Including my employer match I think I am right around 25%. I started when I was absolutely shoe string budget broke with $30 a month and slowly built up each time I could. In the last 5 years I have really made some huge gains. Now that my saving is a % based automatic set up any time I get a raise my saving amount automatically increases. It was very exciting to reach my first 100k. I love watching my money grow. I started out a teen mom on welfare and have worked my butt off with my husband and high school sweetheart to get here. I am not stopping or slowing down now. I am hopeful that I can not only retire one day but also leave something for my kids and maybe grand kids someday. With work and effort anyone can do it. Everyone said I was going to be a welfare drop out for my entire life (including my own mother) but I am so far from that. Make a plan and stick to it. It is possible!
@@brianbeck9807how long did it take you to get your 1st 100k? It took me almost 13 years, then the next 100k took me 2 years. Of course by that time I went to 20% savings rate.
I was very lucky to be introduced to the 401k in the mid 90's. I started out at 5% and increased by at least 50% of every raise that I got. Both annual and promotions. I did this until I hit the 401k max. I am now 54 and maxing out Roth 401k, ROTH IRA and After-Tax 401k. Forecasting to retire in 5 years with more income than I have today working.
Time is almost more valuable than the amount, within reason. I started my engineering job, fresh out of college at age 22, $18700/yr, barely paid rent/food, but still saved $50/month with match. INcreased as my wages increased. Now, 49 years later, I have over 1.5M in various accounts.
Hang on....almost 50 years ago? That would put you in the 1970s. $18,700 back then is the equivalent of $133,000 today! What were you spending on making you barely afford rent and food? Most engineers starting today are lucky to land a job, making half that amount.
@@BreezeOTM I started at the very bottom paygrade and rapidly moved up, doubling my salary in 3 years. Then moved to other jobs as opportunity presented itself. My two sons are in engineering and Mechanical Engrs start at 96K/yr today and can rapidly move up in a few years with experience.
@@wDawks I was a design/mechanical/electrical engineer for 28 years, then started my own business in kitchen/bath remodeling for a change of pace for 10 years.
I was lucky. My employer contributed $0.75 on the dollar up to 8% of my pay, so I was saving at a 14% rate. It was a fantastic deal that allowed me to retire at 60.
Similar i get 50c on the dollar up to 10%. I put 10% which nets me 15%. In my mid 30s with 200k in my 401k with a 60k salary. Also put 2% into a roth to help out.
My employer gave .25 on the dollar up to 6%, so an additional 1.5%. During the financial crisis of 2008-9, he stopped the match and never reinstated it. I'm well compensated now with equity too, but the lack of a match over those years made a big impact on my retirement savings. Now due to our poor participation rate and highly compensated rules I can only save 3% of my pay, plus the catch up. This severely impacts my retirement savings rate.
The worst thing anyone could do is discourage an immediate 50% return on your money that you've earned as an employee. As long as you are AT LEAST putting in the 6%, you are doing the right thing. Putting more is great if possible.
When my employer switched plans to Fidelity Investments, they gave a 10 minute lunch time talk with free pizza. They said we'd need to save 10% and our company would match 50% up to our 6% (so 3% from the company). I worked there for 29 years and that gave me enough to comfortably retire. I was a single parent of twins so I really couldn't contribute more until they finished college.
thank you for this concise explanation! i just accepted a salary position and the company is offering a dollar-for-dollar/100% match up to 5% 😯 i’m 28 and childfree, already saving 50-80% of my income since 2021. i have & live with a long term partner who’s also looking for work so we’ll be one of those DINK (dual income, no kids) very soon! he owns our home and the mortgage + general expenses are low, this new position of mine is also fully remote so i’m happy to save on transportation costs by like 99% 😂
A very important point missed. Company matching discourages ppl from contributing their annual max before the of the year. If you hit the max before year end, the matching will stop.
@@cyclefrst7799No it doesn’t. The rules for 401k plans require the employer to analyze all contributions at the end of of the year. One of the things they look for is checking for anyone who hit the contribution max before the end of the year and adjusting (adding) company match funds to ensure you get your full deserved salary percentage match. You may not get it in the months you supposed to, but you do get it.
@@cyclefrst7799 Great point! So to clarify for anyone reading - the company will match up to their limit _on each paycheck._ So you need to stretch out your contributions over the year so you’re maximizing that match in every paycheck.
You're absolutely amazing. I actually understand finance. NOTE: I just recommended your channel to all my colleagues at work (500+ employees). Continue the great work!! Best of luck!!
I worked for a very small company. There was no retirement plans, no matches or anything. I knew that I would not make it on my good looks, so I put away a substantial part of my fairly low wage. Now at I am old, it is a good thing I did. I didn't have a pretty face then and there has been no improvement over the last 50 years.
I bet you look fantastic every time you get a payment from your investments. Just remember every time you get that check you smile and that smile makes you look fantastic 😊
I started at 25 with "save 10%" in my mind plus whatever employer match I got. At my current company, I have been saving more, setting my percentage to increase by 1% each year. My employer match is dollar for dollar up to a max of $4500. At this point I am maxing out (plus catch up) 401K. Max out ROTH accounts for my wife and I, max out HSA (~$2000 match there from employer), and save 15% of my salary in an employee stock purchase plan where I get a pretty good discount and then rool proceeds from that into a brokerage account regularly. All of that combined adds up to a pretty big amount (I think it comes out to about 41% of my income) of savings each year.
@@mapmike52 It is actually automated in my 401K. I was able to just set it to happen automatically without me doing anything. Before I knew it I was at like 18%. Never really noticed because it happened around the same time annual raises happened. So your paycheck jumps, just not quite as much.
I started late and am playing catch-up so videos like these for the younger generation are invaluable. Excellent channel. Currently I am saving 36% so I can catch-up.
I started investing 6% at the age of 24 because my employer at the time matched 100% up to 6%. Later my match was less and I increased my contribution to 10%. Since 2019, I've been maxing out my 401(k) including catch up contribution since I turned 50.
At 27, my savings/investing rate is roughly 50% going into 2025. I make about $3300 a month after tax, & mortgage & bills are about $1600 per month, & the rest is invested & saved. Im a single man with no dependents, so I plan on getting a second job or gig work next year & all those earnings will be saved to get an income property in the future.
What's your projection shows for when you hit the seven figures in terms of time. Sounds like we could be looking at another influencer on how they got to the goals they achieved.
@TripSoul10 oh no I don't believe I have any desire to try to be an influencer 😅.. it's really hard to say, I don't really focus on that, I focus on step & each milestone at a time.. I just recently reached my current financial situation & I think it'll keep dramatically elevating over the next several years... Im already pretty certain I will be far beyond a couple Ms before I retire, w almost 50k already in my Roth IRA & no plans of slowing down investing anytime soon.
i’m 28 and in a very similar boat! i save/invest ~75% of my income on average and will make a similar amount after tax ($3450, starting new job next week hell ye). i live with my SO but not married so no dependents, he owns the home and pays the lion’s share of mortgage but for me all in monthly bills are ~$1200. i have a on/off side gig as a pet/housesitter for high income folks in my metro but have put that on pause (paws) for the second half of 2024. once i’m settled into my new position i may open back up my availability so i can housesit + work remotely. lots to consider and plan for but i’m excited for what the next year has in store; im grateful to be more than just getting by with how expensive life has become. wishing you luck, keep up your amazing work!
@@veri.contrary Congrats on the job! That's fantastic, I hope to reach that level of savings next yr. I like hearing this because it goes against that narrative that all us younger people are lazy, incompetent, spoiled, etc.. no many of us are out here sacrificing things & getting to it. It especially makes me happy to us melanated peoples making changes & accomplishing great things. Best wishes with everything! 🙏🏾
@@devenchy3k947 Believe me when I say that not all old people think that way. It's really a shame that the loudest voices have the worst criticisms and takes. I'm Gen X, and every Millennial and Gen Z that I work with or that are in my life (like nieces and nephews), bust their butt. It can be hard out there, but I have not met any more lazy younger people than there are lazy older people. You're gonna have some in every generation, and the older generations that criticize the younger generations must have something wrong in their lives to be projecting that onto a generation of very capable young adults.
Starting at the employer match at 22 and adding a +1% auto increase every year made it super easy (barely an inconvenience) to get my eventual savings rate up and over 20% by the time was 30ish without "feeling" it. Also incorporating HSAs and Roth IRA's outside of the auto employee savings is something that also comes with knowledge and growth of excess income for those who find themselves in that position.
Thanks for a good video. I always saved the max to my 401k and stepped up to the “catch up” limits once I hit 50. I maxed my Roth until I hit that limit and then saved 50% of my income for almost 15 years. Now retiring in a few weeks at age 55.
Your retirement is your responsibility. Save and invest your money regardless of the match or not. Don't be paralyzed by all the noise around retirement.
Appreciate these videos. My wife and I both work - and we're putting 15% away in a combination of Roth and Traditional. We're moderate aggressive, and frustrated at the palsy 5-6% growth. Not much one can do with an employer plan, unless we go aggressive. Have 12 more years of work. So also putting money into money market accounts, and Charles Schwab account so that we have cash in various investments. Driving older cars, throwing everything we can at the house mortgage. Don't eat out anymore. Tight, but we're able to also give to charity regularly, and by having all of this taken out of paychecks ahead of time, even though not rich, we're doing ok.
Having the savings taken out before it ever crosses your palm is so powerful. It makes adjusting your lifestyle to fit your cash flow so much easier. Then, after 10 or 20 years, you can look at your investment account balance and be very pleasantly surprised.
I’m a GenXer. Didn’t start 401k until age 36. 18 years later, I’m now at $1M. For a while, was just doing enough to get the match, but the past 10 years or so I’ve been maxing out pre tax. Now starting to put money in a taxable account, since it’s a better return than most other things.
@@tHebUm18 The Roth is a TERRIBLE path for many people. Especially someone who is 54 and probably near the top of their income earning curve. Even if they double that ($2M) by the time they are 65, and take out 4% annually, that is only 80K in actual retirement dollars, which with the last 75 years average inflation of 3.5% is only worth 57K in today's dollars. Paying tax on 57K (adjusted for today's tax brackets) withdrawn from a non Roth IRA or 401K is very little especially if for a couple. And that is compared to the tax that would be paid for someone who is maxing out 401Ks in their 50s. Max 401K in your 50s is $30,500 annually. If their pay before deducting the 30.5K 401 deduction is greater than 110.5K (80K+30.5K). Of course, my analysis is flawed as it ignores social security income which is also taxed. You would have to understand your SS income in the year you would start taking it and your non retirement investment income to make an actual determination if the Roth is right for you. But a terrible assumption. Also, if you move to another country, they may still tax you on Roth distributions where non Roth distributions would get you a foreign tax credit.
I think this is a wonderful idea for employers to do for their employees. I have spoken with several of my younger colleagues through the years at my place of work. Several indicated they don't know how they can put away any money to match because of their tight finances. I encouraged them to start with at least $10 per paycheck.
I think people fall into the set it and forget it trap as well. I wish content would speak to a person starting out at a lower percentage and working up to 25% in higher income years. Getting people to fear something seems to be the motivation of choice on TH-cam. Great video!
I'm working really hard to try to get to 25% but I think as a household we're at about 18% now. We're Millennials who pay for daycare, starting to build a bigger emergency fund, I'm barely making it but we know that one day (soonish) we're EACH going to be millionaires!!
I started only saving the matching rate my employer gave in my last and current company. Around 15 years ago I changed that mindset and increased it to what it is now at 15%.
Biggest step in anything is to get started. Even starting at 2% is worth it, because it's better than not starting at all. That said starting at 6% works and just try to increase it slowly as your wage increases or your financial situation gets better. I am playing catch up (from life curve balls) and putting 20% + now, especially after paying off my mortgage. Also some people feel more comfortable starting with a Roth IRA since you could take out principal in an emergency.
At the University of Pittsburgh, they match up to 8% of your salary dollar for dollar. Then, once you become vested after three years of contributing, they match every dollar you save (up to 8% of your salary) at $1.50. This gives you a 20% savings rate (Your 8% + the University's 12% match), although you must use the University's TIAA-CREF retirement plan. They also have an interesting option once you turn 52, which is that you can get a 14.5% match on your 8% savings from age 52-65, but you agree that you do not get any university match after the age of 65. So, from the age of 52-65, you can get a 22.5% savings rate. I have taken full advantage of this. Like my Mom told me when I first started working there, "Choose to save the full amount from day one. That way, when you get your first paycheck, you'll never get used to having the money you're saving." Hail to Pitt!
10% standard market and 2% long-term inflation seems like optimistic advice 5-10 years ago. I feel like future gains will be based on a mix richer in bonds, less stocks and will be much closer to the price of borrowing money. Still better to be making interest than paying it. I think Suzie Orman's "4% to 6%" is most likely for the next 30 years. Perhaps, after a market correction, when the market valuations are lower and the buffet indicator gets less than 209% a person may want to take more risk and invest more in stocks and see larger gains! Love your videos, they are short and easy to follow. Keep em going!
I was going to make a similar comment about how if people are doing 6%, getting a 3% match and funding their Roth, they are probably in good shape in most cases.
I didn't start investing in my 403B until age 32 when I started working at the hospital. My wife started working at the hospital in 2000 and she has also invested in the 403B. I started with 6% and built it up to 20% over an almost 27 year career to date with a minimum of 11 more years to go. I only wish I had started earlier. My kids have started in their jobs, Our youngest two kids started at 18 with part time jobs while they are going to school. All I know is my ballance is at a very strong level and while its not a 7 figure valuation it is on track to hit our goal.
Got introduced to firemovrement in 2015-2016. I was 30 and had about $30k in retirement. I began gradually increasing my contributions. Now at 39 i have over 500k. Goal is to pay off the house by 45 and by 49 i anticpate i could stop working if needed.
Since I was 39 I've matched out the IRS limit for both 401k and roth every year because I didn't have anything (less than 3k) saved prior to that. I'm currently at 26%. I always advise people at work to at least put in 6% at work just to get that Free money. Our employer match is 4.5%. Some people I know either can't save anything higher, especially now, or even more people I know like to spend it, lol. Thanks you Erin for making theses video's, you have a great way of explaining.
Had a medical emergency that ate up my emergency savings; gotta love our healthcare system :/ So right now I'm saving 6% (+3% match), and some to my HSA towards retirement(~2%). I had to redirect my long term savings to rebuild my emergency fund.
The problem with template based solutions, is people are individuals that don't perfectly align to templates. Awesome talk. My wife and I were not saving for retirement... until the pivot event hit for us. We may not catch up. Thus we may not retire at the age we could have. Our approach is this... the things we cannot do don't prevent us from doing the things we can. Therefore, we are improving our situation. Better is better even if we may not reach a particular ideal. Oh, we are still shooting for that ideal yet, we just having completed a path there, yet. :)
Financing cars and eating out destroys the middle class. They just don't prioritize saving. I used to work with a 60 year old guy who said after his next raise he could "afford" to finance a new Nissan Z. He had 15k in his 401k. The company owner saw his balance one day and told him he needed to save way more. Of course his response (to me, later) was to grumble about how rich our boss was or some nonsense. People think in terms of car payments. Like, they literally don't know what to do with extra money, and think it will disappear if they don't spend it all. It's crazy. I bought a used Toyota for 22k with a check this summer. My biggest money problem is trying to figure out if we can max a 403b, 401k, 457 (yes, I have access to both!), 2 Roths, 2 HSAs, and an ESA next year, or just a 403b, 457, 2 Roths, 2 HSAs, and an ESA. Cars are tools. That's it. Something I need to get to work so I can make money and save.
I didn’t know government employees had so many more retirement savings options. A car is also an asset but depreciating at that. You need to figure out which car meets your needs, has the lowest maintenance costs, and least depreciation. If it was just a tool, you wouldn’t overspend a bit right?
😆 yes! Same here - my biggest question is always whether we can max out all the retirement accounts we have available! Driving a used Toyota that I hope to keep for another 10 years or more.
My saving rate started at age 25 and my rate increased to 16%+3%employer for 20 years. When the company was sold we were fired. So I calculated that I have 21 years until full retirement, and if i contributed nothing for the next 21 years, the fund would double 3 times. So in 2010, when we were fired, it started at 440K and now 14 years later it has doubled twice+ to 2.5 mil. So Erin is right, start early, invest it, and let it grow.
I put 6% (match of 3%) into my 401k, just opened a 401k Roth account and deposit 3% into that, I put 3% into my pension fund (employer has ended this for new employees as of 10 years ago, but they are putting about 22% into the pension on my behalf), so I save 12% from my pay, and my employer is putting 25% , so 37% overall savings rate. I have about 10 years left until I retire. I can last for another 10 years.
My savings rate is higher because of a plan to retire early. However, when I was younger and just starting out, I could never have afforded even 6% because housing costs have always been out of control in the HCOL area that I live in. However, now I can afford to contribute the max, which I do, but I also try to save even more. I don't feel like I'm depriving myself by doing so. I'm very privileged that I'm much older now (Gen X), so have many years of salary increases under my belt, as well as simply being a frugal person by nature. At the moment, I'm saving 30 - 40 % of my income. But, like I said, I plan on retiring early within the next 3 years with the rule of 55, so I needed to save more because I'll have 10+ years of not working in comparison to a person that retires at 65. Having said all that, you asked about our thoughts on 6%. I generally agree with what you said. Let's go with a round number of 10%, which includes employer matches. Yes, you absolutely can retire comfortably at 65, if you've been saving 10% (you + employer) for 45+ years. No question. You're all set. You may not live extravagantly, but you won't feel deprived, or like you're living in poverty. I was shocked at the age when Gen Z started saving. 19?? Good on them, that is amazing, and it made me giddy even thinking about how much money I would have now if I started at 19 years old. I'm genuinely excited for them. I think the only snag in what you talked about in the video is the fact that people probably aren't starting right off the bat with 6%. Like I said, when we're younger, many of us could have never done that. Some yes, but most probably not - and this is mostly due to housing costs. So, while 6% is a great goal, I think it's ok to not feel bad if you can't quite do that yet. You can make up for it if, say, by 30, you're putting in 7 or 8% now that you have a higher income. Great video! I love watching people who are not pushing the common narratives that many financial advisors push. If people listen to them, they'd have nervous breakdowns for not being able to do what they're telling them to do. Realistic videos like this one help assuage those fears for younger folks.
Great video! It all depends on what you can afford. You should always save something but the amount can vary due to your needs. When I was raising my kids I usually saved less than 10% because I needed the cash. Now that the kids are gone and I have a higher income, I can save nearly 50% and still live an enjoyable life with my wife.
When I first started I was at 5% with a 5% employer match. By the time I hit 30 I was up to 10%, In my early 40s I maxed out what I could put in. The first few years of getting set up is hard, so it is more about taking the free money and not much more.
Lovely video. A reminder of how it used to be. 401k and Roth 401k retirement accounts are relatively new, rolling out in the 1980s. Before investing, people depended on pensions. When Eastman Kodak went bankrupt in 2012 they still owed over $2 billion in pensions (they went to continue paying as currently being publicly traded) People didn't really invest on their own because of commission and the barrier to entry. When I was 13, my broker charged me $4.95 per domestic trade, 10 years before it was $20.95. And it was common to buy by the lot (100 shares). You really had to know what you were doing. Even before that electronic trading via a personal computer wasn't a thing, more so call a broker to execute a trade. I'm turning 21 and investing couldn't be easier: cash management accounts, zero commissions on American stocks, free real-time data, and fractional shares.
I agree that 6% (or full match) is not enough. I believe that extra investments should go in Roth and brokerage accounts though. You want pre-tax $ coming out at lower tax rates later in life. That's hard to do with large balance (large distributions) given that it also causes social security $ to be taxed more.
Great information Erin. Thanks for pointing out the BS that financial people keep spouting about NEEDING to save 15% or more in a 401k. My wife and I have done about half of that over the past 20 years and we have a good sized nest egg with at least 15 years to go (20+ for my wife who is younger). One thing those financial people don't take into account is that your expenses (outside of medical and possible long-term care) will go down for most people. If you own a house outright, that is a big decline in your monthly expenses without a mortgage payment. Not having kids living in the house by 65 is also a lower cost. Honestly unless you want to have a luxurious retirement with travel and other fancy stuff all the time, most people can live off of much less. I feel that you definitely need to plan ahead, but not at the expense of living today. Who knows if you will make it to 65 or not? Plus, most people are healthier at a younger age and can do things our senior citizens selves will not be able to. Enjoy life now and save what you can. But don't make yourself miserable thinking you have to save 15% or more if you need some of it now.
For us we don’t trust that the government will have social security like today. It will probably be cut a lot if we get any. Look at the government debt. Also you need to have a safety margin because a lot of things can happen. Sure I’m saving more than I actually will need if everything goes right. I figure I’ll have more to start a business and give if that’s the case. Also with AI I don’t know how long the jobs will last so career could be cut short. I understand your perspective but there’s another perspective as well.
Great video! I never got a match since I was a public employee, but I invested 7-10% into a 457 plan over the years, and greatly increased that the last 4-5 years. That, in combination with maxing out a Roth IRA pretty much since they came out! gave me a 15-20% savings rate. With good investment choices, that’s turned out fine.
Currently, 12% salary with employer match up to 10% dollar to dollar. This is my second employer. First employer was 10% with 100% match for about 18 years. Market has been good to my balance. I always advise anyone to get the max company match because it's free money. 100% return regardless of what the market does is a no-brainer. Looking to early retire at 60.
Most of these retirement plans just suck. My employer matches 7% when the employee puts in *only 4%.* That's a $1.75 for every $1.00 I put in. In addition to that, they match up to another 6% in profit sharing (based on the company's financial profits for a given year). so *up to* 13% for the 4% I put in, or $3.25 for every $1.00 I put in (in a good year). Not only that, but the base pay is really good for my area. I'm probably making more than double what I actually need to make just to get by. As a general rule of thumb, maxing out your employer contribution then maxing our your Roth IRA is a good strategy. That said: *"A man is rich in proportion to the number of things which he can afford to let alone." Thoreau*
When I was working I contributed 12% to my 401k and 10% to my Roth. With most Americans needing high cost medical treatment in their later years 9% is definitely to low. Your assumption is that nothing goes wrong and I think the investors are correct in saying you're wrong.
I do 6% 401k (with 50% match) and $4000-6000 to my Roth IRA (fluctuated based on COVID and buying a house). I still pretty much live like I did when I was making $35k a year even though I have six-figure income, the major difference being, at $35k, I’d be stressed about every financial decision. Now, there isn’t stress about prepaying 6 months of car insurance or other prepay-to-save expenses. I still leverage debt intelligently, just now, outside of my mortgage, any debts could be paid off in cash within 30 days (but anything with
The problem with any general rule, be it 4% SWR or 15% contribution rate is it will break down in all sorts of specific cases. For someone earning 50K, and starting at 25 that 9% works but delay even a few years and it quickly doesn’t work. Also higher incomes will get less replacement from SS, so the saving rate has to increase to compensate for the lower % from SS. 15% is a good target to start as is the 4% rule, because it covers a broad spectrum of the public under a wide range of conditions. Rules of thumb have to be simple to understand and easily applicable. I should also add that if income increases faster than inflation the ending target income is much higher than the starting target in real terms, but with each year you have less and less time to save the incremental amount. e.g. 9% covers a 50K income, but after 40 years of above inflation rises the real target might be 100K and while they had 40 years to save the first 50K they only had about half that (so 20 years) to save the second 50K. Suddenly that 9% looks woefully short in spite of starting at 25.
One of the best pieces of advice that I got when I was younger was every time you get a raise, try to save and invest the amount of the raise. While I haven't been able to follow that advice exactly, it does remind me to try and save at least a portion of any increase in income that I receive. Of course, one of the easiest ways to accomplish that is to increase your 401k contribution percentage.
The last few years before I retired I was maxing out my 401k every year. I learned that if you hit the government's max dollar figure for the year, your company stops your paycheck contributions and they also stop matching since you can't put anything in. So I would lower my contribution rate as I got closer to the end of the year so that I would only hit the max on the last paycheck.
I matched my daughter’s Roth IRA contributions when they started as teenagers and pretty much forced them to save. It’s the one mistake I wouldn’t let them make because you can’t recover from it. Now at 32 and 26 they should have the ability to retire at about 50 if they wish to.
I'm 61, still working, don't plan on retiring until 67. I started saving when I was 19 and haven't stopped. I didn't have a set amount as I just saved something. Then when ever I got a pay raise, I increased my contribution. So, your telling me since I've been saving since I was 19, when I turn 65 I'll have 2M? Oh yeah!!! Bring it on.
My employer matches 200% of 4% plus offers a base contribution of 2.5%. You don't get access to either of these contributions unless you've been there a year though. But that's over $18k a year!
My current savings rate is 28%. It wasn't always this high, but I'm in my 40s now and pretty well settled into my home and career. I have been fortunate enough to be maxing my 401k since 27, though. I mostly have my awesome wife of 20 years to thank because she is a natural saver!
I was lucky, my employer matched 2 dollars for every dollar I contributed up to %5. I never made a fortune but the match made up for it somewhat. I also maxed out my roth
I lived with family while working my way through college, and I roughly saved and invested 90% of my paychecks during that time. 50% to IRA/401k and 50% to a house down payment. Those few years, even though the college itself did not get me a high paying job, were very helpful in getting those investment accounts started. If you plan to retire 6%, 9%, or even 10% probably is not enough. 15% is ok, 20% is better, 15% is more realistic. The sad fact is a large percentage of us won't retire. Setbacks and long term care means most of us will be in a nursing home or assisted living on medicaid getting $52 a month, while the government pays $5,000 to $10,000 a month to a nursing home after you spend down your assets. Partial retirement is much more realistic, part time work, some money from social security and or 401Ks can be easier to achieve than a fully funded retirement.
Great points in this video. Sometimes it feels like the minimum savings suggestion is advocated by those who earn a percentage on your net worth. So the more you save the more they earn... 😢 Consistent saving is important but how much you need to support a "moderate" retirement life style can be controlled. Keep up the good work and thanks for the channel content! ❤
The amount you need to save and invest is highly personal, as you mention. It depends on your age, goals, fixed income in retirement, etc. Someone might be able get by with investing 5 percent while another person will need to invest 35 percent to reach their goals.
I promise I will stop after this video but I think this title is a great balance between teasing the audience to click while not being clickbait. Good job! I realize this isn't a common situation but if you are self-employed (with an S-corp) you can do a lot of things with employer match since you are your own employer. The federal limit on match is actually 25% of an employee's salary. So you can match yourself at that rate with a self 401K. I made my self 401K a Roth while the match is (obviously) traditional. I felt like that was a good balance. The only catch is that a company has to offer the same match to all employees so you wouldn't want to do this your company is any larger than 1.
You're welcome to keep giving feedback - I'm trying to create a balance. (And I really do read all comments on this channel, even though I don't have time to respond to all of them. 😊)
@@ErinTalksMoney Well I didn't want to make it a meme to mention clickbait titles in every video. Hopefully the algorithm is being kind to you. Now everyone, click all the things. ^^
For an individual 401k, you can make the employer match in Roth starting next year. 😊 And if you have a custom plan, you can make _after-tax contributions_ that are likely much larger than your normal 401k deferrals or the company match - up to about $70k annually in total. Those after-tax contributions can be rolled immediately into your Roth account, so you’d end up with a massive Roth increase every year.
22 % including employer matching; luckily for me someone told me when I was very young that I should be aiming for 20% to 25% and I took them seriously and never let my contributions fall below 16% cumulative.
When I was just starting out, I had been saving 6%, when someone told me to try maxing out the 401k. I was still living at home and had very few expenses and was surprised I could actually do it with saving nearly 30%. Years later I had to back off to save for a house and family, but I am very lucky to have put the money in there years ago when I could. Its much higher now than it would've been if I had stuck to 6%.
My employer match ranges from 10% to 50% of every dollar the employee puts in. It depends on what the company’s ROA is for the previous quarter. We aren’t limited on how much we can contribute either (unless you are considered highly compensated by the IRS) Last year I made 170k, saved 6% traditional and 7% ROTH. Oh, and had a nice profit sharing addition to my 401k of $33k. Keep the bloopers and bring in the dog for a visit.
I’m very fortunate to be a federal employee. We have a thrift savings plan and have a 5 percent match & a pension. Also as someone who is close to retirement age 401ks and thrift savings plans were not available to us when we first started in the workforce. So we started investing in our early thirties.
I've always just saved as much as I could. I've worked in a volatile industry for 18 years, so there are some years I make money hand over fist, and some years I don't make much money at all. There have been times when I haven't been able to save money at all and had to dip into my savings to keep things going. There have been other times when I've been able to save 50%. Right now, I'm saving about 80% and have been for the last year and a half. It's been great. I've always been frugal, so lifestyle creep has never been an issue for me.
I’m 51 now. I started with 6% (3% match) 21 years ago, increased it every year when I got a raise or COLA. Still with the same company. Now I’m at 23% savings rate and learned to live on less slowly over the years. Also have other passive income and will get just fine to retire at 59 1/2. The next generation is going to have a much harder time doing so unfortunately.
I have put 10% on my own my entire life, and I get 3% match since 2003. I have worked 50 to 60 hours a week for most of my work life. I am BARELY looking at being modestly secure by retirement, so trust me when I tell you all: 10% of your GROSS pay MUST BE SAVED for your retirement, or if not, start researching how to live in poverty because that is your destiny. If you are behind, it has to be more than 10%. Now having said that, I'm talking about my goal being retired and reasonably happy. If you think struggling without that money now is hard, imagine being 75 and having to figure it out. Do it now. Assume social security could be ripped away from you illegally (just as the initial establishment of it is illegal theft by the government) at any time, the non-earners taking massive amounts is larger and larger every year, at some point it will just explode.
I think it really comes down to your dream/goals for retirement. For example we want to retire early (somewhere between 55-60), build a second home in the mountains (do the snowbird thing) and travel some as well. So we are saving about 25-30% of our household income. Some of that is being placed in retirement accounts and some in bridge accounts since we want to retire early. But if you didn’t want to do all that then sure, I can see it being ok to save 9% IF you started early enough. We started saving around the ages of 26 after we got out college and started working (we both have post baccalaureate degrees).
6% is better than nothing! And it's a great place compared to most people. My first question is, how many of those people are also saving outside their employer plan? I know personally I spent most of my career putting only the minimum for full match into my employer plan. But I was also funding IRA accounts, (own and spousal), and funding a taxable brokerage account, and UTMA accounts for our children, and participating in an employee stock purchase program. There was about a 10 year gap when I probably averaged less than 6% saving per year. Changing jobs to a lower paying job a couple of times will do that. However, I did not need to tap into retirement accounts and the accumulated assets from the prior years kept paying dividends and buying more shares.
I started saving money for long-term goals/retirement back at age 21, and just saved what I could when I could. I’ve increased my savings rate leaps and bounds over the past 26 years (every year) and today I sit north of 35% of my income (including company match). And my wife has been a big saver too. We both plan to retire in our 50’s and start enjoying the fruits of our sacrifices & deferred gratification!
I have been saving 45%-55% for the past 5 years or so and am about to take a major reduction in salary (cut in half) because my wife will be a stay at home mom for a bit. Very tempted to shut off saving, but will try to keep getting the company match (they give 4.5% when I put in 6%).
@@Sondan1988 yes, I am asking a genuine question. You stated in your comment that you have “zero bills”. I would like to know how you pay nothing in bills every month.
I agree with Erin’s assessment. My 401k contribution was always up to the limit of my employer match. I always kept a comfortable buffer in my checking/savings account to assure Id never need to incur penalties for touching 401k early. I rarely ever carried any debt other than mortgages. I have enough for a comfortable retirement that started at age 58 and the RFP projects 35 years. But here’s the perspective on understanding my “enough for a comfortable retirement” that started early. I only have 7/16ths of my investments. My ex got 9/16ths in our divorce a few years before I retired. My new wife came with nothing because her irresponsible ex husband had crashed their lives. My point being that if 7/16ths of a tax deferred savings built on a 50% match was enough for the two of us then it should be more than enough for a couple that is fortunate enough to remain together.
That sounds like a reasonable script, but it's usually not how life play out. At 19, I was paying my way through school working 80 hour weeks in the summer and 25 hour weeks during school so I wouldn't have any student loans. I remember selling plasma and hoping I had enough to buy bologna and ramen. Setting aside 6% (or anything) would have mostly come from what I was spending on tuition. 6% at 25 wouldn't have been that much, and I was just a couple of years into buying normal groceries. By 30, I was comfortably living off 5% of my post tax income and putting 90% towards rental properties. At 40, I cut back from 80 hour weeks to 25 hour weeks and managed to comfortably live on about 10% of my income. Income from work went towards living and saving. Income from the rental properties went towards buying more rental properties. The real estate collapse had no impact, because I didn't sell anything to lose anything. Point being, what I was able to save at 30 exceeded the entire amount I would have saved at 6% in the preceding ten years even with an 8% return. Most people will 5X or 10X the income they earn at 19 by the time they're 50. Progressively increasing savings as the income increases should beat the compounding interest of investing less but earlier. For me, avoiding debt and having an bar emergency fund up until 30 put me way ahead of those who saved for retirement but incurred debt.
@robnelson6545 If I'm selling plasma, how would that indicate someone else was paying my bills? I actually got rejected from selling plasma several times because my protein count was too low. A 19 year old earning 50k and saving 6% isn't typical. But yes, my income did spike once I left the landscaping, bartending and temp work while I was in school and moved to a decade and a half of 80 hour workweeks, which is also not typical. What is more typical is a 30 year old being able to save 10% more than a 20 year old having enough to cover living expenses and still have 6% to set aside. The primary reason my income continued to spike wasn't my earned income , it was those rental properties buying more rental properties.
@@wisenber ok you must have been living on 10% of your total income not your earned income. Let’s say you were making $250k most people could not live on $25k unless they didn’t have a house payment and a car payment, you know what I men?
@@robnelson6545 "Let’s say you were making $250k most people could not live on $25k unless they didn’t have a house payment and a car payment," I paid off my first small house within a couple of years and never had a car loan. And yes, it was total income as in the income I was earning and the income the rental houses I bought with my earning were earning. That being said, after I got out of school, I didn't have to live the life of a monk. But I did average over 75 hours a week of work for a decade and a half. I could have stopped there if I wanted to just get by, but i actually enjoy my work. My earned income today is about what it was 25 years ago despite my working a quarter of the hours, but that mostly due to my hiring and developing employees to do what I was doing. If you work for someone else your entire career, it's much less likely to make very large gains in income.
At 25, I put 6% towards my Roth 401k to match my employer contribution, max out my HSA (including $500 match), max out my Roth IRA, and contribute to my brokerage accounts. In total, I contribute more than the 401k limit each year, but I strive to have flexibility in my retirement accounts and smaller RMDs.
I think it depends on your situation, but if you're younger and are living at home with parents, it's definitely better to save as much as you can for 5 years or so to front load the accounts. Then you can cut back a bit as you need to plan for other expenses.
With correct math, the matching amount on the 401k increases your salary and so the percentages people quote should be lower. 6% of $100 is $6, but $6 is less than 6% of $103, which is what you're making with the 3% extra from the match.
Early and often. Gen Xer here. Started at 22 in my first job putting away 6% and a total match to get me to 9% from 22-25 years old. Got a better job where they gave me 5% no matter what so I matched with 5% for 5 years. Got into a science job at 32 with a pension and a 401k that matched up to 6% giving me a total of 9% savings. I’m 46 now and even with 350k in my 401 as i consolidated them over the years and a pension at 150k I still feel short. I’m now putting in 15% in a 401 with a match of another 3% because I’m scared I won’t have enough at 65 to retire. It’s crazy. I have to pretend social security doesn’t exist.
I'm fortunate my employer matches dollar-for-dollar up to 6%. I've been adding 1% each year the past couple years, and will be at 15% starting next year.
One viewpoint about salting away 10% of a salary means you actually live on a restricted income. Saving 10% or more nearing your retirement date will make the transition easier. You will already be used to living on less income, which will stretch your retirement dollars further. I pushed to 20%, which fattens the 401k. I can cover the bills now and have no doubts about it later.
Retiree here. Wife and I had 6% match but we contributed to the maximum 401k amount beginning in our mid twenties. Basically S&P 500 and Groth Co funds. Set it and forget it through market and economic ups and downs. We are now in the 1 % percent income bracket of all retirees. We now fund our childrens Roths at their minimum through Gifting each year. Last thing we never owned bonds during our entirety of our 37 working years as I was investing to maximize growth and compounding. We also accumulated a few years savings / cash to prevent delay in retirement date / strategy. You can do this and all the data and research shows it works. Never pull your equities out in a down market buy more instead. You are investing not speculating and it will work unless capitalism ends.
That is insane. Half of 6% is all I have ever seen at 3 different jobs over 35 years. Some years I did 8% or 10%. Now only Roth . I agree 10 to 12 would be better but I am fine thanks to the recent bull markets.
Not that every person knows about Roth IRAs but being young and at a lower tax bracket I only do 6% currently because I max out a roth ira every year as well which the data doesn't take into account
Depends mostly on your income and age. If you make median or less, you will probably need access to about 80% of your income to meet current needs, you will likely need another 10% to pay taxes and should mostly focus savings to building an emergency fund or available for financing profitable endeavors (like starting your own business). Remember, most people send about 70% of their lives not retired and all yet to retire have a solid chance of never being retired.
I try to save 5%-20% depending on the expenses each week. As far as employer matching its free money. When its based on a percentage that looks different for each individual. Someone who makes 100k vs 50k 6% is a different number. There are annuity products out there that will provide you a really good income. If you can at least save 150k-200k by age 52. And we put part of that money into a PIA let it defer for 10yrs. You will get a substantial amount. The particular product i am referring they guarantee 14% each year to the benefit base.
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Including my employer match I think I am right around 25%. I started when I was absolutely shoe string budget broke with $30 a month and slowly built up each time I could. In the last 5 years I have really made some huge gains. Now that my saving is a % based automatic set up any time I get a raise my saving amount automatically increases. It was very exciting to reach my first 100k. I love watching my money grow. I started out a teen mom on welfare and have worked my butt off with my husband and high school sweetheart to get here. I am not stopping or slowing down now. I am hopeful that I can not only retire one day but also leave something for my kids and maybe grand kids someday. With work and effort anyone can do it. Everyone said I was going to be a welfare drop out for my entire life (including my own mother) but I am so far from that. Make a plan and stick to it. It is possible!
It's all on the cash flow. Start with:
Savings x 25
*
Congrats on your determination and success to date! Very inspiring. Keep it up!
@@j10001 Thanks!
@@brianbeck9807how long did it take you to get your 1st 100k? It took me almost 13 years, then the next 100k took me 2 years. Of course by that time I went to 20% savings rate.
My Motto when it comes to saving, especially for retirement - "Give till it hurts. Your future self will thank you for it!" Do 401Ks, IRAs, etc..
Pumpin that iron!
Oh you mean the 401k 🙂
@@bluethundar
You can have multiple 401ks depending on your employment history and one may might assume a Roth prefix.
As long as you are not putting off living in order to give until it hurts. Many don’t make it to retirement.
My future self is an asshole and I’m not giving him anything!
I was very lucky to be introduced to the 401k in the mid 90's. I started out at 5% and increased by at least 50% of every raise that I got. Both annual and promotions. I did this until I hit the 401k max. I am now 54 and maxing out Roth 401k, ROTH IRA and After-Tax 401k. Forecasting to retire in 5 years with more income than I have today working.
Nice. I suspect it is in the millions?
That after-tax 401k contribution can _really_ juice up a retirement account!
Time is almost more valuable than the amount, within reason. I started my engineering job, fresh out of college at age 22, $18700/yr, barely paid rent/food, but still saved $50/month with match. INcreased as my wages increased. Now, 49 years later, I have over 1.5M in various accounts.
Hang on....almost 50 years ago? That would put you in the 1970s. $18,700 back then is the equivalent of $133,000 today! What were you spending on making you barely afford rent and food? Most engineers starting today are lucky to land a job, making half that amount.
Time is more valuable, what do you engineer?
@@BreezeOTM I started at the very bottom paygrade and rapidly moved up, doubling my salary in 3 years. Then moved to other jobs as opportunity presented itself. My two sons are in engineering and Mechanical Engrs start at 96K/yr today and can rapidly move up in a few years with experience.
@@wDawks I was a design/mechanical/electrical engineer for 28 years, then started my own business in kitchen/bath remodeling for a change of pace for 10 years.
@@wDawks Mechanical Engr, Electrical Engr , Mfg Engr.
I was lucky. My employer contributed $0.75 on the dollar up to 8% of my pay, so I was saving at a 14% rate. It was a fantastic deal that allowed me to retire at 60.
Similar i get 50c on the dollar up to 10%. I put 10% which nets me 15%. In my mid 30s with 200k in my 401k with a 60k salary. Also put 2% into a roth to help out.
My employer gave .25 on the dollar up to 6%, so an additional 1.5%. During the financial crisis of 2008-9, he stopped the match and never reinstated it.
I'm well compensated now with equity too, but the lack of a match over those years made a big impact on my retirement savings. Now due to our poor participation rate and highly compensated rules I can only save 3% of my pay, plus the catch up. This severely impacts my retirement savings rate.
oh, to be a boomer...
@@AnonYmous-mw5lc you mean you'd like to be decades closer to death? Enjoy your life and save for retirement. Work to live, not live to work.
The worst thing anyone could do is discourage an immediate 50% return on your money that you've earned as an employee. As long as you are AT LEAST putting in the 6%, you are doing the right thing. Putting more is great if possible.
When my employer switched plans to Fidelity Investments, they gave a 10 minute lunch time talk with free pizza. They said we'd need to save 10% and our company would match 50% up to our 6% (so 3% from the company). I worked there for 29 years and that gave me enough to comfortably retire. I was a single parent of twins so I really couldn't contribute more until they finished college.
thank you for this concise explanation! i just accepted a salary position and the company is offering a dollar-for-dollar/100% match up to 5% 😯 i’m 28 and childfree, already saving 50-80% of my income since 2021. i have & live with a long term partner who’s also looking for work so we’ll be one of those DINK (dual income, no kids) very soon!
he owns our home and the mortgage + general expenses are low, this new position of mine is also fully remote so i’m happy to save on transportation costs by like 99% 😂
A very important point missed. Company matching discourages ppl from contributing their annual max before the of the year. If you hit the max before year end, the matching will stop.
@@cyclefrst7799 this is good to know; thank you!!
@@cyclefrst7799 THIS!
@@cyclefrst7799No it doesn’t. The rules for 401k plans require the employer to analyze all contributions at the end of of the year. One of the things they look for is checking for anyone who hit the contribution max before the end of the year and adjusting (adding) company match funds to ensure you get your full deserved salary percentage match. You may not get it in the months you supposed to, but you do get it.
@@cyclefrst7799 Great point! So to clarify for anyone reading - the company will match up to their limit _on each paycheck._ So you need to stretch out your contributions over the year so you’re maximizing that match in every paycheck.
You're absolutely amazing. I actually understand finance. NOTE: I just recommended your channel to all my colleagues at work (500+ employees). Continue the great work!! Best of luck!!
I worked for a very small company. There was no retirement plans, no matches or anything.
I knew that I would not make it on my good looks, so I put away a substantial part of my fairly low wage. Now at I am old, it is a good thing I did. I didn't have a pretty face then and there has been no improvement over the last 50 years.
I bet you look fantastic every time you get a payment from your investments. Just remember every time you get that check you smile and that smile makes you look fantastic 😊
@@mikehlavinka2964 Thank you. It is nice not to have to worry. I can help others a tiny bit too.
Great information Erin! My employer offers dollar per dollar up to 6%, so it results in 12%
Love it!
I started at 25 with "save 10%" in my mind plus whatever employer match I got. At my current company, I have been saving more, setting my percentage to increase by 1% each year. My employer match is dollar for dollar up to a max of $4500. At this point I am maxing out (plus catch up) 401K. Max out ROTH accounts for my wife and I, max out HSA (~$2000 match there from employer), and save 15% of my salary in an employee stock purchase plan where I get a pretty good discount and then rool proceeds from that into a brokerage account regularly. All of that combined adds up to a pretty big amount (I think it comes out to about 41% of my income) of savings each year.
That's amazing. I like your +1% each year and may start doing that myself.
@@mapmike52 It is actually automated in my 401K. I was able to just set it to happen automatically without me doing anything. Before I knew it I was at like 18%. Never really noticed because it happened around the same time annual raises happened. So your paycheck jumps, just not quite as much.
No op😊 i
I started late and am playing catch-up so videos like these for the younger generation are invaluable. Excellent channel. Currently I am saving 36% so I can catch-up.
I started investing 6% at the age of 24 because my employer at the time matched 100% up to 6%. Later my match was less and I increased my contribution to 10%. Since 2019, I've been maxing out my 401(k) including catch up contribution since I turned 50.
At 27, my savings/investing rate is roughly 50% going into 2025. I make about $3300 a month after tax, & mortgage & bills are about $1600 per month, & the rest is invested & saved. Im a single man with no dependents, so I plan on getting a second job or gig work next year & all those earnings will be saved to get an income property in the future.
What's your projection shows for when you hit the seven figures in terms of time. Sounds like we could be looking at another influencer on how they got to the goals they achieved.
@TripSoul10 oh no I don't believe I have any desire to try to be an influencer 😅.. it's really hard to say, I don't really focus on that, I focus on step & each milestone at a time.. I just recently reached my current financial situation & I think it'll keep dramatically elevating over the next several years... Im already pretty certain I will be far beyond a couple Ms before I retire, w almost 50k already in my Roth IRA & no plans of slowing down investing anytime soon.
i’m 28 and in a very similar boat! i save/invest ~75% of my income on average and will make a similar amount after tax ($3450, starting new job next week hell ye). i live with my SO but not married so no dependents, he owns the home and pays the lion’s share of mortgage but for me all in monthly bills are ~$1200.
i have a on/off side gig as a pet/housesitter for high income folks in my metro but have put that on pause (paws) for the second half of 2024. once i’m settled into my new position i may open back up my availability so i can housesit + work remotely.
lots to consider and plan for but i’m excited for what the next year has in store; im grateful to be more than just getting by with how expensive life has become. wishing you luck, keep up your amazing work!
@@veri.contrary Congrats on the job! That's fantastic, I hope to reach that level of savings next yr. I like hearing this because it goes against that narrative that all us younger people are lazy, incompetent, spoiled, etc.. no many of us are out here sacrificing things & getting to it. It especially makes me happy to us melanated peoples making changes & accomplishing great things. Best wishes with everything! 🙏🏾
@@devenchy3k947 Believe me when I say that not all old people think that way. It's really a shame that the loudest voices have the worst criticisms and takes. I'm Gen X, and every Millennial and Gen Z that I work with or that are in my life (like nieces and nephews), bust their butt. It can be hard out there, but I have not met any more lazy younger people than there are lazy older people. You're gonna have some in every generation, and the older generations that criticize the younger generations must have something wrong in their lives to be projecting that onto a generation of very capable young adults.
Starting at the employer match at 22 and adding a +1% auto increase every year made it super easy (barely an inconvenience) to get my eventual savings rate up and over 20% by the time was 30ish without "feeling" it. Also incorporating HSAs and Roth IRA's outside of the auto employee savings is something that also comes with knowledge and growth of excess income for those who find themselves in that position.
Thanks for a good video. I always saved the max to my 401k and stepped up to the “catch up” limits once I hit 50. I maxed my Roth until I hit that limit and then saved 50% of my income for almost 15 years. Now retiring in a few weeks at age 55.
Your retirement is your responsibility. Save and invest your money regardless of the match or not.
Don't be paralyzed by all the noise around retirement.
Appreciate these videos. My wife and I both work - and we're putting 15% away in a combination of Roth and Traditional. We're moderate aggressive, and frustrated at the palsy 5-6% growth. Not much one can do with an employer plan, unless we go aggressive. Have 12 more years of work. So also putting money into money market accounts, and Charles Schwab account so that we have cash in various investments. Driving older cars, throwing everything we can at the house mortgage. Don't eat out anymore. Tight, but we're able to also give to charity regularly, and by having all of this taken out of paychecks ahead of time, even though not rich, we're doing ok.
If you've got 12 years you should be aggressive and moderate as you get closer to retirement.
@@notreal5311 good point.
Having the savings taken out before it ever crosses your palm is so powerful. It makes adjusting your lifestyle to fit your cash flow so much easier. Then, after 10 or 20 years, you can look at your investment account balance and be very pleasantly surprised.
I’m a GenXer. Didn’t start 401k until age 36. 18 years later, I’m now at $1M. For a while, was just doing enough to get the match, but the past 10 years or so I’ve been maxing out pre tax. Now starting to put money in a taxable account, since it’s a better return than most other things.
Hope you're doing a Roth IRA too before taxable account. Tax benefits are effectively a guaranteed return vs taxable accounts.
Keep it up! Great job man. People can still do well even if they don’t start until they are 35+
@@tHebUm18 The Roth is a TERRIBLE path for many people. Especially someone who is 54 and probably near the top of their income earning curve. Even if they double that ($2M) by the time they are 65, and take out 4% annually, that is only 80K in actual retirement dollars, which with the last 75 years average inflation of 3.5% is only worth 57K in today's dollars. Paying tax on 57K (adjusted for today's tax brackets) withdrawn from a non Roth IRA or 401K is very little especially if for a couple. And that is compared to the tax that would be paid for someone who is maxing out 401Ks in their 50s. Max 401K in your 50s is $30,500 annually. If their pay before deducting the 30.5K 401 deduction is greater than 110.5K (80K+30.5K). Of course, my analysis is flawed as it ignores social security income which is also taxed. You would have to understand your SS income in the year you would start taking it and your non retirement investment income to make an actual determination if the Roth is right for you. But a terrible assumption. Also, if you move to another country, they may still tax you on Roth distributions where non Roth distributions would get you a foreign tax credit.
I think this is a wonderful idea for employers to do for their employees. I have spoken with several of my younger colleagues through the years at my place of work. Several indicated they don't know how they can put away any money to match because of their tight finances. I encouraged them to start with at least $10 per paycheck.
I think people fall into the set it and forget it trap as well. I wish content would speak to a person starting out at a lower percentage and working up to 25% in higher income years. Getting people to fear something seems to be the motivation of choice on TH-cam. Great video!
I'm working really hard to try to get to 25% but I think as a household we're at about 18% now. We're Millennials who pay for daycare, starting to build a bigger emergency fund, I'm barely making it but we know that one day (soonish) we're EACH going to be millionaires!!
I started only saving the matching rate my employer gave in my last and current company. Around 15 years ago I changed that mindset and increased it to what it is now at 15%.
Biggest step in anything is to get started. Even starting at 2% is worth it, because it's better than not starting at all. That said starting at 6% works and just try to increase it slowly as your wage increases or your financial situation gets better. I am playing catch up (from life curve balls) and putting 20% + now, especially after paying off my mortgage. Also some people feel more comfortable starting with a Roth IRA since you could take out principal in an emergency.
Hi Erin. Another good discussion and video this morning. I have always been a natural saver but my rate was never all that high
At the University of Pittsburgh, they match up to 8% of your salary dollar for dollar. Then, once you become vested after three years of contributing, they match every dollar you save (up to 8% of your salary) at $1.50. This gives you a 20% savings rate (Your 8% + the University's 12% match), although you must use the University's TIAA-CREF retirement plan. They also have an interesting option once you turn 52, which is that you can get a 14.5% match on your 8% savings from age 52-65, but you agree that you do not get any university match after the age of 65. So, from the age of 52-65, you can get a 22.5% savings rate. I have taken full advantage of this. Like my Mom told me when I first started working there, "Choose to save the full amount from day one. That way, when you get your first paycheck, you'll never get used to having the money you're saving." Hail to Pitt!
10% standard market and 2% long-term inflation seems like optimistic advice 5-10 years ago. I feel like future gains will be based on a mix richer in bonds, less stocks and will be much closer to the price of borrowing money. Still better to be making interest than paying it. I think Suzie Orman's "4% to 6%" is most likely for the next 30 years. Perhaps, after a market correction, when the market valuations are lower and the buffet indicator gets less than 209% a person may want to take more risk and invest more in stocks and see larger gains! Love your videos, they are short and easy to follow. Keep em going!
I only ever invested enough in 401k to get the match, but then maxed out my and my wife's Roth IRA each of the last 27 years.
Currently my strategy as well
How? Roth ira started in 1998
I was going to make a similar comment about how if people are doing 6%, getting a 3% match and funding their Roth, they are probably in good shape in most cases.
@@steve99912 ok, 26 years. You got me. 😉 I started my first job in 1992 and the Roth limit was $2000 when I started using them.
@steve99912 if you include 1998 and 2024 that's 27 years.
Solid advice and good, healthy skepticism/criticism here. Love it, and thank you for all of this great content.
I didn't start investing in my 403B until age 32 when I started working at the hospital. My wife started working at the hospital in 2000 and she has also invested in the 403B. I started with 6% and built it up to 20% over an almost 27 year career to date with a minimum of 11 more years to go. I only wish I had started earlier. My kids have started in their jobs, Our youngest two kids started at 18 with part time jobs while they are going to school. All I know is my ballance is at a very strong level and while its not a 7 figure valuation it is on track to hit our goal.
Being on track and hitting your goals is all that matters.
This is a high level video ... just want you to know you are influential in ppls financial health... thanks ❤
Thank you!! 🙏
Got introduced to firemovrement in 2015-2016. I was 30 and had about $30k in retirement. I began gradually increasing my contributions. Now at 39 i have over 500k. Goal is to pay off the house by 45 and by 49 i anticpate i could stop working if needed.
Since I was 39 I've matched out the IRS limit for both 401k and roth every year because I didn't have anything (less than 3k) saved prior to that. I'm currently at 26%. I always advise people at work to at least put in 6% at work just to get that Free money. Our employer match is 4.5%. Some people I know either can't save anything higher, especially now, or even more people I know like to spend it, lol. Thanks you Erin for making theses video's, you have a great way of explaining.
Had a medical emergency that ate up my emergency savings; gotta love our healthcare system :/ So right now I'm saving 6% (+3% match), and some to my HSA towards retirement(~2%). I had to redirect my long term savings to rebuild my emergency fund.
Thanks for being a breath of fresh air!!! The 25% save for retirement is extreme👎🏿, but 10-15% is doable so🙏🏿😊
The problem with template based solutions, is people are individuals that don't perfectly align to templates. Awesome talk. My wife and I were not saving for retirement... until the pivot event hit for us. We may not catch up. Thus we may not retire at the age we could have. Our approach is this... the things we cannot do don't prevent us from doing the things we can. Therefore, we are improving our situation. Better is better even if we may not reach a particular ideal. Oh, we are still shooting for that ideal yet, we just having completed a path there, yet. :)
Financing cars and eating out destroys the middle class. They just don't prioritize saving. I used to work with a 60 year old guy who said after his next raise he could "afford" to finance a new Nissan Z. He had 15k in his 401k. The company owner saw his balance one day and told him he needed to save way more. Of course his response (to me, later) was to grumble about how rich our boss was or some nonsense. People think in terms of car payments. Like, they literally don't know what to do with extra money, and think it will disappear if they don't spend it all. It's crazy. I bought a used Toyota for 22k with a check this summer. My biggest money problem is trying to figure out if we can max a 403b, 401k, 457 (yes, I have access to both!), 2 Roths, 2 HSAs, and an ESA next year, or just a 403b, 457, 2 Roths, 2 HSAs, and an ESA. Cars are tools. That's it. Something I need to get to work so I can make money and save.
I didn’t know government employees had so many more retirement savings options. A car is also an asset but depreciating at that. You need to figure out which car meets your needs, has the lowest maintenance costs, and least depreciation. If it was just a tool, you wouldn’t overspend a bit right?
😆 yes! Same here - my biggest question is always whether we can max out all the retirement accounts we have available! Driving a used Toyota that I hope to keep for another 10 years or more.
My saving rate started at age 25 and my rate increased to 16%+3%employer for 20 years. When the company was sold we were fired. So I calculated that I have 21 years until full retirement, and if i contributed nothing for the next 21 years, the fund would double 3 times. So in 2010, when we were fired, it started at 440K and now 14 years later it has doubled twice+ to 2.5 mil. So Erin is right, start early, invest it, and let it grow.
I put 6% (match of 3%) into my 401k, just opened a 401k Roth account and deposit 3% into that, I put 3% into my pension fund (employer has ended this for new employees as of 10 years ago, but they are putting about 22% into the pension on my behalf), so I save 12% from my pay, and my employer is putting 25% , so 37% overall savings rate. I have about 10 years left until I retire. I can last for another 10 years.
My savings rate is higher because of a plan to retire early. However, when I was younger and just starting out, I could never have afforded even 6% because housing costs have always been out of control in the HCOL area that I live in. However, now I can afford to contribute the max, which I do, but I also try to save even more. I don't feel like I'm depriving myself by doing so. I'm very privileged that I'm much older now (Gen X), so have many years of salary increases under my belt, as well as simply being a frugal person by nature. At the moment, I'm saving 30 - 40 % of my income. But, like I said, I plan on retiring early within the next 3 years with the rule of 55, so I needed to save more because I'll have 10+ years of not working in comparison to a person that retires at 65. Having said all that, you asked about our thoughts on 6%. I generally agree with what you said. Let's go with a round number of 10%, which includes employer matches. Yes, you absolutely can retire comfortably at 65, if you've been saving 10% (you + employer) for 45+ years. No question. You're all set. You may not live extravagantly, but you won't feel deprived, or like you're living in poverty. I was shocked at the age when Gen Z started saving. 19?? Good on them, that is amazing, and it made me giddy even thinking about how much money I would have now if I started at 19 years old. I'm genuinely excited for them. I think the only snag in what you talked about in the video is the fact that people probably aren't starting right off the bat with 6%. Like I said, when we're younger, many of us could have never done that. Some yes, but most probably not - and this is mostly due to housing costs. So, while 6% is a great goal, I think it's ok to not feel bad if you can't quite do that yet. You can make up for it if, say, by 30, you're putting in 7 or 8% now that you have a higher income. Great video! I love watching people who are not pushing the common narratives that many financial advisors push. If people listen to them, they'd have nervous breakdowns for not being able to do what they're telling them to do. Realistic videos like this one help assuage those fears for younger folks.
LOVE the bloopers at the end of your vids!! Great content
Great video! It all depends on what you can afford. You should always save something but the amount can vary due to your needs. When I was raising my kids I usually saved less than 10% because I needed the cash. Now that the kids are gone and I have a higher income, I can save nearly 50% and still live an enjoyable life with my wife.
When I first started I was at 5% with a 5% employer match. By the time I hit 30 I was up to 10%, In my early 40s I maxed out what I could put in. The first few years of getting set up is hard, so it is more about taking the free money and not much more.
Lovely video. A reminder of how it used to be. 401k and Roth 401k retirement accounts are relatively new, rolling out in the 1980s. Before investing, people depended on pensions. When Eastman Kodak went bankrupt in 2012 they still owed over $2 billion in pensions (they went to continue paying as currently being publicly traded)
People didn't really invest on their own because of commission and the barrier to entry. When I was 13, my broker charged me $4.95 per domestic trade, 10 years before it was $20.95. And it was common to buy by the lot (100 shares). You really had to know what you were doing. Even before that electronic trading via a personal computer wasn't a thing, more so call a broker to execute a trade.
I'm turning 21 and investing couldn't be easier: cash management accounts, zero commissions on American stocks, free real-time data, and fractional shares.
I agree that 6% (or full match) is not enough. I believe that extra investments should go in Roth and brokerage accounts though. You want pre-tax $ coming out at lower tax rates later in life. That's hard to do with large balance (large distributions) given that it also causes social security $ to be taxed more.
Smart. Wish I understood this earlier and put more in Roth.
Great information Erin. Thanks for pointing out the BS that financial people keep spouting about NEEDING to save 15% or more in a 401k. My wife and I have done about half of that over the past 20 years and we have a good sized nest egg with at least 15 years to go (20+ for my wife who is younger).
One thing those financial people don't take into account is that your expenses (outside of medical and possible long-term care) will go down for most people. If you own a house outright, that is a big decline in your monthly expenses without a mortgage payment. Not having kids living in the house by 65 is also a lower cost.
Honestly unless you want to have a luxurious retirement with travel and other fancy stuff all the time, most people can live off of much less. I feel that you definitely need to plan ahead, but not at the expense of living today. Who knows if you will make it to 65 or not? Plus, most people are healthier at a younger age and can do things our senior citizens selves will not be able to. Enjoy life now and save what you can. But don't make yourself miserable thinking you have to save 15% or more if you need some of it now.
For us we don’t trust that the government will have social security like today. It will probably be cut a lot if we get any. Look at the government debt. Also you need to have a safety margin because a lot of things can happen. Sure I’m saving more than I actually will need if everything goes right. I figure I’ll have more to start a business and give if that’s the case. Also with AI I don’t know how long the jobs will last so career could be cut short. I understand your perspective but there’s another perspective as well.
Excellent video Erin... Don't just save but INVEST now!
Great video! I never got a match since I was a public employee, but I invested 7-10% into a 457 plan over the years, and greatly increased that the last 4-5 years. That, in combination with maxing out a Roth IRA pretty much since they came out! gave me a 15-20% savings rate. With good investment choices, that’s turned out fine.
A lot of companies don't match. Mine doesn't match anything. This year I will max out my Roth 401k and Roth IRA. I say 20% to 25% is better.
Currently, 12% salary with employer match up to 10% dollar to dollar. This is my second employer. First employer was 10% with 100% match for about 18 years. Market has been good to my balance. I always advise anyone to get the max company match because it's free money. 100% return regardless of what the market does is a no-brainer. Looking to early retire at 60.
Most of these retirement plans just suck.
My employer matches 7% when the employee puts in *only 4%.* That's a $1.75 for every $1.00 I put in. In addition to that, they match up to another 6% in profit sharing (based on the company's financial profits for a given year). so *up to* 13% for the 4% I put in, or $3.25 for every $1.00 I put in (in a good year).
Not only that, but the base pay is really good for my area. I'm probably making more than double what I actually need to make just to get by.
As a general rule of thumb, maxing out your employer contribution then maxing our your Roth IRA is a good strategy.
That said: *"A man is rich in proportion to the number of things which he can afford to let alone." Thoreau*
I enjoy your videos. I currently save about 25% of my pretax income. I split it between an IRA, 401K, HSA and a Brokerage.
When I was working I contributed 12% to my 401k and 10% to my Roth. With most Americans needing high cost medical treatment in their later years 9% is definitely to low. Your assumption is that nothing goes wrong and I think the investors are correct in saying you're wrong.
I do 6% 401k (with 50% match) and $4000-6000 to my Roth IRA (fluctuated based on COVID and buying a house). I still pretty much live like I did when I was making $35k a year even though I have six-figure income, the major difference being, at $35k, I’d be stressed about every financial decision. Now, there isn’t stress about prepaying 6 months of car insurance or other prepay-to-save expenses. I still leverage debt intelligently, just now, outside of my mortgage, any debts could be paid off in cash within 30 days (but anything with
The problem with any general rule, be it 4% SWR or 15% contribution rate is it will break down in all sorts of specific cases. For someone earning 50K, and starting at 25 that 9% works but delay even a few years and it quickly doesn’t work. Also higher incomes will get less replacement from SS, so the saving rate has to increase to compensate for the lower % from SS. 15% is a good target to start as is the 4% rule, because it covers a broad spectrum of the public under a wide range of conditions. Rules of thumb have to be simple to understand and easily applicable. I should also add that if income increases faster than inflation the ending target income is much higher than the starting target in real terms, but with each year you have less and less time to save the incremental amount. e.g. 9% covers a 50K income, but after 40 years of above inflation rises the real target might be 100K and while they had 40 years to save the first 50K they only had about half that (so 20 years) to save the second 50K. Suddenly that 9% looks woefully short in spite of starting at 25.
One of the best pieces of advice that I got when I was younger was every time you get a raise, try to save and invest the amount of the raise. While I haven't been able to follow that advice exactly, it does remind me to try and save at least a portion of any increase in income that I receive. Of course, one of the easiest ways to accomplish that is to increase your 401k contribution percentage.
The last few years before I retired I was maxing out my 401k every year. I learned that if you hit the government's max dollar figure for the year, your company stops your paycheck contributions and they also stop matching since you can't put anything in. So I would lower my contribution rate as I got closer to the end of the year so that I would only hit the max on the last paycheck.
I was wondering about that last year when I got close. Missed my max by about $200 so I can make sure I get the match.
I matched my daughter’s Roth IRA contributions when they started as teenagers and pretty much forced them to save. It’s the one mistake I wouldn’t let them make because you can’t recover from it. Now at 32 and 26 they should have the ability to retire at about 50 if they wish to.
I'm 61, still working, don't plan on retiring until 67. I started saving when I was 19 and haven't stopped. I didn't have a set amount as I just saved something. Then when ever I got a pay raise, I increased my contribution. So, your telling me since I've been saving since I was 19, when I turn 65 I'll have 2M? Oh yeah!!! Bring it on.
Ugh stop with the teasing. What you at now?
My employer matches 200% of 4% plus offers a base contribution of 2.5%. You don't get access to either of these contributions unless you've been there a year though. But that's over $18k a year!
My current savings rate is 28%. It wasn't always this high, but I'm in my 40s now and pretty well settled into my home and career. I have been fortunate enough to be maxing my 401k since 27, though. I mostly have my awesome wife of 20 years to thank because she is a natural saver!
I was lucky, my employer matched 2 dollars for every dollar I contributed up to %5. I never made a fortune but the match made up for it somewhat. I also maxed out my roth
I lived with family while working my way through college, and I roughly saved and invested 90% of my paychecks during that time. 50% to IRA/401k and 50% to a house down payment. Those few years, even though the college itself did not get me a high paying job, were very helpful in getting those investment accounts started.
If you plan to retire 6%, 9%, or even 10% probably is not enough. 15% is ok, 20% is better, 15% is more realistic. The sad fact is a large percentage of us won't retire. Setbacks and long term care means most of us will be in a nursing home or assisted living on medicaid getting $52 a month, while the government pays $5,000 to $10,000 a month to a nursing home after you spend down your assets.
Partial retirement is much more realistic, part time work, some money from social security and or 401Ks can be easier to achieve than a fully funded retirement.
Great points in this video. Sometimes it feels like the minimum savings suggestion is advocated by those who earn a percentage on your net worth. So the more you save the more they earn... 😢 Consistent saving is important but how much you need to support a "moderate" retirement life style can be controlled. Keep up the good work and thanks for the channel content! ❤
The amount you need to save and invest is highly personal, as you mention. It depends on your age, goals, fixed income in retirement, etc. Someone might be able get by with investing 5 percent while another person will need to invest 35 percent to reach their goals.
I promise I will stop after this video but I think this title is a great balance between teasing the audience to click while not being clickbait. Good job!
I realize this isn't a common situation but if you are self-employed (with an S-corp) you can do a lot of things with employer match since you are your own employer. The federal limit on match is actually 25% of an employee's salary. So you can match yourself at that rate with a self 401K. I made my self 401K a Roth while the match is (obviously) traditional. I felt like that was a good balance. The only catch is that a company has to offer the same match to all employees so you wouldn't want to do this your company is any larger than 1.
You're welcome to keep giving feedback - I'm trying to create a balance. (And I really do read all comments on this channel, even though I don't have time to respond to all of them. 😊)
@@ErinTalksMoney Well I didn't want to make it a meme to mention clickbait titles in every video. Hopefully the algorithm is being kind to you. Now everyone, click all the things. ^^
For an individual 401k, you can make the employer match in Roth starting next year. 😊 And if you have a custom plan, you can make _after-tax contributions_ that are likely much larger than your normal 401k deferrals or the company match - up to about $70k annually in total. Those after-tax contributions can be rolled immediately into your Roth account, so you’d end up with a massive Roth increase every year.
22 % including employer matching; luckily for me someone told me when I was very young that I should be aiming for 20% to 25% and I took them seriously and never let my contributions fall below 16% cumulative.
When I was just starting out, I had been saving 6%, when someone told me to try maxing out the 401k. I was still living at home and had very few expenses and was surprised I could actually do it with saving nearly 30%. Years later I had to back off to save for a house and family, but I am very lucky to have put the money in there years ago when I could. Its much higher now than it would've been if I had stuck to 6%.
Love the picture-in-picture editing!
I started at 15% when I got my first big kid job. I did drop it down a bit to pay of college debt and buy a house, but then bumped it back up.
My employer match ranges from 10% to 50% of every dollar the employee puts in. It depends on what the company’s ROA is for the previous quarter. We aren’t limited on how much we can contribute either (unless you are considered highly compensated by the IRS) Last year I made 170k, saved 6% traditional and 7% ROTH. Oh, and had a nice profit sharing addition to my 401k of $33k.
Keep the bloopers and bring in the dog for a visit.
I’m very fortunate to be a federal employee. We have a thrift savings plan and have a 5 percent match & a pension. Also as someone who is close to retirement age 401ks and thrift savings plans were not available to us when we first started in the workforce. So we started investing in our early thirties.
I've always just saved as much as I could. I've worked in a volatile industry for 18 years, so there are some years I make money hand over fist, and some years I don't make much money at all. There have been times when I haven't been able to save money at all and had to dip into my savings to keep things going. There have been other times when I've been able to save 50%. Right now, I'm saving about 80% and have been for the last year and a half. It's been great. I've always been frugal, so lifestyle creep has never been an issue for me.
I’m 51 now. I started with 6% (3% match) 21 years ago, increased it every year when I got a raise or COLA. Still with the same company. Now I’m at 23% savings rate and learned to live on less slowly over the years. Also have other passive income and will get just fine to retire at 59 1/2.
The next generation is going to have a much harder time doing so unfortunately.
I have put 10% on my own my entire life, and I get 3% match since 2003. I have worked 50 to 60 hours a week for most of my work life. I am BARELY looking at being modestly secure by retirement, so trust me when I tell you all: 10% of your GROSS pay MUST BE SAVED for your retirement, or if not, start researching how to live in poverty because that is your destiny. If you are behind, it has to be more than 10%. Now having said that, I'm talking about my goal being retired and reasonably happy.
If you think struggling without that money now is hard, imagine being 75 and having to figure it out. Do it now.
Assume social security could be ripped away from you illegally (just as the initial establishment of it is illegal theft by the government) at any time, the non-earners taking massive amounts is larger and larger every year, at some point it will just explode.
I think it really comes down to your dream/goals for retirement. For example we want to retire early (somewhere between 55-60), build a second home in the mountains (do the snowbird thing) and travel some as well. So we are saving about 25-30% of our household income. Some of that is being placed in retirement accounts and some in bridge accounts since we want to retire early. But if you didn’t want to do all that then sure, I can see it being ok to save 9% IF you started early enough. We started saving around the ages of 26 after we got out college and started working (we both have post baccalaureate degrees).
6% is better than nothing! And it's a great place compared to most people. My first question is, how many of those people are also saving outside their employer plan? I know personally I spent most of my career putting only the minimum for full match into my employer plan. But I was also funding IRA accounts, (own and spousal), and funding a taxable brokerage account, and UTMA accounts for our children, and participating in an employee stock purchase program.
There was about a 10 year gap when I probably averaged less than 6% saving per year. Changing jobs to a lower paying job a couple of times will do that. However, I did not need to tap into retirement accounts and the accumulated assets from the prior years kept paying dividends and buying more shares.
I started saving money for long-term goals/retirement back at age 21, and just saved what I could when I could. I’ve increased my savings rate leaps and bounds over the past 26 years (every year) and today I sit north of 35% of my income (including company match). And my wife has been a big saver too. We both plan to retire in our 50’s and start enjoying the fruits of our sacrifices & deferred gratification!
Mathematically, you could already be at FI
Do you consider your expenses being under control?
I have been saving 45%-55% for the past 5 years or so and am about to take a major reduction in salary (cut in half) because my wife will be a stay at home mom for a bit. Very tempted to shut off saving, but will try to keep getting the company match (they give 4.5% when I put in 6%).
We are financial mutants and save between 40-50%, have zero bills, own our house, and watch a lot of Erin videos.
You do not have bills for Internet, phone, insurance, video/music streaming services, utilities, property taxes, etc?
@@ErikAsquith please tell me you are not being serious !?
@@Sondan1988 yes, I am asking a genuine question. You stated in your comment that you have “zero bills”. I would like to know how you pay nothing in bills every month.
@@ErikAsquith sure !! I don't eat, have electricity, and this is a made up post over the internet to Erin. Good luck Mr. Erik ! Bye
Yeah people over exaggerate
I agree with Erin’s assessment.
My 401k contribution was always up to the limit of my employer match. I always kept a comfortable buffer in my checking/savings account to assure Id never need to incur penalties for touching 401k early. I rarely ever carried any debt other than mortgages.
I have enough for a comfortable retirement that started at age 58 and the RFP projects 35 years.
But here’s the perspective on understanding my “enough for a comfortable retirement” that started early. I only have 7/16ths of my investments. My ex got 9/16ths in our divorce a few years before I retired. My new wife came with nothing because her irresponsible ex husband had crashed their lives.
My point being that if 7/16ths of a tax deferred savings built on a 50% match was enough for the two of us then it should be more than enough for a couple that is fortunate enough to remain together.
That sounds like a reasonable script, but it's usually not how life play out.
At 19, I was paying my way through school working 80 hour weeks in the summer and 25 hour weeks during school so I wouldn't have any student loans. I remember selling plasma and hoping I had enough to buy bologna and ramen.
Setting aside 6% (or anything) would have mostly come from what I was spending on tuition.
6% at 25 wouldn't have been that much, and I was just a couple of years into buying normal groceries.
By 30, I was comfortably living off 5% of my post tax income and putting 90% towards rental properties.
At 40, I cut back from 80 hour weeks to 25 hour weeks and managed to comfortably live on about 10% of my income. Income from work went towards living and saving. Income from the rental properties went towards buying more rental properties.
The real estate collapse had no impact, because I didn't sell anything to lose anything.
Point being, what I was able to save at 30 exceeded the entire amount I would have saved at 6% in the preceding ten years even with an 8% return. Most people will 5X or 10X the income they earn at 19 by the time they're 50. Progressively increasing savings as the income increases should beat the compounding interest of investing less but earlier.
For me, avoiding debt and having an bar emergency fund up until 30 put me way ahead of those who saved for retirement but incurred debt.
Either you had a huge income or you had someone else paying most of your expenses which is not the typical person.
@robnelson6545 If I'm selling plasma, how would that indicate someone else was paying my bills? I actually got rejected from selling plasma several times because my protein count was too low.
A 19 year old earning 50k and saving 6% isn't typical.
But yes, my income did spike once I left the landscaping, bartending and temp work while I was in school and moved to a decade and a half of 80 hour workweeks, which is also not typical.
What is more typical is a 30 year old being able to save 10% more than a 20 year old having enough to cover living expenses and still have 6% to set aside.
The primary reason my income continued to spike wasn't my earned income , it was those rental properties buying more rental properties.
@@wisenber ok you must have been living on 10% of your total income not your earned income. Let’s say you were making $250k most people could not live on $25k unless they didn’t have a house payment and a car payment, you know what I men?
@@robnelson6545 "Let’s say you were making $250k most people could not live on $25k unless they didn’t have a house payment and a car payment,"
I paid off my first small house within a couple of years and never had a car loan.
And yes, it was total income as in the income I was earning and the income the rental houses I bought with my earning were earning.
That being said, after I got out of school, I didn't have to live the life of a monk. But I did average over 75 hours a week of work for a decade and a half. I could have stopped there if I wanted to just get by, but i actually enjoy my work.
My earned income today is about what it was 25 years ago despite my working a quarter of the hours, but that mostly due to my hiring and developing employees to do what I was doing.
If you work for someone else your entire career, it's much less likely to make very large gains in income.
At 25, I put 6% towards my Roth 401k to match my employer contribution, max out my HSA (including $500 match), max out my Roth IRA, and contribute to my brokerage accounts. In total, I contribute more than the 401k limit each year, but I strive to have flexibility in my retirement accounts and smaller RMDs.
I put in 15% for 37 years, retired at 57. Saved a boatload on taxes too.
I think it depends on your situation, but if you're younger and are living at home with parents, it's definitely better to save as much as you can for 5 years or so to front load the accounts. Then you can cut back a bit as you need to plan for other expenses.
Inflation is truly 9-10%, so if the s&p500 goes up 10% a year. You are just keeping even with inflation.
It’s my first full year since my divorce. I saved somewhere between 50-60% of my income. Now to work on increasing the income.
With correct math, the matching amount on the 401k increases your salary and so the percentages people quote should be lower. 6% of $100 is $6, but $6 is less than 6% of $103, which is what you're making with the 3% extra from the match.
They need to teach this in school.
Early and often. Gen Xer here. Started at 22 in my first job putting away 6% and a total match to get me to 9% from 22-25 years old. Got a better job where they gave me 5% no matter what so I matched with 5% for 5 years.
Got into a science job at 32 with a pension and a 401k that matched up to 6% giving me a total of 9% savings.
I’m 46 now and even with 350k in my 401 as i consolidated them over the years and a pension at 150k I still feel short.
I’m now putting in 15% in a 401 with a match of another 3% because I’m scared I won’t have enough at 65 to retire.
It’s crazy. I have to pretend social security doesn’t exist.
My Employer matches dollar for dollar up to 6%. They also give me an additional 3%
I max out the 401k limits and catch up each year.
I'm fortunate my employer matches dollar-for-dollar up to 6%. I've been adding 1% each year the past couple years, and will be at 15% starting next year.
One viewpoint about salting away 10% of a salary means you actually live on a restricted income. Saving 10% or more nearing your retirement date will make the transition easier. You will already be used to living on less income, which will stretch your retirement dollars further. I pushed to 20%, which fattens the 401k. I can cover the bills now and have no doubts about it later.
Retiree here. Wife and I had 6% match but we contributed to the maximum 401k amount beginning in our mid twenties. Basically S&P 500 and Groth Co funds. Set it and forget it through market and economic ups and downs. We are now in the 1 % percent income bracket of all retirees. We now fund our childrens Roths at their minimum through Gifting each year. Last thing we never owned bonds during our entirety of our 37 working years as I was investing to maximize growth and compounding. We also accumulated a few years savings / cash to prevent delay in retirement date / strategy. You can do this and all the data and research shows it works. Never pull your equities out in a down market buy more instead. You are investing not speculating and it will work unless capitalism ends.
My employer matched my savings up to 10% and I was there 35 years. So I contributed the 10 % so I could get the maximum match. Yes, this is true. 😊
That is insane. Half of 6% is all I have ever seen at 3 different jobs over 35 years. Some years I did 8% or 10%. Now only Roth . I agree 10 to 12 would be better but I am fine thanks to the recent bull markets.
Not that every person knows about Roth IRAs but being young and at a lower tax bracket I only do 6% currently because I max out a roth ira every year as well which the data doesn't take into account
Yep, I only do 5% into the 401k but also max out a Roth IRA and an HSA, so my personal total is 21%.
Employers shifting to 25% match up to 12% would be a great solve but surely would result in a large employee exit if not done across workplaces.
Depends mostly on your income and age. If you make median or less, you will probably need access to about 80% of your income to meet current needs, you will likely need another 10% to pay taxes and should mostly focus savings to building an emergency fund or available for financing profitable endeavors (like starting your own business). Remember, most people send about 70% of their lives not retired and all yet to retire have a solid chance of never being retired.
The other major flaw is that many of these folks that take the match, quit before they’re vested and lose it all.
I try to save 5%-20% depending on the expenses each week. As far as employer matching its free money.
When its based on a percentage that looks different for each individual. Someone who makes 100k vs 50k 6% is a different number.
There are annuity products out there that will provide you a really good income. If you can at least save 150k-200k by age 52. And we put part of that money into a PIA let it defer for 10yrs. You will get a substantial amount. The particular product i am referring they guarantee 14% each year to the benefit base.