Guess what?? They talked about personal finance on the radio today, and I almost had a moneygasm! Haha…
The clip was on some new savings recommendations that apparently just came out, and while I couldn’t find the exact article off the show’s website, I did come across this one that matched it to a T (and which was also over a year old?): “Here’s how much money you should have saved at every age”
Never heard of targets like these before, but hey – let’s play along! Here’s what “they” are now recommending ;)
- At 25 years old — you should have 1/2 of your yearly salary saved
- At 30 years old — you should have 1x your yearly salary saved
- At 35 years old — you should have 2x your yearly salary saved
- At 40 years old — you should have 3x your yearly salary saved
- At 45 years old — you should have 4x your yearly salary saved
- At 50 years old — you should have 5x your yearly salary saved
- At 55 years old — you should have 6x your yearly salary saved
- At 60 years old — you should have 7x your yearly salary saved
- At 65 years old — you should have 8x your yearly salary saved
- At retirement — you should have 10x your yearly salary saved
So pretty much, once you hit 30 years old you should be adding another 100% worth of your salary to your savings with each passing 5 year period… And then once you hit around 10x your salary you’re safe to pull the cord.
(Although really, how you can determine a retirement date without mentioning EXPENSES even once is beyond me, but again – I’ll continue playing the game ;))
Before I had much time to even marinate on it though, the comments from the radio host and sidekicks were pretty obvious about their feelings, haha…
“Aww, how cute!” – one of them blurted out.
“Explain to us millennials again what “savings” is?” – said another ;)
Pretty sad to hear, particularly as many of their listeners were probably laughing along in agreement!, however it did make me smile because I knew the second I reached my computer I’d have something fun to do with all my data.
So you ready to compare?? Think I’ll match up or miss the marks completely?
Okay, here we go… I counted both my savings and my investments btw in the calculations since it looks like that’s what “savings” entailed per the CNBC article (along with debt payments, fyi), and then I also did my best to exclude my wife’s contributions to better estimate the #’s for just *one* person too.
Here’s what it churned out!
The “New” Standard vs J. Money
- 25 years old (2005): $2,000’ish ÷ $35,000 = .05% yearly salary (standard = 1/2)
- 30 years old (2010): $250,000 ÷ $60,000 = 4x yearly salary (standard = 1x)
- 35 years old (2015): $450,000 ÷ $75,000 = 6x yearly salary (standard = 2x)
- 40 years old (2020): $900,000 estd ÷ $100,000 = 9x yearly salary (standard = 3x)
So major #FAIL there with 25 year old J. Money (and no big surprise, considering I couldn’t even tell you what an IRA or 401(k) was!), but come age 30 and beyond we turned up the heat on that puppy! Putting us around 3x the recommended rates – alright alright alriiiight! (Said in the best Matthew McConaughey voice)
(It’s no coincidence btw that our money skyrocketed the minute we started tracking it all and blogging about our journey… The ’08 market crash and generous employer benefits also helped speed it up, but you really can’t discount the power of accountability with this stuff! And really just CARING ENOUGH to make things happen!)
So yeah – new or not, I’m all for these savings targets here, but only because I’d choose ANY targets being passed around mass media than NO targets at all, haha… Whatever it takes to wake people up!
As for me though, I’m sticking to the trusty 25x yearly expenses plan based on the “Trinity Study” we here in the FIRE world love so much. Gotta forecast things on your lifestyle costs, not your salaries!
My two cents anyways… What are your thoughts? You like these targets or think they’re a bunch of hippy dippy bologna? (Bonus points if you can tell me where that reference is from ;))
Feel free to compare your own #’s to these targets too and share… Maybe they’ll put things in better perspective for you?
For additional reading, check out Financial Samurai’s charts and thoughts on this as well: How Much Savings Should I Have Accumulated By Age? He gets a wee deeper in his analyzations than I, haha…
Perhaps you’ll get multiple moneygasms ;)
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!