Erin's videos are always good because she not only explains personal finance topics, she also tells people what they can do to improve their own situation. For example, the different retirement calculators she mentions could really help people get a reasonable idea of what their situation actually is.
My wife and I are in sync when it comes to money. That is half the battle- we have friends that can't agree or maintain separate agendas when it comes to their money. The other half is having no debt, a paid off home and always paying ourselves first has really worked for us. Once we paid off our house, our rate of savings and investment tripled. The fact that I have one pension already (retired military) and possibly another in 9 years from FERS frees up a lot of the income requirements that wld normally be covered by SS and 401/IRAs.
"When your income goes up, so should your savings". Exactly. Really, it comes down to supercharging your lifestyle creep or supercharging your savings/investments, whenever you get a raise. I'd have fun with 10% of the raise and save the other 90%.
As you stated, these are great tools, and I would add, the farther from retirement you are, the better they are. I started using these calculators about 10 years out from retirement. The closer I got to retirement, the more out of wack the results got! Almost every tool would have me saving far more than needed, which is great, because early on, it has you saving aggressively, which is better than not saving enough. Lot of that is, as you said, because of raises. Most people, but not all, don't necessarily spend more just because they have it! Once I got closer to retirement, I used expenses as my target, and found I had saved more than I needed. However, I never did without anything due to saving, so it's all good!
The fidelity savings is tough cause if you get a raise, promoted, or a new job you may not be able to reach those marks. I agree we just need to keep saving and keep on going forward. Cool the AARP calculator seems cool. I'll have to check that out.
Don't get hung up on the exact multiples, like you say, a raise changes the game. One could argue that for lots of people, a raise means lifestyle creep, and therefore the multiples still apply. But if you can keep your lifestyle creep in check, then you're ahead of the game, never mind that the multiples rule says you're behind. That's why I like working from actual expenses, that's your REAL measuring stick. That plus how much you need to calm that "what if" voice...lol.
I thinknthe calculator must be using the initial income level as a static (unchanging) metric. If so, it might not be that far off, but if you reset to your newest salary, bam!
The X salary thing is way off, at least for our goals in retirement. We ended up 23 times ending salary and even that we stay on a strict budget. Great content!
I do like the calculators they offer a lot. Not only are they easier, they are more accurate for me. I'm thankful they share them to non members for free and I'm even more they don't give a free version to try to sell you a costly version. Membership can get you a lot of discounts and ways to save money if you use those things.
If you don't understand your expenses while you're working and determine which expenses go away once you retire and which expenses will go up in retirement, you are guessing at how much income you need. There is no rule of thumb that works for everyone. If you plan on doing international travel 2-3 times a year, you'll need a lot more than if you decide you're just going to be going to the local beach from time to time. An emergency fund generally should be able to handle a car (if you drive), or replacing a furnace or broken appliances.
Hi Erin. This was a very good discussion of a topic which is unclear and confusing to a lot of folks. I'm certain this will proide some needed guidance and context for them as they are planning for their future. Have a blessed week and I'll see you on the next one. Larry, Central Valley, Ca.
In the end the only goal that really matters is being able to cover your expenses once you retire. For most people that means you need about 25x your expenses (minus fixed income like SS and pensions). If you're not planning to do much expensive stuff like traveling once you retire, have a large pension or are a very high earner, that could come out to substantially less than 10x your pre-retirement income. Alternatively if you plan to spend a lot or your house isn't paid off you might need much more than 10x your income.
One thing I’ve run into repeatedly…today I’m behind where I need to be for my age bracket. Not horribly behind but significant. When I console a compound interest calendar and show that if I contribute $0 going forward and assume 7% growth based on aggressive allocation, I will get to the number by my target retirement age. It’s been a little less than motivating for me to up my contribution when I see this. I know I should, but pointing out that there’s some good hope for those of us who are lagging a bit
Good topic Erin. I loosely recall that over 50% of Amercians have less than 50K saved? Would be interesting to compare the calculator v/s current society progress against it...
I have 25X and its not enough. I am still working part time. I am in my mid 50s and health care alone will suck up a lot until I hit 65. My Social Security will be so low its basically a joke to what I would need to live the life stile I want to live. If it was not for an inheritance I was not planing on ever getting until I was to old to have much time to enjoy it as such I was expecting to work until the day I died. I need far more saved up money to cover what Social Security would be to low to cover.
Good video. Is there a software that we can save to our own PC in lieu of using an on-line calculator where our personal information is more secure? Thx, Cheers
Be good if you did a video on school age financial education Erin, your advice is always good but if for a lot of people seeing it late in life is the big problem. My thought are it should be a mandatory subject with the same priority as maths or science etc i.e. a core subject
Can be difficult to calculate when u factor in the amount you’ll actually need. My home should be paid off, I would no longer need to save 20 percent of my income, my wife has a pension, and then there’s social security… I’m also helping to pay for my last child to get through school with no loans. so, if I just take my income times 80 percent and multiply that by 8 for what I should have saved, it doesn’t factor in the reduction of debt and other expenses I currently have but won’t in retirement.
I've been in touch with a financial analyst ever since I started investing. Knowing today's culture the challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders and now i can plan for a better retirement
Gabriel Alberto William is the financial advisor I work with. Most likely, the internet should have his basic info, you can make a research with his full name
Bank of America states 8.5 x your annual salary in your 60s to replace merely 38% of your income up to $100,000! This is ridiculous. That would mean you’d have to save 2.63 x 8.5 or over 22 times your annual income to replace your full income by 100 %. Most individuals as kidding themselves if they feel they can live on anything less that 75% of their annual gross income without substantially altering their lifestyle in a negative ( more frugal) way. So the estimate underestimates what you need ( read the fine print).
There is a big element that is not being addressed in these formulas. Let’s use round numbers and let’s say 10% by age 62. If I make $150,000.00 a year according to some charts I should have 1.5 million saved for retirement. Right? But what about my pension and social security? Let’s say I can collect $6,000.00 or $72,000.00 a year not taking into consideration colas. If I was to be retired for 20 years I would have collected $1,450,000.00 So taking these charts into consideration I don’t need any saving even though I do.
I am not sure I agree with your interpretation. $1.5M generates $60k a year, plus your $72k from social security would put you at $132k per year, about what you were making before less your assumed saving rate of about 10%.
@ but maybe I was not clear about my pension. At 62 my pension and social security will be $6,000.00 a month or $72,000.00 a year. With no increases that is about $1,450,000.00 in 20 years. I was just commenting that if you estimate a pension the way more less to do it is to take the yearly income from your pension and social security and God willing you make it to 82 that’s 20 years of collecting same. So $6,000.00 X 20 years = 72,000.00 a year = $1,450,000.00. And that’s not taking colas into consideration. My point is UA-camrs concentrate 95% of the time how much you have saved. But they neglect to incorporate ones pensions and social security. Even the calculators online that I have found don’t do this as well. You have to make 2 calculations and combine them.
You are lucky to have a pension. And concerning SS, whether it would be able to pay out at 100% next decade is still in question. I think calculators understand that pensions are pretty much an endangered species by now and SS is not any better.
@@LoiFamily thank you. Yes I agree l'm lucky to have a pension as most companies have switched to employee self funded 401K's which are underutilized. In fact, boing eliminated their pensions in 2016 and after 911 airline employees lost their pensions as well. Social security is projected to stay solvent until 2035. However, all they need to do is raise the maximum contribution level to $250,000.00 from the current level of $176,100.00. Everything we hear about social security running out is not economical it is being used for political purposes.
I don't like Fidelitys savings chart. It's too strict and it's based on income rather than expenses. And it doesn't account for personal variables such as social security, pensions, length of retirement, asset allocation, asset location, etc.
Is there a calculator that takes a pension into the math? I am retired military and I am saving like crazy but I wasn’t saving the first 10 years I was on active duty. This makes me feel like I am behind but with the retirement, I may not be as far behind as I think. I hit send and you answered this. Thank you Erin.
When you are in your 20s and 30s, always invest more. Your savings rate after 40 barely matters. I’m nearly 40, and my average investment growth is 4x my contribution rate. And that gap will only get wider.
Save a lot early in life since compounded interest/investment returns over time can help offset inherent uncertainty of future income streams, health and lifespan
I've watched them too, and I think they might be making two assumptions: (1) starting saving for retirement late (eg, 30s), or (2) a salary below $70,000 and a retirement need about $1.6 million - necessitating the need of a >15% savings rate. This year's net worth show didn't seem the same as years past.
Hi Erin, From my point of view I never save enough (mind you, I'm not Mrs. Scrounge). Having a good savings rate over 35% is good (46% in 2024), but it could increase with a higher income.
When the market goes down, it never feels like enough. I transferred my paycheck into my high yield savings account. I starter to buy the dip yesterday but it's still dipping today.
Consider it a discount and buy all you can. When it comes back, and it always does, you will see the returns. Don't look at the here and now look to the future.
Erin's videos are always good because she not only explains personal finance topics, she also tells people what they can do to improve their own situation. For example, the different retirement calculators she mentions could really help people get a reasonable idea of what their situation actually is.
Thank you so much!! I’m so glad you find these videos helpful!! 🙏
I just got a new job at Jersey Mikes 😊 I am SO Excited for this video 😊
Emergency fund is key! Without that base the “saving for retirement” is tough.
Is that a 12 to 24 month emergency fund instead of 6 to 9 month one?
My wife and I are in sync when it comes to money. That is half the battle- we have friends that can't agree or maintain separate agendas when it comes to their money. The other half is having no debt, a paid off home and always paying ourselves first has really worked for us. Once we paid off our house, our rate of savings and investment tripled. The fact that I have one pension already (retired military) and possibly another in 9 years from FERS frees up a lot of the income requirements that wld normally be covered by SS and 401/IRAs.
Once again great content and presentation. Very clear, concise and informative. As always keep up the great work!
Keep pushing forward and stay in the fight! Control the controllables.
"When your income goes up, so should your savings". Exactly.
Really, it comes down to supercharging your lifestyle creep or supercharging your savings/investments, whenever you get a raise. I'd have fun with 10% of the raise and save the other 90%.
As you stated, these are great tools, and I would add, the farther from retirement you are, the better they are. I started using these calculators about 10 years out from retirement. The closer I got to retirement, the more out of wack the results got! Almost every tool would have me saving far more than needed, which is great, because early on, it has you saving aggressively, which is better than not saving enough. Lot of that is, as you said, because of raises. Most people, but not all, don't necessarily spend more just because they have it! Once I got closer to retirement, I used expenses as my target, and found I had saved more than I needed. However, I never did without anything due to saving, so it's all good!
The fidelity savings is tough cause if you get a raise, promoted, or a new job you may not be able to reach those marks. I agree we just need to keep saving and keep on going forward. Cool the AARP calculator seems cool. I'll have to check that out.
I agree. Any model that punishes success is flawed.
Don't get hung up on the exact multiples, like you say, a raise changes the game. One could argue that for lots of people, a raise means lifestyle creep, and therefore the multiples still apply. But if you can keep your lifestyle creep in check, then you're ahead of the game, never mind that the multiples rule says you're behind. That's why I like working from actual expenses, that's your REAL measuring stick. That plus how much you need to calm that "what if" voice...lol.
I thinknthe calculator must be using the initial income level as a static (unchanging) metric. If so, it might not be that far off, but if you reset to your newest salary, bam!
The X salary thing is way off, at least for our goals in retirement. We ended up 23 times ending salary and even that we stay on a strict budget.
Great content!
I'm sending this to our adult children!
Thank you!!
Haha, I did the same thing.
Ironically I was just on the AARP site this morning....agree it is one of the better ones.
I do like the calculators they offer a lot. Not only are they easier, they are more accurate for me. I'm thankful they share them to non members for free and I'm even more they don't give a free version to try to sell you a costly version. Membership can get you a lot of discounts and ways to save money if you use those things.
I use my interest calculator to keep track of my monthly & yearly dividends. I save accordingly.
Hi Erin this a great video ❤thanks for posting it
Another great video, thanks Erin.
If you don't understand your expenses while you're working and determine which expenses go away once you retire and which expenses will go up in retirement, you are guessing at how much income you need.
There is no rule of thumb that works for everyone. If you plan on doing international travel 2-3 times a year, you'll need a lot more than if you decide you're just going to be going to the local beach from time to time. An emergency fund generally should be able to handle a car (if you drive), or replacing a furnace or broken appliances.
How much should you save? If you want to end up with a little, then save a little. If you want to end up with a lot, then save a lot.
This is wisdom, simplified.
Hi Erin. This was a very good discussion of a topic which is unclear and confusing to a lot of folks. I'm certain this will proide some needed guidance and context for them as they are planning for their future. Have a blessed week and I'll see you on the next one. Larry, Central Valley, Ca.
In the end the only goal that really matters is being able to cover your expenses once you retire. For most people that means you need about 25x your expenses (minus fixed income like SS and pensions). If you're not planning to do much expensive stuff like traveling once you retire, have a large pension or are a very high earner, that could come out to substantially less than 10x your pre-retirement income. Alternatively if you plan to spend a lot or your house isn't paid off you might need much more than 10x your income.
One thing I’ve run into repeatedly…today I’m behind where I need to be for my age bracket. Not horribly behind but significant. When I console a compound interest calendar and show that if I contribute $0 going forward and assume 7% growth based on aggressive allocation, I will get to the number by my target retirement age. It’s been a little less than motivating for me to up my contribution when I see this. I know I should, but pointing out that there’s some good hope for those of us who are lagging a bit
Solid advice!
Good topic Erin. I loosely recall that over 50% of Amercians have less than 50K saved? Would be interesting to compare the calculator v/s current society progress against it...
I’m certain it’s terrible. I think the average retirement savings for 60-70 year olds is like $134k
How does one calculate a a pension into the X-times-salary formula?
Can you do a video where you critique the bad financial advice on Tic Toc?
I have 25X and its not enough. I am still working part time.
I am in my mid 50s and health care alone will suck up a lot until I hit 65.
My Social Security will be so low its basically a joke to what I would need to live the life stile I want to live. If it was not for an inheritance I was not planing on ever getting until I was to old to have much time to enjoy it as such I was expecting to work until the day I died. I need far more saved up money to cover what Social Security would be to low to cover.
Good video. Is there a software that we can save to our own PC in lieu of using an on-line calculator where our personal information is more secure? Thx, Cheers
Be good if you did a video on school age financial education Erin, your advice is always good but if for a lot of people seeing it late in life is the big problem. My thought are it should be a mandatory subject with the same priority as maths or science etc i.e. a core subject
Can be difficult to calculate when u factor in the amount you’ll actually need. My home should be paid off, I would no longer need to save 20 percent of my income, my wife has a pension, and then there’s social security… I’m also helping to pay for my last child to get through school with no loans. so, if I just take my income times 80 percent and multiply that by 8 for what I should have saved, it doesn’t factor in the reduction of debt and other expenses I currently have but won’t in retirement.
IMO, if you're not saving in a brokerage account, outside of retirement accounts, you're not saving enough.
💯
How about a salary multiplier if you want to retire early, before 67? For example, I am 58, and want to retire at 62, what is my multiplier?
Investing in stocks is planting a tree for your future; with patience, it will bear fruit
Just like a tree, investments need time and care to reach their full potential
I've been in touch with a financial analyst ever since I started investing. Knowing today's culture the challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders and now i can plan for a better retirement
Mind if I ask you to recommend this particular coach you are using their service? Seems you've figured it all out
Gabriel Alberto William is the financial advisor I work with. Most likely, the internet should have his basic info, you can make a research with his full name
I just google his name and his website popped up immediately. I'm very much impressed and i will email him right away
Does 1x your salary mean saved like in an emergent fund or invested or both combined together? Or ?
Typically these percentages are for what you should have in investments. The emergency fund is separate and not part of that equation
Bank of America states 8.5 x your annual salary in your 60s to replace merely 38% of your income up to $100,000! This is ridiculous. That would mean you’d have to save 2.63 x 8.5 or over 22 times your annual income to replace your full income by 100 %. Most individuals as kidding themselves if they feel they can live on anything less that 75% of their annual gross income without substantially altering their lifestyle in a negative ( more frugal) way. So the estimate underestimates what you need ( read the fine print).
There is a big element that is not being addressed in these formulas. Let’s use round numbers and let’s say 10% by age 62. If I make $150,000.00 a year according to some charts I should have 1.5 million saved for retirement. Right?
But what about my pension and social security? Let’s say I can collect $6,000.00 or $72,000.00 a year not taking into consideration colas. If I was to be retired for 20 years I would have collected $1,450,000.00 So taking these charts into consideration I don’t need any saving even though I do.
I am not sure I agree with your interpretation. $1.5M generates $60k a year, plus your $72k from social security would put you at $132k per year, about what you were making before less your assumed saving rate of about 10%.
@ $150,000.00
@ but maybe I was not clear about my pension. At 62 my pension and social security will be $6,000.00 a month or $72,000.00 a year. With no increases that is about $1,450,000.00 in 20 years.
I was just commenting that if you estimate a pension the way more less to do it is to take the yearly income from your pension and social security and God willing you make it to 82 that’s 20 years of collecting same. So
$6,000.00 X 20 years = 72,000.00 a year = $1,450,000.00. And that’s not taking colas into consideration.
My point is UA-camrs concentrate 95% of the time how much you have saved. But they neglect to incorporate ones pensions and social security. Even the calculators online that I have found don’t do this as well. You have to make 2 calculations and combine them.
You are lucky to have a pension. And concerning SS, whether it would be able to pay out at 100% next decade is still in question. I think calculators understand that pensions are pretty much an endangered species by now and SS is not any better.
@@LoiFamily thank you. Yes I agree l'm lucky to have a pension as most companies have switched to employee self funded 401K's which are underutilized. In fact, boing eliminated their pensions in 2016 and after 911 airline employees lost their pensions as well.
Social security is projected to stay solvent until 2035. However, all they need to do is raise the maximum contribution level to $250,000.00 from the current level of $176,100.00. Everything we hear about social security running out is not economical it is being used for political purposes.
I don't like Fidelitys savings chart. It's too strict and it's based on income rather than expenses. And it doesn't account for personal variables such as social security, pensions, length of retirement, asset allocation, asset location, etc.
Can you do a review of the book: The Next Millionaire Next Door? It is one of my all time favorites
Is there a calculator that takes a pension into the math? I am retired military and I am saving like crazy but I wasn’t saving the first 10 years I was on active duty. This makes me feel like I am behind but with the retirement, I may not be as far behind as I think. I hit send and you answered this. Thank you Erin.
Get some silver and gold coins . I recommend American eagles. Those are insurance.
Tesla stock is my investment.
Hi Erin can I ask you one question please
Increasing per percentage yearly my 401k, was one of my wiser decisions I made during my 20's and 30's.
Cookie cutter information
At least she kept me entertained with a nice shirt
🤷🏿♂️🤷🏿♂️🤷🏿♂️
Using the AARP calculator I am on track. Need $4.6M and I will have $4.9M.
Bro! You are in the 1% club. You don’t need a calculator if you are keeping your expenses in check
Hmm what if you're living paycheck to paycheck because you're saving a lot??
You might be saving too much, or just not earning enough relative to your expenses.
When you are in your 20s and 30s, always invest more. Your savings rate after 40 barely matters.
I’m nearly 40, and my average investment growth is 4x my contribution rate. And that gap will only get wider.
Save a lot early in life since compounded interest/investment returns over time can help offset inherent uncertainty of future income streams, health and lifespan
The moneyguyshow goes hard and says ideally save 25%. An oversimplified statement but a rough idea of what they say.
I've watched them too, and I think they might be making two assumptions: (1) starting saving for retirement late (eg, 30s), or (2) a salary below $70,000 and a retirement need about $1.6 million - necessitating the need of a >15% savings rate.
This year's net worth show didn't seem the same as years past.
Hi Erin,
From my point of view I never save enough (mind you, I'm not Mrs. Scrounge). Having a good savings rate over 35% is good (46% in 2024), but it could increase with a higher income.
The federal reserve can print unlimited currency.
The amount needed is unknowable!
When the market goes down, it never feels like enough. I transferred my paycheck into my high yield savings account. I starter to buy the dip yesterday but it's still dipping today.
You’ve only been saving and investing for a month then I guess.
@ThomasJarred-fl9uf I'm a mortgage free landlord with 401k, Roth 401k, 2 HSA, HYSA, and 2 after tax brokerage accounts.
@ThomasJarred-fl9uf I dont know why my comments are deleted.
@ThomasJarred-fl9uf How is your 2 401k accounts and IRA and 2 after tax doing today?
@ThomasJarred-fl9uf Because if I invested 100% of my paycheck this week ....I'm still down for the week.
I have a gubamint pension that no one in the private sector gets anymore. Why can't you losers retire?
3rd
And 2nd
Well, congratulations to you!
1st
Been tryin to save in my 401k but it seems like the more I take from my paycheck to invest the more the stock market is dropping....lol
That’s good. My 401k hardly moved in 2022 despite contributing more cash… and then the last years were VERY nice. Imagine you’re buying the dip.
Consider it a discount and buy all you can. When it comes back, and it always does, you will see the returns. Don't look at the here and now look to the future.