When Should You Have $500K or $1M Saved for Retirement?

[Ryan]

I always see these rules of thumbs out there for retirement savings, the most comment one seems to be 1x your salary by 35, 3x by 45, 5x by 55, and 8x by retirement.  

But at what age are you aiming to hit $500K or $1M in retirement savings?  Or what age did you hit those numbers?

If I could hit $500K by the time I'm 40 I'd be happy.  If I could hit  $1M by 45, I'd be happy.

[yogiii]

Personal or as a couple for those who are?

[Deleted]

It would be nice to hit 500K by 50, but I don't see it happening since it's just 3.5 more years.

I million by 60 sounds like a realistic goal for me though.

[Ryan]

Jul 30, 2015 11:19:57 GMT -5 yogiii said:

Personal or as a couple for those who are?

As a couple for those that are.  

[movingforward]

IDK - all these "rules" are kind of silly to me.  There are tons of factors at play that determine how much a person needs to save.  That being said, I would love to have 500K saved by the age of 50.  We will see... it may or may not happen.  If I get my boss's job next year or move into a higher paying job at another company then it will probably happen fairly easily.  If not, then it won't... I really have come to terms with "I will have what I have when I retire."  I am kind of sick of thinking about it.  Yes, I just lost my YM card. 

[TheHaitian]

Goal is 400k (retirement accounts) by 40 and 1Million by 50.

But that is just in retirement accounts (401k,403b and ROTH). Once student loans are paid off taking that money and throwing it at taxable accounts so should have a nice sum there too.

[ArchietheDragon]

Jul 30, 2015 11:15:27 GMT -5 Ryan said:

I always see these rules of thumbs out there for retirement savings, the most comment one seems to be 1x your salary by 35, 3x by 45, 5x by 55, and 8x by retirement.  

But at what age are you aiming to hit $500K or $1M in retirement savings?  Or what age did you hit those numbers?

If I could hit $500K by the time I'm 40 I'd be happy.  If I could hit  $1M by 45, I'd be happy.

I am right there with you.   $500k by 40, $1million by 45 would be perfecto. 

[CarolinaKat]

Jul 30, 2015 11:26:09 GMT -5 minnesotapaintlady said:

It would be nice to hit 500K by 50, but I don't see it happening since it's just 3.5 more years.

I million by 60 sounds like a realistic goal for me though.

Holy crap! I thought you were younger! ETA: As in you look young for your age, not as in calling you old 

[ArchietheDragon]

Jul 30, 2015 12:25:09 GMT -5 CarolinaKat said:

Jul 30, 2015 11:26:09 GMT -5 minnesotapaintlady said:

It would be nice to hit 500K by 50, but I don't see it happening since it's just 3.5 more years.

I million by 60 sounds like a realistic goal for me though.

Holy crap! I thought you were  younger!

LOL.   remember that thread about being careful mentioning someone's gray hair... 

[Deleted]

Jul 30, 2015 12:25:09 GMT -5 CarolinaKat said:

Jul 30, 2015 11:26:09 GMT -5 minnesotapaintlady said:

It would be nice to hit 500K by 50, but I don't see it happening since it's just 3.5 more years.

I million by 60 sounds like a realistic goal for me though.

Holy crap! I thought you were younger! ETA: As in you look young for your age, not as in calling you old 

Holy crap is right.  Those years go by fast.

[The Captain]

Goal set about 10 years ago was .5K by 46, 1 M by 50, 1.5M by 53 and and 2M by 55.  These are combined accounts and the age milestone is my age, not DH's.

After the crash of 08 I didn't think we were going to make it.

Now it looks like we may be hitting certain milestones a bit early if there isn't another bit of a downturn.

Note:  DH and I both save heavily for retirement socking away way more to the ROTH 401(k) balances now than the tax advantaged amounts allowed to the deductible 401(k)'s.  In other words, we are putting away more than $18K a year each.

I want to be in a position to retire if I wish at 55.  I will likely keep working at least part time or seasonal, but I want it to be because I want to, not because I need to.

By 55 DD hopefully will only have one year of college left, the rentals will be mostly paid for, and the principal on our primary will be so low we could pay it off if we wanted.

In other words, retirement is a multi-legged plan.

[imawino]

Jul 30, 2015 11:31:58 GMT -5 movingforward said:

IDK - all these "rules" are kind of silly to me.  There are tons of factors at play that determine how much a person needs to save.  That being said, I would love to have 500K saved by the age of 50.  We will see... it may or may not happen.  If I get my boss's job next year or move into a higher paying job at another company then it will probably happen fairly easily.  If not, then it won't... I really have come to terms with "I will have what I have when I retire."  I am kind of sick of thinking about it.  Yes, I just lost my YM card. 

*GASP*

Blasphemer.

[HoneyBBQ]

Jul 30, 2015 11:15:27 GMT -5 Ryan said:

I always see these rules of thumbs out there for retirement savings, the most comment one seems to be 1x your salary by 35, 3x by 45, 5x by 55, and 8x by retirement.  

But at what age are you aiming to hit $500K or $1M in retirement savings?  Or what age did you hit those numbers?

If I could hit $500K by the time I'm 40 I'd be happy.  If I could hit  $1M by 45, I'd be happy.

I probably hit $500k in around 30/31 ish (and then again a few years later after the recovery)


I don't have $1MM in my personal retirement accounts yets, but we have well over that in our household combined retirement accounts. My projection should be to hit $1MM in my personal accounts late next year, right before 40.  

*results not typical, 2 career household both with 6 figure salary*

[happyhoix]

I don't know anymore how much DH and I will need. Every different on line calculator comes up with different estimates.

DH makes about half what I do, but he'll get a pension, which I won't. House is paid for. Only kid is launched completely, with ten years left to go to retirement. If the economy doesn't crap out and neither of us has health issues or gets fired, we should hit close to the 1 MM in total assets by retirement, maybe 800K in retirement money/savings and a 200K house. Will that be enough with DH's pension and our SS? I have no freaking idea.

[Baby Fawkes]

I think I hit $500K sometime around 30/31. It would be nice to hit $1M by 35 but that's a stretch. Should easily be able to get there by the time I'm 40 at the current pace and more likely to hit it around 37.

Almost 34 and married with SAHW so although I count as a couple, it's really my personal accounts that make up the retirement funds. DW had approx. $35K when she was last working which is a little over $40K now.

[tskeeter]

Working from where we were on 1/1/2007, it looks like we should have been around $500K at 47 and around $1 million at around 50.

What I found surprising is that it looks like between gains and contributions, we grew our retirement nestegg by an average of nearly 30% a year for over 20 years.

Of course, if you factor in losing close to 50% of our retirement in 2008/2009, the average annual growth from gains and contributions translates into an average of about 23% a year over 30+ years.

[gooddecisions]

My husband had no problem hitting 500K by 35. I'm the same age and am only at 260K. The big difference- he was well compensated which meant a much higher employer contribution. I was only making 30-40K in my 20s, which meant my employer was only kicking-in around $1k/year or less those early critical years. Bigger salary makes a big difference. He was actually shocked that I was even allowed (much less able) to max out my contributions on my crappy salary.

[tskeeter]

Jul 30, 2015 15:39:41 GMT -5 happyhoix said:

I don't know anymore how much DH and I will need. Every different on line calculator comes up with different estimates.

DH makes about half what I do, but he'll get a pension, which I won't. House is paid for. Only kid is launched completely, with ten years left to go to retirement. If the economy doesn't crap out and neither of us has health issues or gets fired, we should hit close to the 1 MM in total assets by retirement, maybe 800K in retirement money/savings and a 200K house. Will that be enough with DH's pension and our SS? I have no freaking idea.

I think the most realistic approach that I've seen is to compute the net present value of your projected income flows over your expected lifetimes and the NPV of your expenses.  If the NPV of your income flows is more than about 115% of the NPV of your expenses, you'll be OK.  If your income will be more than 125% of your expenses, the folks that use this approach indicate you should be thinking about planning your kid's inheritances.

If you can't reach income of 110% - 115% of expenses, your should consider working longer to delay taking money out of your retirement accounts to pay expenses and to allow you to build up a bigger nestegg.  

[Ombud]

Jul 30, 2015 17:12:42 GMT -5 tskeeter said:

If the NPV of your income flows is more than about 115% of the NPV of your expenses, you'll be OK.  If your income will be more than 125% of your expenses, the folks that use this approach indicate you should be thinking about planning your kid's inheritances.

So I'm done? Why doesn't that seem right?

[Plain Old Petunia]

Jul 30, 2015 15:45:42 GMT -5 @southernsusana said:

I'll never have $500,000, much less $1,000,000. 

It doesn't worry me, to be honest. I don't have a lavish lifestyle now so I won't be giving anything up.

And that beautiful pension doesn't hurt, either.

[Plain Old Petunia]

Jul 30, 2015 17:52:44 GMT -5 @sroo4 said:

Jul 30, 2015 17:12:42 GMT -5 tskeeter said:

I think the most realistic approach that I've seen is to compute the net present value of your projected income flows over your expected lifetimes and the NPV of your expenses.  If the NPV of your income flows is more than about 115% of the NPV of your expenses, you'll be OK.  If your income will be more than 125% of your expenses, the folks that use this approach indicate you should be thinking about planning your kid's inheritances.

If you can't reach income of 110% - 115% of expenses, your should consider working longer to delay taking money out of your retirement accounts to pay expenses and to allow you to build up a bigger nestegg.  

Is there a translation available for this post? 

NPV = net present value. He's saying if your estimate of your income is bigger than your estimate of your expenses by 15%, you're in OK shape. If it's more, start planning your estate. If it's less, re-think your plan.

[Deleted]

Interesting thread,

Hit 500K net worth @ 35
PD off house @ 37 (~300K value)
Hit 500K (retirement accounts only @ 38)
Hoping to hit $1MM net worth by 40 (markets only need to give me a $9K increase)
Expect to drop below $1MM @ 41 (about time for a market correction). 
Hoping Retirement hits $1MM @ 45 and net worth above $1.5MM - Year I will F-U the daily grind (probably not retire, but switch to part time and only do the work I like).
 
Sorry for adding net worth, but I really hate articles/comparisons that don't.  What money outside my tax sheltered accounts is retirement? I consider my PD off house part of my retirement plan.

*Results not typical*
Single professional with six figure income in fly over country.  
Not very YM or I would have way more (always bought new cars, traded them prior to 100K miles and several European vacations).

[tskeeter]

Jul 30, 2015 18:06:17 GMT -5 Ombud said:

Jul 30, 2015 17:12:42 GMT -5 tskeeter said:

If the NPV of your income flows is more than about 115% of the NPV of your expenses, you'll be OK.  If your income will be more than 125% of your expenses, the folks that use this approach indicate you should be thinking about planning your kid's inheritances.

So I'm done? Why doesn't that seem right?

That means that you have saved more than you need and that you should send any retirement savings in excess of 135% of the NPV of your anticipated expenses to tskeeter.  He always likes to have a little more and would be very happy to relieve you of your burden.

[Ombud]

Jul 30, 2015 19:09:43 GMT -5 tskeeter said:

Jul 30, 2015 18:06:17 GMT -5 Ombud said:

So I'm done? Why doesn't that seem right?

That means that you have saved more than you need and that you should send any retirement savings in excess of 135% of the NPV of your anticipated expenses to tskeeter.  He always likes to have a little more and would be very happy to relieve you of your burden.

Um. No. Starting a legacy account for GKs inheritance. Want to have 15K × 7 GKs by years end

But thank you for volunteering?

[happyhoix]

Jul 30, 2015 18:36:27 GMT -5 Plain Old Petunia said:

Jul 30, 2015 17:52:44 GMT -5 @sroo4 said:

Is there a translation available for this post? 

NPV = net present value. He's saying if your estimate of your income is bigger than your estimate of your expenses by 15%, you're in OK shape. If it's more, start planning your estate. If it's less, re-think your plan.

I think this is part of the problem - DH and I have a house on 2 acres that used to be wooded, pre tornado, and is now 2 acres of grass that needs mowing. More house than we need, way more grass than we want, so the plan is to downsize to a condo probably, hopefully within walking distance of grocery store/bank/pharmacy/ etc (we've both witnessed parents having issues with driving as they got older and don't have to rely on families/taxis to get where we need to go).  

We would pay cash for the condo, but how to calculate living expenses thirty years from now?

Neither DH or I are good financial people (other than that we always live on what we earn and manage to save) so we'll fly by the seat of our pants on this, and hopefully end up dead before our money is gone, with something to leave to DS.

[Deleted]

Should is a tough question, depends on pensions, when you wanna retire and market conditions. We hit 500k I believe at 33, expect a mil at 37 and 2 mil at 42.

That was done saving one of our two incomes, a 6 month tour in Afghanistan, being DINKS and a heck of a market the past 5 years. We started at pretty much zero at 29 from divorces/market crash/two homes underwater.

[8 Bit WWBG]

If I could get $500K by 40, I'd be ecstatic.  As it stands though, I think $250K is a much more realistic expectation.  I turn 36 soon and I only just passed $100k about this time last year.  I'd need to grow $100k/year to hit half a million by 40.

My analysis is just based on me, I'm not counting DW.

[The Captain]

Jul 31, 2015 9:16:09 GMT -5 @tbird said:

Jul 30, 2015 11:19:57 GMT -5 yogiii said:

Personal or as a couple for those who are?

do we have a standard conversion factor of single to couple retirement savings?


It is *2, but it isn't the same either....I was thinking maybe a .75 conversion factor whereby 500k for a couple was = 375 for a singleton?

If you find something reasonable please let me know.

I've always been a bit miffed by "all in ones" like this, as well as the "X times salary" rule which doesn't take into account possible major bumps in salary.

At the end of the day, does your projects inflows exceed your projected inflows?  Someone mentioned a 15% excess margin on the inflows which I like.  I think that's a better rule than anything else.

[Deleted]

I like the 25X expenses at the time of retirement. I like it because I'm on track to easily meet that goal.

[svwashout]

Jul 30, 2015 11:15:27 GMT -5 Ryan said:

I always see these rules of thumbs out there for retirement savings, the most comment one seems to be 1x your salary by 35, 3x by 45, 5x by 55, and 8x by retirement.  

But at what age are you aiming to hit $500K or $1M in retirement savings?  Or what age did you hit those numbers?

If I could hit $500K by the time I'm 40 I'd be happy.  If I could hit  $1M by 45, I'd be happy.

I would do this by multiples of annual living expenses rather than by wage income. Maybe something like 1x at 25, 3x at 35, 9x at 45, and 27x at 55 for the early out option?

For someone who starts work at 21, if they save 20% of their after-tax income (plus all of their raises) and spend 80% of it, then four years of savings should net one year of living expenses even with no pay bump. Tripling every decade may seem rich, but it's reasonable if the money grows untouched and tax-deferred-- after all with the Phil script's 11% return, every decade multiplies by 1.11^10 or ~3x of the original lump sum.

The nut can grow even faster if you add to it after age 25. However your standard of living should reasonably rise over time so the savings targets move higher over time as well. The trick is to find the balance point to set your deferral percentage-- this probably should scale with your rate of wage growth (maybe something like 401k defer% = 2x raise%).

My first job out of school I disliked starting from Day 1, so I sprinted towards the finish line. Because of a very high savings rate, it crossed in my mid 30s. No regrets, the early sacrifice was well worth today's peace of mind even though I chose not to drop out early. Many people who found a way to live small while working tech jobs in silicon valley are shaving decades off their life sentence, but we're invisible so it looks rarer than it is.