the 10x) will be substantially higher than your model.
I started saving at age 31 and now I am almost 42. My savings rate is 33% and that works out to about $5000 per month.