My husband and I started investing aggressively 30+ years ago. By aggressively, I mean consistently 15% with a 4% employer match. When you consistently have less to spend you live within that new "norm". It paid off handsomely. By the way, my husband was an engineer and I was a teacher. We didn't scrimp and save to the penny, that's not realistic. We spent reasonably. We have paid fully for all 3 of our children's undergraduate degrees at state universities using 529 plans. Classic way to do it. Our children paid for their Master's degrees themselves. It can be done. Live within your means. Start investing as early as you can, as Erin states in this video.
Wheelhouse video for Erin. Erin's video's are encouraging, informative, and usually essential. This one is all three. Without saving, there's no chance to invest. And without investing, there's no chance to retire, let alone retire early. Start early, target a higher savings rate than average, and you'll be so damn happy you did. Thirty years is NOTHING. It'll flash by before you know it, and you'll kick yourself if you wasted half of it dicking around... p.s. Anyone else notice the savings bar in her title page turns from red to green around the mid 20 percent range? Hint, hint?
@@ErinTalksMoneyLOL, you're still a youngster. By the time you're approaching your senior years like me, you'll be silly comfy, and waiting for Audi to bring back a new TT model 😂 Keep up the public service, financial education is so essential. I'd love to see you research and present data on finding motivation on key activities like eating well, exercise, and financial discipline. Still think it's not rocket science to intuitively know you need to save,, so why don't people do it?
Agreed, Im 44 and about to do it. If I kept at current pace, by 67 Id have like 10 million ridiculous dollars. Wayyy more than I need. Im peacing out at 2M.
@6:29 - Exactly this. I didn't start contributing to my 401k until my late 20's and never really gave much thought about it other than meeting the employer match. By the time I decided to learn more about retirement/investments, I was 38 and had 150k just by putting something in and not touching it. I've been contributing the max amount since then.
Erin we love your channel. I’m 57 my wife 53 and we retired 3 years ago. We started saving and investing 40% of our income in our early 30’s. We never had CC dept, student loans paid off and always lived below our means. We still have a small mortgage but it’s not an issue at all and 2 paid off fairly new cars(20&24). It wasn’t easy but now life is smooth sailing. Thanks again Erin. Great content.
For those who will be getting pension, multiply your projected annual pension amount in year 1 of retirement by 25 to get an approximate dollar value. Add this to your other retirement account savings amounts to get your total number.
Indeed I've reached my initial goal of 25 times my expenses or about 35% of my income. Then I realized I could save 20% more to account for taxes. Then I thought I'd aim for 10% more for future medical expenses and perhaps another goal post advance to use the 3% rule instead of 4%. Truth is I keep saving and investing until age 60.
Great video Erin. Starting young is important but increasing the amount saved as earnings increase makes a huge difference as well. 30 years ago, saving $300/month was a real sacrifice, now (many salary increases later) I save closer to $2300/month.
Savings rate is just under 11% (that’s maxing out 401K contributions) plus 3% company match. Been maxing out for the last 5 years. Hoping to retire in 20-22 years if I can pay off student loans by then. It’s been feeling more doable the last few years. Great video!
I am 56 years old and reduced the rate of savings to enjoy life. I was very aggressive saver earlier in my life and now compounding is enough. Fidelity is overly conservative and if fidelity's calculator says you are ok, then you are more than ok.
Yeah. When I compared my spreadsheet to Fidelity’s projections I found a huge difference. My guess is that their marketing department wrote their calculator to get us to invest too much so they can collect more in fees.
@@gijns 35% / 6M+ / 56yrs old. I plan to retire at 61 as my math says if I work more, my net gain will be a wash by paying more taxes. Working beyond 61, I will not be able to convert bulk of my 401 to Roth before RMD kicks in and I will be forced to pay tax at a much high-rate slab.
@@tscoff Fidelity's calculator has 3 gloom and doom scenario: 'significantly below', 'below' and 'average'. My math says Fidelity's avg is based on 7% return while S&P 500's lifetime avg is 11%. Fidelity's default setting 'Significantly below' is pretty much flat @ 2% returns. i.e. only Inflation adjusted. Going by 'Significantly below' standard only 5% of Americans can retire.
Older Gen X here...just turned 56. I started saving probably before I can remember. Had a passbook savings account that got 5.5% interest in the inflationary 70' and early 80's. All money from working for neighbors, birthday money from Grandparents or early jobs went in. By the time I went to college in '86 I had over $5k. Saw early that college was too expensive and wasn't teaching the things you need so I focused more on working and started my first 401k by the time I was 20. When I left that first job after 8 years my salary was only $30k/yr but I had $50k in that 401k. Retired last year at 55 with about $5 million in investments. It can be done, but if you don't start early it will be much more difficult. It's hard to say what my savings rate averaged because it constantly changed, but I do know that my take home pay was about 45% of my gross pay most of my career.
Not so. I am currently 55 and didn't start saving until 12-13 years ago and I am still on target to retire at 62-63 with a plentiful portfolio. Obviously, the earlier you start investing, the better, but an even more important data point is your savings rate. I knew I needed to save more because I started late and that's exactly what I did. I'm up to a 35% savings rate and I increase it every time I get a pay increase. Saving at a high rate really isn't as challenging as most people think, and I earn a modest income, well below 100k. Also, even young people just starting their careers can benefit from an aggressive savings rate because it enables early retirement.
@@dlg5485 three ways, thank you. 1) start young 2) Work an extra few years 3) have a high savings rate. We did all three and were FI at 50, retired at 52, went back to work after 6 weeks off and now 60. Still saving and investing. Gonna work 2-3 more years. The best thing is you get to do the job you want to do, i work 14 days on and 14 off and job share with a like minded person. So 14 days to do whatever I want. It works for me.
@@dlg5485congrats! Good comment. By increasing our saving rate, it will help to meet the target goal. I have been using the saving goal and compounding interest calculator to help with this process. At first, it was hard to meet 30% of pay. Then, when I achieved the 30% for a couple months, it became easier and easier. Working longer will help as well if I start late. I believe work all the way to 65 or 70 is okay as long as I enjoy working. I have plan to work until I am 80 years old. It is best to keep every aspect of life in good condition such as your health, mental and medical condition, and financial stability. I do remind myself life is short and enjoy the moment a long the working life. I have 30 years to go of the working life. Then, I will hit 40 years of working with a pension.
One huge reason that people are starting to invest for retirement younger and younger is because employers are mandated to opt all new employees into their 401k plans when employees are hired. When I started my career 401k plans were something that we had to opt in to. Now they’re something that new employees are opted in to by default.
Great stuff! You should do a video about why investing as early as possible is especially a no-brainer today. As a member of Gen-X - we had a lot more friction to getting an investing plan going because 1) Online trades weren't a thing until after the year 2000 (we needed to work with a broker) and weren't free per trade until the late 2010s (I remember brokerages advertising 9.99 per trade as late as the first half of the 2010s), 2) There wasn't easy access to investing advice and plans online, 3) Employers would offer the 401k benefit but often assumed the employee would do their own due diligence and it was a mystery benefit to many workers. All of these barriers to investing have been removed as of today.
I totally agree. I'm "elder millennial" but same idea. When I got my first full time job with a 401k they just asked if I wanted to participate. Not knowing what it was I said yes, but I had no idea about contribution rates. They enrolled me at 3% and I assumed I was fine. It wasn't until my 30s that I realized that wasn't close to enough. So that assertion that it's hard not to be successful certainly wasn't true 2 decades ago, especially since 3% of what is less than current minimum wage never built up to anything with appreciable compounding.
Also index funds appeared pretty late, too late for boomers and the older gen X to take advantage of them while young. So you’d pay $30+ for a trade and still not be diversified.
Id love to see a similar video that gives guidelines as to how much you should have saved by the time you retire using different retirement ages. For example, here's how much you need to have saved if you want to retire at 50, 55, 60, etc. using different expenses!! Thats the video that's actually informative!!
The employer contributions make a big difference! My 403b contributions are 8.25% and my employer matches all of it 😁. So far, I've been able to save 25 to 30% per year
Great video. Our target is 25% based on the Money Guys. That income multiple target by age always trips me up as my income changes over time and isn’t it related to your starting income? Which I can never remember. Current income would be easier to remember. Thanks for the links to the fun tools.
I don’t think I’ll ever say I’ve saved enough- I also think that information is readily available to newer generations than older generations better informed.
Im in college. I have an auto loan and about 16k in student loans about 60% of my income is going towards the auto loan. My goal is to have that off of my back by the end of my senior year or maybe even the start of it and started on my student loans by graduation. It might seem like a lot but just existing doesn’t cost a lot for me right now and i still have money leftover for hanging out with friends etc
I paid through college, feels good to graduate and not have any debt. I did floor refinishing and then worked as an intern in tech during college and got scholarships halfway through due to having a 4.0 GPA
@@jmorris023 ive had this car loan before i was in school. Its really not good but if i sold the car now id still owe on it. I regret it a lot but its too late. You cant give recommendations like that without the whole picture buddy
I’m 35 I contribute a little over 20% total between my IRA and 403b my employer matching 100% of my 10% contributions to the 403. I started investing around 5% when I was 19.
I started saving at age of 36. Saving rate (pre-tax) was between 50-70%. With index fund investment and steady salary increase I have significantly more than $1m net worth 10 years later.
Starting early, being consistent and living below your means is the key! Compounding interest will do the work for you. Working till 67 is just crazy. What kind of retirement is that?
If your invested with the S&P 500 your money will double about every 7-Years! Let’s say you have $1,300,000 at 56, at 63 (7-Years later) you’ll have about $2,600,000 (not counting any Contributions!) Of course, none of these Returns are guaranteed! It’s just an ABOUT guess!
I started at 4 percent in the 90’s with a 4 percent match at 22 years old. Increased slowly over time. Now I’m aggressively saving 18% in a Roth and my employer adds a 10% match. Trying to retire by 60 or 61… 8 or 9 years from now.
I'm at 35 and I'm behind but I paid off all my debts which I carried since I was 20. I started maxing out my IRA starting July and started saving/invest 25% of my income. Hoping to catch up
I personally believe that life is too uncertain to rely on guaranteed jobs or wage growth. I am so happy that I've been able to save up so much in my 20s. The future is uncertain.
I agree with you, I like to save as much as I can whenever I can. Because I never know when there might be a period of unemployment, a change in family dynamics, you name it. Life is so incredibly unpredictable. Save when you can.
I started saving at the age 27 and I have to disagree that time in the market is best, I was saving $250 a paycheck and put it into a target date mutual fund and did that until I was 33 in that amount of time I had maybe 10 or 11K not much. Now when I got a better job, I was able to save that amount in 4 months vs 6 years, it comes down to the amount you are investing. 4K a month will outdo years of $500 month
@@mudgirl3436 That's great! My situation is similar. I don't have rent or a mortgage. I put all my belongings in storage, and I'm living in an AirBNB that's being paid for by my job.
Where I live, competition for white collar jobs was rather high, as was the prevalence of college debt. I decided to get a 3 year education and enter into warehouse and distribution work, sometimes factories also. How's that going? Well.. the pay is fair when employed, but the turnover rate can be high, and the gaps in employment take a toll on finances. Today, I live in a small 800 sq foot home, paid off, and save 60% of my income. I don't enjoy working or the uncertainty attached to it. So I would rather focus on retiring on the bare minimum first, then go about increasing my post-retirement income to be 2x or 3x my expenses. That way, I can keep moving up in the world whether employed or not, and I won't ever spend what I can't afford on my passive income alone. It's very aggressive, and there's a lot of risk, but it seems necessary to avoid being one missed paycheck away from financial ruin.
As soon as I started working after college I put the maximum amount allowed every year into my IRA and 401k. All the money was in the stock market. My IRA and 401k balances 37 years later are enough for me to live on the rest of my life. I retired before age 60 when my office closed and job ended. I didn't need to find a new job thanks to my portfolio.
Did you ever wonder who the worst investor of all time is ? It’s me. So I have been trying to fix things by watching quality videos like this one. Key for young folks is not to trade and pay no attention to the market. Just live life. No CNBC! No Jim Cramer!
Agree… Time in market greater than timing the market. Overtime, keep putting money in… any negative fluctuations will be offset eventually. Plus, if you invest month over month, when markets down, you are basically buying low.
Hi Erin, great video! Very informative. Love your outtakes 😊 I imagine, (and I hope I’m spelling his name correctly, ) Jamison is keeping you up with little sleep 😴 Hope you have a blessed week 😊
I definitely feel like I'm behind for having started late, but I'm having trouble figuring out how much I need to catch up if I want to go ham for a little while up front before I can relax back to these recommended numbers. I've been around 35-50% the past 4 years (counting employer, Roth IRA, and 401k) but I'm still not close to the "have this much by this age" goals.
I’ve been maxing out my 401k since I was about 29 I’m 58 now and I gotta say I’d feel bad if I didn’t max out each year. Hopefully I’ll get to retire in 18 months. Wife is six years younger than me so I’ll be on her insurance.
Hey Erin, it could be an interesting video to show someone starting investing at 28-30 that for the rest of their working life, saves a couple percentage points under the recommended amount for every age. (i.e. 12% at 28, 15% at 32, 20% at 38) This analysis would represent the average person trying to catch up.
Including my employer match to my 401k plan, my savings rate is 31%. But about 92% of my contribution is in Roth plans which means I’m paying taxes now instead of later.
Hello! I am lucky enough to have a pension. I am saving in addition to the pension but do you have advice on how to much to save in addition to my pension? I am 45 and worked for twenty years and will have about 40 years total. Thanks!
So helpful to know the advantages of starting young, but you can still make great progress if you start later! Thanks for another great video. Please try to get some sleep though Erin!😂
My wife and I are lucky to have good employers who contribute ~10% of salary to 401k/pension. Then we save ~22% to 401k/IRA. That puts us at ~32%, hoping to hit FI in 10-15 yrs in our late forties or early fiftiesa!
I think saving and investing 25-30% gross is a good amount, and for me going above that is not worth sacrificing the now. Plus now that my wife is going to have a pension, we are going to be in an even better position later in life, so I am okay coasting with our current savings rates.
When you say saving, you are referring to retirement saving, but there is a annual cap on what you can contribute. The remaining will have to be on your own brokerage account which is after tax money for sure. Im sure not many can hit those numbers annually, but it is something worth mentioning. So saving say 50% annually on a $100K income will mean $50K, which is over the annually IRA or TSP limit. Is there another account that doesn't have these limits?
Once you had a limit on a work sponsored plan, you could also take advantage of a traditional or a Roth IRA. Roth IRA being subject to income limits, of course. But after that, you’re right, probably have to turn to a traditional brokerage account.
@@ErinTalksMoneythis is exactly what I started this year. I add any money over and above the Roth 401k and Roth IRA max contributions to a traditional brokerage account
I don't like saving based on a percentage. I like saving based on what I feel is a reasonable amount at each stage life. Some years I am not able to invest as much because of life circumstances. But I do want to try to increase my investing amount over time.
So the 'fire' table at 10:02 is a bit misleading because it seems to suggest that if you just save 100% of your earnings for 1 year you can retire. I guess technically you could but not sure what kind of retirement it would be you probably couldn't afford to be homeless in a tent on that...
The income based targets are dumb. At 30 I was on track. 50k salary, 50 retirement. At 35 I was behind. 100k salary, 100k in retirement. Just turned 38, and now way behind according to these rules. 150k income, 200k in retirement. Ill be lucky to have 2x by 40, assuming my income doesnt go up.
I noticed they almost ALMOST....never say WHAT to invest in .... I'm assuming if your 20 - 30 y/o, they are assuming that the percentage you are saving is going into an index fund
I saved in 401k and 403B for 10% then my employer match 5% and additional 1% each yr so basically I have 8% employer match total of 18% then save in my mutual fund and $1000 in my emergency and travel fund.
Tough to judge where I’m at based on Fidelity’s guidelines since I’m making 2.75x what I made when I started saving at age 28. I’m closing in on 40 and if I had 3x what my salary is, I probably would slow down saving considerably (at least for retirement).
People always saved. Investing didn’t become a thing until the 70s and it was for rich people. We have to be honest and understand that investing is gambling over decades hoping u will have a nest egg. There are no guarantees. When u sign the paperwork for ur brokerage accounts there is a blurb that states past performance is not a guarantee of future performance
I’m doing ok now on salary but it’s very late in my career. Yeah, just getting by isn’t going to allow you to save much. I saw another video that said 49% of the US population has less than $10k saved for retirement. AVERAGE savings statistics are high because of the super rich. Median figures mean more
We did the same when we made low income, in retail and as students. Lived in small basement apartment in industrial neighborhood and socked away what we could. Now in our 50's and sitting pretty. It's the good habits that yield the good results over time, keep it up.
This has always confused me. Save "x" your starting salary, if you start at $50,000 annual salary, then by 67 you should have $500,000 saved. I was under the impression that for the 1x, 2x...10x "x" was a moving target and the "x" would be the salary at that age. There is a big gap between 10x your starting salary and 10x your pre-retirement salary.
I'm a little jealous, my brother started investing at age 10. My father set up a custodial account for him. Not something he thought about when me and my other brother were younger.
The general assessment that each generation continues to show positive growth to retirement planning, I predict a major reset following revolutionary impending reforms to both SS and Medicare. Afterwards, it will no longer be an apples-to-apples comparison to the previous 40+ years. And it is not me saying it, but looking back to the late member of Congress William Armstrong’s predictions in 1983…and here we are 40+ years later and counting.
I target 15% of gross, 50% of take-home, and I don't know how you boil that into 1 percentage number. I guess I could call it 15/50 and sound trendy. But then it doesn't count employeer matches or HSA.
I don't have a target percentage. I think the whole idea of investing a fixed percentage for life is bad. While young and without a family, it's possible to save much more if you have a decent income. Once you are taking care of a family extra income is sparse to come by. This is why I prefer Coast FI.
FIRE movement isn’t about baby steps -sorry kids and sorry Fidelity. Saving 50% of your income enables retirement in 17 years. while a 30% increase to 80% slashes the timeline to just 5 years,. This illustrates the powerful, non-linear path to financial independence.
I wonder if Fidelity’s numbers include SS. I personally did not save at these rates, but with over 50k a year in SS, my retirement is very comfortable. Fidelity wants people to put in as much as possible for as long as possible. Hmm, I wonder why ….
Agreed, a cash based system where hospitals are forced to post all prices would be much better. Forcing people to buy insurance they don’t want or need is absurd.
@@mattbleiler7294people shouldn’t have to go bankrupt due to healthcare costs. It’s ridiculous how much everything costs, via all of the corruption and price gouging.
i just don't believe retirement is really possible because if your money is in investments... it is at the whim of the market. it is a version of "losing your job" that is in no way in your control.
"But I feel like if you start at an early age and just put something away, no matter what the amount, my attitude is kind of like its impossible to screw it up..." Younger generations: Tell me more about how I can pull money OUT of my retirement accounts for "emergencies" like the Eras tour?
My husband and I started investing aggressively 30+ years ago. By aggressively, I mean consistently 15% with a 4% employer match. When you consistently have less to spend you live within that new "norm". It paid off handsomely. By the way, my husband was an engineer and I was a teacher. We didn't scrimp and save to the penny, that's not realistic. We spent reasonably. We have paid fully for all 3 of our children's undergraduate degrees at state universities using 529 plans. Classic way to do it. Our children paid for their Master's degrees themselves. It can be done. Live within your means. Start investing as early as you can, as Erin states in this video.
Wheelhouse video for Erin. Erin's video's are encouraging, informative, and usually essential. This one is all three. Without saving, there's no chance to invest. And without investing, there's no chance to retire, let alone retire early. Start early, target a higher savings rate than average, and you'll be so damn happy you did. Thirty years is NOTHING. It'll flash by before you know it, and you'll kick yourself if you wasted half of it dicking around...
p.s. Anyone else notice the savings bar in her title page turns from red to green around the mid 20 percent range? Hint, hint?
Thank you so much! And I agree with you, these years just seem to be going by faster and faster.
@@ErinTalksMoneyLOL, you're still a youngster. By the time you're approaching your senior years like me, you'll be silly comfy, and waiting for Audi to bring back a new TT model 😂 Keep up the public service, financial education is so essential. I'd love to see you research and present data on finding motivation on key activities like eating well, exercise, and financial discipline. Still think it's not rocket science to intuitively know you need to save,, so why don't people do it?
Funny how that works. My 35 year corporate career went by in about a week.!!! Boy am I glad I saved!!!
I don't want to see data that is the "recommended" retirement age of 67. Lets do some more on retiring at 60 or maybe 55. 67 is ridiculous imho.
What is ridiculous is that the wealthiest country that has ever existed is pushing back retirement age and phasing out guaranteed safety nets.
Shit... I'm 47 and want to retire! lol. Ughh.
@@Billn1971 I'm 47 as well. I'll settle for 55-60
@@muphynman221 the wealthiest country that's has 35 trillion in debt? But I get your point.
Agreed, Im 44 and about to do it. If I kept at current pace, by 67 Id have like 10 million ridiculous dollars. Wayyy more than I need. Im peacing out at 2M.
@6:29 - Exactly this. I didn't start contributing to my 401k until my late 20's and never really gave much thought about it other than meeting the employer match. By the time I decided to learn more about retirement/investments, I was 38 and had 150k just by putting something in and not touching it. I've been contributing the max amount since then.
Erin we love your channel. I’m 57 my wife 53 and we retired 3 years ago. We started saving and investing 40% of our income in our early 30’s. We never had CC dept, student loans paid off and always lived below our means. We still have a small mortgage but it’s not an issue at all and 2 paid off fairly new cars(20&24). It wasn’t easy but now life is smooth sailing. Thanks again Erin. Great content.
For those who will be getting pension, multiply your projected annual pension amount in year 1 of retirement by 25 to get an approximate dollar value. Add this to your other retirement account savings amounts to get your total number.
That's how I've always looked at it.
Indeed I've reached my initial goal of 25 times my expenses or about 35% of my income. Then I realized I could save 20% more to account for taxes. Then I thought I'd aim for 10% more for future medical expenses and perhaps another goal post advance to use the 3% rule instead of 4%. Truth is I keep saving and investing until age 60.
I think the whole take away from this is that it’s OK to keep changing your target as you learn more 😊
You'd pay less in taxes in retirement more than likely, since you can be strategic with withdrawals.
Great video Erin. Starting young is important but increasing the amount saved as earnings increase makes a huge difference as well. 30 years ago, saving $300/month was a real sacrifice, now (many salary increases later) I save closer to $2300/month.
Yes when I got my first 401k, I was making about $23k/year 😂
Savings rate is just under 11% (that’s maxing out 401K contributions) plus 3% company match. Been maxing out for the last 5 years. Hoping to retire in 20-22 years if I can pay off student loans by then. It’s been feeling more doable the last few years.
Great video!
I am 56 years old and reduced the rate of savings to enjoy life. I was very aggressive saver earlier in my life and now compounding is enough. Fidelity is overly conservative and if fidelity's calculator says you are ok, then you are more than ok.
Yeah. When I compared my spreadsheet to Fidelity’s projections I found a huge difference. My guess is that their marketing department wrote their calculator to get us to invest too much so they can collect more in fees.
What percent did you save? And what was the end principal?
@@gijns 35% / 6M+ / 56yrs old. I plan to retire at 61 as my math says if I work more, my net gain will be a wash by paying more taxes. Working beyond 61, I will not be able to convert bulk of my 401 to Roth before RMD kicks in and I will be forced to pay tax at a much high-rate slab.
@@tscoff Fidelity's calculator has 3 gloom and doom scenario: 'significantly below', 'below' and 'average'. My math says Fidelity's avg is based on 7% return while S&P 500's lifetime avg is 11%. Fidelity's default setting 'Significantly below' is pretty much flat @ 2% returns. i.e. only Inflation adjusted. Going by 'Significantly below' standard only 5% of Americans can retire.
@@lordabhikingfisher8087who tf needs to work with 6 million in the bank? Must’ve never had kids or did anything meaningful in life
Older Gen X here...just turned 56. I started saving probably before I can remember. Had a passbook savings account that got 5.5% interest in the inflationary 70' and early 80's. All money from working for neighbors, birthday money from Grandparents or early jobs went in. By the time I went to college in '86 I had over $5k. Saw early that college was too expensive and wasn't teaching the things you need so I focused more on working and started my first 401k by the time I was 20. When I left that first job after 8 years my salary was only $30k/yr but I had $50k in that 401k. Retired last year at 55 with about $5 million in investments. It can be done, but if you don't start early it will be much more difficult. It's hard to say what my savings rate averaged because it constantly changed, but I do know that my take home pay was about 45% of my gross pay most of my career.
Start early or work longer is the only two ways to build a portfolio for the long haul. I recommend starting early! Great video as always.
Not so. I am currently 55 and didn't start saving until 12-13 years ago and I am still on target to retire at 62-63 with a plentiful portfolio. Obviously, the earlier you start investing, the better, but an even more important data point is your savings rate. I knew I needed to save more because I started late and that's exactly what I did. I'm up to a 35% savings rate and I increase it every time I get a pay increase. Saving at a high rate really isn't as challenging as most people think, and I earn a modest income, well below 100k. Also, even young people just starting their careers can benefit from an aggressive savings rate because it enables early retirement.
@@dlg5485 three ways, thank you.
1) start young
2) Work an extra few years
3) have a high savings rate.
We did all three and were FI at 50, retired at 52, went back to work after 6 weeks off and now 60. Still saving and investing. Gonna work 2-3 more years. The best thing is you get to do the job you want to do, i work 14 days on and 14 off and job share with a like minded person. So 14 days to do whatever I want. It works for me.
@@dlg5485congrats! Good comment. By increasing our saving rate, it will help to meet the target goal. I have been using the saving goal and compounding interest calculator to help with this process. At first, it was hard to meet 30% of pay. Then, when I achieved the 30% for a couple months, it became easier and easier. Working longer will help as well if I start late. I believe work all the way to 65 or 70 is okay as long as I enjoy working. I have plan to work until I am 80 years old. It is best to keep every aspect of life in good condition such as your health, mental and medical condition, and financial stability. I do remind myself life is short and enjoy the moment a long the working life. I have 30 years to go of the working life. Then, I will hit 40 years of working with a pension.
One huge reason that people are starting to invest for retirement younger and younger is because employers are mandated to opt all new employees into their 401k plans when employees are hired. When I started my career 401k plans were something that we had to opt in to. Now they’re something that new employees are opted in to by default.
It's a wonderful change. The power of defaults should never be underestimated.
Great stuff! You should do a video about why investing as early as possible is especially a no-brainer today. As a member of Gen-X - we had a lot more friction to getting an investing plan going because 1) Online trades weren't a thing until after the year 2000 (we needed to work with a broker) and weren't free per trade until the late 2010s (I remember brokerages advertising 9.99 per trade as late as the first half of the 2010s), 2) There wasn't easy access to investing advice and plans online, 3) Employers would offer the 401k benefit but often assumed the employee would do their own due diligence and it was a mystery benefit to many workers. All of these barriers to investing have been removed as of today.
I totally agree. I'm "elder millennial" but same idea. When I got my first full time job with a 401k they just asked if I wanted to participate. Not knowing what it was I said yes, but I had no idea about contribution rates. They enrolled me at 3% and I assumed I was fine. It wasn't until my 30s that I realized that wasn't close to enough. So that assertion that it's hard not to be successful certainly wasn't true 2 decades ago, especially since 3% of what is less than current minimum wage never built up to anything with appreciable compounding.
X here. I remember paying about $30/trade?
This is such an important point. ETrade launched the $9.99 trade in the late 90s, I believe, and it was revolutionary!
Also index funds appeared pretty late, too late for boomers and the older gen X to take advantage of them while young. So you’d pay $30+ for a trade and still not be diversified.
table at 10:15 was the game changer for my money mindset
It depends on your income though. If you’re making 10k a year, you won’t reach financial independence by saving 100% of it over 10 years.
Id love to see a similar video that gives guidelines as to how much you should have saved by the time you retire using different retirement ages. For example, here's how much you need to have saved if you want to retire at 50, 55, 60, etc. using different expenses!! Thats the video that's actually informative!!
Thanks for the suggestion, I’ll see if I can put one together that goes over that! 😊
The employer contributions make a big difference! My 403b contributions are 8.25% and my employer matches all of it 😁. So far, I've been able to save 25 to 30% per year
Thats the problem. It depends on how good your employer is
By chance, is the employer government?
Boomer here. I started at 16. It is a good thing to start early. Retired at 60.
Great video. Our target is 25% based on the Money Guys. That income multiple target by age always trips me up as my income changes over time and isn’t it related to your starting income? Which I can never remember. Current income would be easier to remember. Thanks for the links to the fun tools.
I don’t think I’ll ever say I’ve saved enough- I also think that information is readily available to newer generations than older generations better informed.
There is so much information nowadays! How fortunate are we that so much is accessible today?
When you say "income" at 4:20 (the Fidelity graph of suggested multiples of one's "income") does that refer to gross or net?
Im in college. I have an auto loan and about 16k in student loans about 60% of my income is going towards the auto loan. My goal is to have that off of my back by the end of my senior year or maybe even the start of it and started on my student loans by graduation. It might seem like a lot but just existing doesn’t cost a lot for me right now and i still have money leftover for hanging out with friends etc
I paid through college, feels good to graduate and not have any debt. I did floor refinishing and then worked as an intern in tech during college and got scholarships halfway through due to having a 4.0 GPA
Shouldn’t have a car loan in college, that’s crazy. Sell that shit and buy a 15 year old Civic.
@@jmorris023 ive had this car loan before i was in school. Its really not good but if i sold the car now id still owe on it. I regret it a lot but its too late. You cant give recommendations like that without the whole picture buddy
@@jmorris023 dont give unsolicited advice either
I’m 35 I contribute a little over 20% total between my IRA and 403b my employer matching 100% of my 10% contributions to the 403. I started investing around 5% when I was 19.
I started saving at age of 36. Saving rate (pre-tax) was between 50-70%. With index fund investment and steady salary increase I have significantly more than $1m net worth 10 years later.
Starting early, being consistent and living below your means is the key! Compounding interest will do the work for you. Working till 67 is just crazy. What kind of retirement is that?
If your invested with the S&P 500 your money will double about every 7-Years!
Let’s say you have $1,300,000 at 56, at 63 (7-Years later) you’ll have about $2,600,000 (not counting any Contributions!)
Of course, none of these Returns are guaranteed! It’s just an ABOUT guess!
Could even be higher I am all in with Buffett's BRK-B
Yep that’s me. 👍🏻
Yeah if you buy $1 scratch off you could win $2 yeah gambling isn’t investing
I started at 4 percent in the 90’s with a 4 percent match at 22 years old. Increased slowly over time. Now I’m aggressively saving 18% in a Roth and my employer adds a 10% match. Trying to retire by 60 or 61… 8 or 9 years from now.
I'm at 35 and I'm behind but I paid off all my debts which I carried since I was 20. I started maxing out my IRA starting July and started saving/invest 25% of my income. Hoping to catch up
Sounds like young are doing well. Keep up the good work!
I personally believe that life is too uncertain to rely on guaranteed jobs or wage growth. I am so happy that I've been able to save up so much in my 20s. The future is uncertain.
I agree with you, I like to save as much as I can whenever I can. Because I never know when there might be a period of unemployment, a change in family dynamics, you name it. Life is so incredibly unpredictable. Save when you can.
Good idea. The worse that can happen is you have a lot of extra money. Not a bad problem to have.
I started saving at the age 27 and I have to disagree that time in the market is best, I was saving $250 a paycheck and put it into a target date mutual fund and did that until I was 33 in that amount of time I had maybe 10 or 11K not much. Now when I got a better job, I was able to save that amount in 4 months vs 6 years, it comes down to the amount you are investing. 4K a month will outdo years of $500 month
Lately, I've been saving about 75% of my paycheck for the last year and a half, but I'm in an unusual situation, and it won't last forever.
Same here, my husband and I have no expenses (living rent free in a camper, no kids) so we can stuff away money like crazy for this short time period.
@@mudgirl3436 That's great! My situation is similar. I don't have rent or a mortgage. I put all my belongings in storage, and I'm living in an AirBNB that's being paid for by my job.
Where I live, competition for white collar jobs was rather high, as was the prevalence of college debt. I decided to get a 3 year education and enter into warehouse and distribution work, sometimes factories also. How's that going? Well.. the pay is fair when employed, but the turnover rate can be high, and the gaps in employment take a toll on finances.
Today, I live in a small 800 sq foot home, paid off, and save 60% of my income. I don't enjoy working or the uncertainty attached to it. So I would rather focus on retiring on the bare minimum first, then go about increasing my post-retirement income to be 2x or 3x my expenses. That way, I can keep moving up in the world whether employed or not, and I won't ever spend what I can't afford on my passive income alone. It's very aggressive, and there's a lot of risk, but it seems necessary to avoid being one missed paycheck away from financial ruin.
As soon as I started working after college I put the maximum amount allowed every year into my IRA and 401k. All the money was in the stock market. My IRA and 401k balances 37 years later are enough for me to live on the rest of my life. I retired before age 60 when my office closed and job ended. I didn't need to find a new job thanks to my portfolio.
Did you ever wonder who the worst investor of all time is ? It’s me. So I have been trying to fix things by watching quality videos like this one. Key for young folks is not to trade and pay no attention to the market. Just live life. No CNBC! No Jim Cramer!
Agree… Time in market greater than timing the market. Overtime, keep putting money in… any negative fluctuations will be offset eventually. Plus, if you invest month over month, when markets down, you are basically buying low.
Hi Erin, great video! Very informative. Love your outtakes 😊 I imagine, (and I hope I’m spelling his name correctly, ) Jamison is keeping you up with little sleep 😴 Hope you have a blessed week 😊
Thanks so much Mark! Jameson is doing great, and luckily for me he is an amazing sleeper. I just struggle to get enough sleep. 😂
I hope you have a wonderful week! 😊
I definitely feel like I'm behind for having started late, but I'm having trouble figuring out how much I need to catch up if I want to go ham for a little while up front before I can relax back to these recommended numbers. I've been around 35-50% the past 4 years (counting employer, Roth IRA, and 401k) but I'm still not close to the "have this much by this age" goals.
I’ve been maxing out my 401k since I was about 29 I’m 58 now and I gotta say I’d feel bad if I didn’t max out each year. Hopefully I’ll get to retire in 18 months. Wife is six years younger than me so I’ll be on her insurance.
Hey Erin, it could be an interesting video to show someone starting investing at 28-30 that for the rest of their working life, saves a couple percentage points under the recommended amount for every age. (i.e. 12% at 28, 15% at 32, 20% at 38) This analysis would represent the average person trying to catch up.
Unless you are one of the extreme few who loves their job, your goal should never be to retire by 67
My co worker is in his 60s.worrys me I don’t wanna have to work till I die
Needed video!!!! Just invest n be consistent n the end goal will be positive💯🙏🏿😊
Including my employer match to my 401k plan, my savings rate is 31%. But about 92% of my contribution is in Roth plans which means I’m paying taxes now instead of later.
Hello! I am lucky enough to have a pension. I am saving in addition to the pension but do you have advice on how to much to save in addition to my pension? I am 45 and worked for twenty years and will have about 40 years total. Thanks!
So helpful to know the advantages of starting young, but you can still make great progress if you start later! Thanks for another great video. Please try to get some sleep though Erin!😂
My issue is not money ....its insurance for retirement. Waiting until 67 is ridiculous !
Can't withdraw continuously because sometimes, the portfolio is going to be below where it started. You have to manetain an allocation percentage.
The earlier you start to max out your Roth IRA, the better, in my opinion. Always max out your company match if you're lucky enough to get one!🎉🎉🎉
My wife and I are lucky to have good employers who contribute ~10% of salary to 401k/pension. Then we save ~22% to 401k/IRA. That puts us at ~32%, hoping to hit FI in 10-15 yrs in our late forties or early fiftiesa!
Thats literally the issue. Most employers are 🗑️ its literally about being lucky
i just turned 30. 73k in my 401k and I will have full pension by age 57. that's when I'll retire.
I think saving and investing 25-30% gross is a good amount, and for me going above that is not worth sacrificing the now. Plus now that my wife is going to have a pension, we are going to be in an even better position later in life, so I am okay coasting with our current savings rates.
We invest 30% of my income and 25% of my wife's. That's outside of our IRAs, which we fully funded earlier this year.
Hey! Nice to see you! 😊
@@ErinTalksMoney 🤣🤣🤣. I've been hit or miss lately.
Hey, I get it. Life is busy! But, I smile when I see comments from you 😊
@@ErinTalksMoney Hope you and Steve are doing well!
@@ErinTalksMoney Hope you and Steve are doing well!
Sadly, most people in my communuty earn less than $50k.
Nonetheless very useful knowledge. Thank you!
When you say saving, you are referring to retirement saving, but there is a annual cap on what you can contribute. The remaining will have to be on your own brokerage account which is after tax money for sure. Im sure not many can hit those numbers annually, but it is something worth mentioning. So saving say 50% annually on a $100K income will mean $50K, which is over the annually IRA or TSP limit. Is there another account that doesn't have these limits?
Once you had a limit on a work sponsored plan, you could also take advantage of a traditional or a Roth IRA. Roth IRA being subject to income limits, of course. But after that, you’re right, probably have to turn to a traditional brokerage account.
@@ErinTalksMoneythis is exactly what I started this year. I add any money over and above the Roth 401k and Roth IRA max contributions to a traditional brokerage account
I want to coast fire by 50. Drop my stressful tech job and pick up an easier job for health insurance.
I don't like saving based on a percentage. I like saving based on what I feel is a reasonable amount at each stage life. Some years I am not able to invest as much because of life circumstances. But I do want to try to increase my investing amount over time.
So the 'fire' table at 10:02 is a bit misleading because it seems to suggest that if you just save 100% of your earnings for 1 year you can retire. I guess technically you could but not sure what kind of retirement it would be you probably couldn't afford to be homeless in a tent on that...
The income based targets are dumb. At 30 I was on track. 50k salary, 50 retirement. At 35 I was behind. 100k salary, 100k in retirement. Just turned 38, and now way behind according to these rules. 150k income, 200k in retirement. Ill be lucky to have 2x by 40, assuming my income doesnt go up.
Thank you!
Thanks for watching!
I noticed they almost ALMOST....never say WHAT to invest in
....
I'm assuming if your 20 - 30 y/o, they are assuming that the percentage you are saving is going into an index fund
Great topic! Would it be possible to do a video like this on Vanguard’s suggestions? Huge Vanguard fan here!
Great suggestion! Vanguard is pretty amazing!
I saved in 401k and 403B for 10% then my employer match 5% and additional 1% each yr so basically I have 8% employer match total of 18% then save in my mutual fund and $1000 in my emergency and travel fund.
Tough to judge where I’m at based on Fidelity’s guidelines since I’m making 2.75x what I made when I started saving at age 28. I’m closing in on 40 and if I had 3x what my salary is, I probably would slow down saving considerably (at least for retirement).
Is there someone I can talk to to find out my information?like what I should be saving.i do have a 5% employer match
I am retired early and have 47% savings rate so far this year. My goal is 69% by the end of the year. 😊😊😊😊
Best videos ever
Thanks so much!
People always saved. Investing didn’t become a thing until the 70s and it was for rich people. We have to be honest and understand that investing is gambling over decades hoping u will have a nest egg. There are no guarantees. When u sign the paperwork for ur brokerage accounts there is a blurb that states past performance is not a guarantee of future performance
This is very true.
I save as much as my 30,000 will allow.
I’m doing ok now on salary but it’s very late in my career. Yeah, just getting by isn’t going to allow you to save much. I saw another video that said 49% of the US population has less than $10k saved for retirement. AVERAGE savings statistics are high because of the super rich. Median figures mean more
We did the same when we made low income, in retail and as students. Lived in small basement apartment in industrial neighborhood and socked away what we could. Now in our 50's and sitting pretty. It's the good habits that yield the good results over time, keep it up.
Invest $5.00 a day.
That’s just an opportunity to increase your income?
Is the savings % based on gross income or after tax take home pay ? Because taxes take more than 1/3 right off the bat ...
This has always confused me. Save "x" your starting salary, if you start at $50,000 annual salary, then by 67 you should have $500,000 saved.
I was under the impression that for the 1x, 2x...10x "x" was a moving target and the "x" would be the salary at that age. There is a big gap between 10x your starting salary and 10x your pre-retirement salary.
It's a bit confusing. A better comparison would be to compare your total savings amount to annual spending.
Is there someone I can talk to to find out my information?like what I should be saving
Financial adviser
2.5 million is my goal.
I already have 20x my income saved in retirement. Without medical coverage I cannot retire.
Here for the bloopers
That Networify calculator is super conservative at 5% ROI.
It helps the business now automatically opt someone into the 401k when they are hired
These things are great but there's nothing on youtube for people with defined percentage-of-final salary pensions. Is there?
I'm a little jealous, my brother started investing at age 10. My father set up a custodial account for him. Not something he thought about when me and my other brother were younger.
i dont understand he Mr. Money Mustache chart... how is saving 100% of my income getting me instantly retired?
The general assessment that each generation continues to show positive growth to retirement planning, I predict a major reset following revolutionary impending reforms to both SS and Medicare. Afterwards, it will no longer be an apples-to-apples comparison to the previous 40+ years.
And it is not me saying it, but looking back to the late member of Congress William Armstrong’s predictions in 1983…and here we are 40+ years later and counting.
I target 15% of gross, 50% of take-home, and I don't know how you boil that into 1 percentage number. I guess I could call it 15/50 and sound trendy. But then it doesn't count employeer matches or HSA.
You should do a video of just bloopers.
I don't have a target percentage. I think the whole idea of investing a fixed percentage for life is bad. While young and without a family, it's possible to save much more if you have a decent income. Once you are taking care of a family extra income is sparse to come by. This is why I prefer Coast FI.
I think coast fire is amazing!!!
I'm almost maxing out my 401K contribution (I'm 58). I'm always worried about going over.
once you hit the max, your employer will stop contributions. I hit this around Nov most years.
FIRE movement isn’t about baby steps -sorry kids and sorry Fidelity. Saving 50% of your income enables retirement in 17 years. while a 30% increase to 80% slashes the timeline to just 5 years,. This illustrates the powerful, non-linear path to financial independence.
That excludes me. I have been working for 35 years and never made 50k in a year.
I wonder if Fidelity’s numbers include SS. I personally did not save at these rates, but with over 50k a year in SS, my retirement is very comfortable. Fidelity wants people to put in as much as possible for as long as possible. Hmm, I wonder why ….
Increase your contribution when you get a raise. Painless way if you start by 35.
So I started now at 35. This means I'm extremely behind cuz I plan on retiring by 60.
Approximately 30% savings rate 👍
We need a better healthcare system. That’ll enable people to save more for retirement, for starters.
Agreed, a cash based system where hospitals are forced to post all prices would be much better. Forcing people to buy insurance they don’t want or need is absurd.
@@mattbleiler7294people shouldn’t have to go bankrupt due to healthcare costs. It’s ridiculous how much everything costs, via all of the corruption and price gouging.
Why not 62, or 65? Why does the retirement age keep moving up.
i just don't believe retirement is really possible because if your money is in investments... it is at the whim of the market. it is a version of "losing your job" that is in no way in your control.
"Lets just be normal."
😂😂😂😂
We need to all combine and fight against the fact that these idiots and politicians think we should work until 67
"But I feel like if you start at an early age and just put something away, no matter what the amount, my attitude is kind of like its impossible to screw it up..."
Younger generations: Tell me more about how I can pull money OUT of my retirement accounts for "emergencies" like the Eras tour?
😬😬
I do make decent money but I work far more hours than anyone I know!
How people do these videos without differentiating Roth vs traditional is horrible.
25% into Roth is WAY more than 25% into Trad
No mention of expenses? This is not a good video with focusing on expenses first. Die with Zero is a good book.
27%
I didn't start saving until I was 53.🙄
😅😅