are you on target with ...

[Ombud]

Fidelity's new guidelines? www.yahoo.com/finance/news/much-money-retire-guide-might-213400158.html

 individual should save the equivalent of their annual salary by the time they turn 30. By the time they’re 35, they should have double their salary in retirement savings. By 40, that total should be three times a person’s salary. The target numbers continue to grow until age 67, when an individual should have 10 times their pay in retirement savings.

[SVT]

I'm ahead of it.  I'm 30 and have double.

[yogiii]

ahead

[Deleted]

On target if I'm allowed to count my state pension.  Since I contribute 7.5% of my income toward it (and still pay SS), I should be.  It's retirement savings in a different format.

[Value Buy]

Was ahead of age 67 target until the dumbass market fell apart


Actually still ahead of age 67 target, but it certainly feels a heck of a lot less looking at the numbers today.

[teen persuasion]

Jan 23, 2016 10:18:23 GMT -5 @tbird said:

I'm way behind.....but if I changed jobs and took a 20k/yr paycut, I'd be on target

That's the problem with this plan - it uses current income, not expenses.  My income increases, I'm behind; I quit, and I'm ahead?  That makes no sense.

I'm shooting for 25 * expenses, not income.

[gooddecisions]

I've managed to stay on target, but only because I've been maxing out for a long time on a modest income. There have been very few years my contribution hasn't been 20%. My 3% employer match hasn't helped all that much. The market hasn't been great for me either- overall since I started working 15 years ago- just ok.

[tskeeter]

Jan 23, 2016 10:49:20 GMT -5 gooddecisions said:

I've managed to stay on target, but only because I've been maxing out for a long time on a modest income. There have been very few years my contribution hasn't been 20%. My 3% employer match hasn't helped all that much. The market hasn't been great for me either- overall since I started working 15 years ago- just ok.

Wealth accumulation is a slow process in the beginning.  It takes years and years to get to the first million.  The second million might take another seven years or so.  The third million,less than five years.  From there, it increases pretty quickly if the market cooperates.

[steph08]

30 and ahead of target. I have 1.6x my salary in retirement savings. 

[giramomma]

I don't think the guidelines are new.

There's also more things to consider than a dollar amount to trigger retirement.

Access to health insurance is a biggie, as well as seeing my kids through their undergrad degrees...

And then there's my health. If I'm not going to see 70, I'll likely retire early. I'll be worth enough dead that DH should be set and he can help the kids pay off any lingering undergrad loans if they are needed.

[Apple]

I'm ahead, plus I'll have a pension.  Keeping my fingers crossed that life doesn't fall apart over the next 20 years before I can retire!

[svwashout]

Jan 23, 2016 10:48:31 GMT -5 teen persuasion said:

Jan 23, 2016 10:18:23 GMT -5 @tbird said:

I'm way behind.....but if I changed jobs and took a 20k/yr paycut, I'd be on target

That's the problem with this plan - it uses current income, not expenses.  My income increases, I'm behind; I quit, and I'm ahead?  That makes no sense.

I'm shooting for 25 * expenses, not income.

For retirement readiness I'd agree a multiple of annual expenses makes more sense than a multiple of salary.  If right after announcing your retirement your boss suddenly offers to triple your salary, did she just 'destroy' your retirement readiness?  As multiples of annual expenses, tripling those factors at each age seems about right-- if you work until full retirement age.

Also from the CNN Money data for average net worth by age quoted here--
www.financialsamurai.com/the-average-net-worth-for-the-above-average-person/
and assuming average annual salary is $1000 times age in years, average net worth would be 0.3x at age 30, 1.3x at age 40, 2x at age 50, and 3x at age 60. So the real-life average trajectory is consistently about one third of the Fidelity targets.

[cranberry]

I have 3.75 times my annual income, not including a pension at age 64. I'm 48 now. Is that on track?

[emma1420]

I am pretty far behind.  With the latest stock market downturn, I don't even have the equivalent of my salary in my 401k.  However, I also didn't start contributing in a meaningful way until i was 34.  

[Value Buy]

Jan 23, 2016 11:04:00 GMT -5 tskeeter said:

Jan 23, 2016 10:49:20 GMT -5 gooddecisions said:

I've managed to stay on target, but only because I've been maxing out for a long time on a modest income. There have been very few years my contribution hasn't been 20%. My 3% employer match hasn't helped all that much. The market hasn't been great for me either- overall since I started working 15 years ago- just ok.

Wealth accumulation is a slow process in the beginning.  It takes years and years to get to the first million.  The second million might take another seven years or so.  The third million,less than five years.  From there, it increases pretty quickly if the market cooperates.

Wait, we talking multiple millions here?
Oh Oh.
Off to WMT and applying for a cart collector position...........

[tallguy]

Jan 23, 2016 13:32:41 GMT -5 Value Buy said:

Jan 23, 2016 11:04:00 GMT -5 tskeeter said:

Wealth accumulation is a slow process in the beginning.  It takes years and years to get to the first million.  The second million might take another seven years or so.  The third million,less than five years.  From there, it increases pretty quickly if the market cooperates.

Wait, we talking multiple millions here?
Oh Oh.
Off to WMT and applying for a cart collector position...........

Seriously.  If I thought I needed multiple millions I would have just kept working full-time.  For some reason I thought 25-30 years worth of expenses was enough.  NOW what am I going to do?    

[quince]

I was reasonably ahead  (2X at 33) before my husband started being paid in full at the start up. Now we're behind. To be fair, he's only been making the money for 2 years, and we're only slightly behind. Possibly not at all if you did a calculation on the probability of his options cashing out, but we don't consider them, because ...well, start up.

If he hopped jobs and doubled his salary, we'd be further behind, except not really, because there's no mandate our expenses increase, and we already live in the most expensive location for his industry...so...

[Deleted]

x3 at 35, but plan on retiring at 55.

Have x20 of annual expenses though which I think is the more important number.

[mamasita99]

No I don't have this in my own personal retirement accounts, but I am getting there.
When I include my pension, am I on target? I don't know... I kind of forget the pension is there, I have a lot of years to go.

[spartan7886]

Ahead - about 3.5x at 30. The advantage of having an income that's twice your expenses.

[Deleted]

I was definitely ahead of that when I retired. No wonder our financial advisor keeps telling me I can afford a cleaning lady.

Measures as a function of salary don't always make sense to me, especially for people who save a high % of their income. If you're saving 40% of your gross, your post-retirement needs are likely to be a lot less than someone making the same amount but saving only 5%.

[tallguy]

One of the reasons Fidelity update its benchmarks was so that they would apply to a wider group of workers. The previous guidelines were based on individuals making $70,000 a year, but the new ones were designed for anyone earning between $50,000 and $300,000 a year.

The revisions also reflect a more conservative expected rate of return. Instead of assuming a rate of return of 5.5 percent a year, the firm now assumes savings will grow by 3 percent a year on average. The goal of the new guidelines is to allow savers to amass enough money to replace 45 percent of their pre-retirement income.

I'm not a big fan of the "multiple of income" model either.  Multiple of expenses would be a better metric for any real planning.  I'm guessing, though, that most people can't figure out what their necessary expenses are NOW (and certainly not what they would project to in the future) nor what they would be able or willing to cut.  Multiple of income is a much easier metric to figure out, and as long as the goal is just a guess anyway.... 

[sapphire12]

I'm ahead, plus I have a pension. However, I don't plan to work until 67, but I also don't live on my entire salary either, so I think I'll be okay.

[mojothehelpermonkey]

I am still on track (based on my living expenses at least, because my current income in zero). Actually, maybe not. I am not enough of a masochist to have checked my retirement account balances within the last couple of weeks.

[Cookies Galore]

Nope! Don't care!

[Baby Fawkes]

Jan 23, 2016 17:20:56 GMT -5 @athena53 said:

I was definitely ahead of that when I retired. No wonder our financial advisor keeps telling me I can afford a cleaning lady.

Measures as a function of salary don't always make sense to me, especially for people who save a high % of their income. If you're saving 40% of your gross, your post-retirement needs are likely to be a lot less than someone making the same amount but saving only 5%.

I was in line with this at 30, but now I'm a fair bit behind. This is purely because I've been very fortunate that I've had two very nice pay rises in the last two years. My spending has stayed about the same though so I don't really think the measurements based on earnings are great for a group like YM. On average I think we save a lot more as a percentage than the general audience that the guidelines target

[justme]

No. I got a 25+% raise last year that took me from almost having 1 year of salary at 30 to now being $20k behind. Good overall, but for that target I'm missing it. But next year, after I've finished the new stuff with my condo, I'm going to focus on my retirement and hopefully hit the 35 goal. Though if I get married between now and then we should definitely hit it because we could live quite nice off mine and save all of his to catch up quick.

I also hope to increase my salary a bit in the next few years and now that I've bought a place any increases pretty much can go straight to savings.

[happytraveler]

I tend to believe, in spite of what Fidelity says in the article, that "economies of scale" apply in terms of retirement savings much like they do in other aspects of life. If you make a relatively low salary, I think you may very well need 10x your income at 67 to be able to retire. If you make a high salary, you may only need 5x your income (as a general rule). Once you are able to cover your necessary expenses (shelter, food, medical, etc.) it is easy to economize if needed, and these discretionary expenses like travel, doting on grandchildren, etc. will likely diminish overtime, as opposed to shelter and food costs which go on until you expire.

[DVM gone riding]

I WAS until they updated the guidelines! This just came out this month right? I read why they did it something about a change in the presumed SWR. I was really proud of myself at income saved at 30 which use to be 35 but now I am behind since i got married and my husband has NO savings. So we are at about 1x total income at 35.

[mojothehelpermonkey]

That is probably close to where we will be when my fiance and I get married. We are both still in our 30s, so I figure we can catch up because there will be two of us sharing expenses and working toward a common goal. He was kind of late to the game when it came to prioritizing saving for retirement, but at least we are on the same page.