I'm looking for actual concrete savings figures...

[spanky79]

Hi, my wife and I are 31 years old and consider ourselves pretty aggressive savers. However, one of the problems I have always encountered when researching savings habits is that so often people simply give percentages, ie save 10% of your income, or put x% of your income into a 401k or whatever.

However, that's really not that helpful of a metric when trying to figure out how you are doing compared to others your age. After all 10% of a 50k income is 5k, while 10% of a 150k/year is 15k. And really percentages are kinda worthless in the sense that bills aren't based on a % of ones income.

Regardless, what I think would be much more helpful are the actual figures, ie, 35 year olds generally should have 50k in their savings account, or by age 40 people should x-amount of dollars in savings. But those statistics are just never available.

[KingB]

When DW and I are accumulating, we did not have a specific % target. We maximize our 401k's, take advantage of available ESPP, spend what we need (living a balance life) and save the rest. I did not track what % of our income are we saving.

[W2R]

I don't think there is any one amount that you should have saved at a given age, but you have to save sometime. Personally I had nothing at age 50, and went from there. That's the hard way to do it, though.

[arebelspy]

Quote:

Originally Posted by spanky79 Hi, my wife and I are 31 years old and consider ourselves pretty aggressive savers. However, one of the problems I have always encountered when researching savings habits is that so often people simply give percentages, ie save 10% of your income, or put x% of your income into a 401k or whatever. However, that's really not that helpful of a metric when trying to figure out how you are doing compared to others your age. After all 10% of a 50k income is 5k, while 10% of a 150k/year is 15k. And really percentages are kinda worthless in the sense that bills aren't based on a % of ones income. Regardless, what I think would be much more helpful are the actual figures, ie, 35 year olds generally should have 50k in their savings account, or by age 40 people should x-amount of dollars in savings. But those statistics are just never available.

The Millionaire Next Door h a formula about how much to save by certain ages. I'm sure some basic googling could find it easily.

It is pretty unrealistic and inaccurate if you're too young or too old, respectively, but for people in their 30s or 40s it's a decent little calculation.

EDIT: I'd rather not share my figures publicly, but if you want some numbers, I have no problem sharing individually/privately. If you want, feel free to PM me.

[cho oyu]

The primary reason that you won't see many age-related dollar-amount savings goals is because it really isn't relevant without additional information.

The primary numbers that dictate savings are 1) your expected retirement date, 2) your expected expenses in retirement, and 3) your present net worth. With that information, it's pretty easy to calculate a rough estimate of your required yearly dollar savings.

If someone plans on living on $50k a year and wants to retire at 45, it's pretty clear that savings goals will need to be much higher than someone who plans on living on $30k and retiring at 50.

Note that there are more complexities that can be added in such as desired risk levels, portfolio allocation, and distribution of expected returns.

If you search through the forums, you'll find a few threads where people give indications of yearly savings amounts: these run anywhere from 4 figures to 6 figures per year. Another source for net worth (albeit likely having a huge selection bias and the normal accuracy rate for unverified internet information) is networthIQ. I believe you can look at individual reports to obtain more information on yearly savings rates.

[FIREd]

You can't expect a 35 year old making $20K a year to have the same amount of savings as a 35 year old making $200K a year. So actual dollar figures are unhelpful if you want to compare yourself to others IMO.

Personally, my original goal was to have:
6 times my annual expenses in savings/investments by age 35
11 times my annual expenses in savings/investments by age 40
17 times my annual expenses in savings/investments by age 45
24 times my annual expenses in savings/investments by age 50
32 times my annual expenses in savings/investments by age 55

So, if my annual expenses were $60K per year at age 35, my goal was to have at least $360,000 in savings/investment at that age.

IIRC, the Millionaire next door formula is net worth = (age x income)/10
So a 35 year old making $100K, should have a net worth = (35 x $100K)/10 = $350K

[FUEGO]

I don't want to drop specific numbers, but per the millionaire next door formula "(age x income)/10", we are exceeding expectations by a reasonable margin.

Comparing absolute dollar amounts doesn't mean a lot absent other facts. Having a million bucks at age 40 is much more impressive if you earn $100,000 a year than if you earn $500,000 a year.

[Nords]

Quote:

Originally Posted by spanky79 Hi, my wife and I are 31 years old and consider ourselves pretty aggressive savers. However, one of the problems I have always encountered when researching savings habits is that so often people simply give percentages, ie save 10% of your income, or put x% of your income into a 401k or whatever.

Most posters aren't comfortable sharing their actual amounts for fear of being targeted by scammers or stalkers or outright thieves.

Besides we'd just be distracted by competing against each other over the size of our... portfolios. And some posters might be embarrassed by "shrinkage".

Quote:

Originally Posted by spanky79 However, that's really not that helpful of a metric when trying to figure out how you are doing compared to others your age. After all 10% of a 50k income is 5k, while 10% of a 150k/year is 15k. And really percentages are kinda worthless in the sense that bills aren't based on a % of ones income.

You don't need to care how others are doing-- you only need to care how you're doing. For every guy like you complaining about the lack of numbers there's at least one more poster complaining that specific numbers are unfairly intimidating to their ER efforts.

Instead of comparisons, you could equate your portfolio survival to the future value of a series of payments. For example, you're balancing a 4% withdrawal scheme against the time & savings rate necessary to pile up the portfolio. That math can be solved as an equation whose values depend on your expenses as well as your assumed savings, investment APYs, and years of work.

This post goes through the nitty-gritty details of the math, with sample calculations and tables of approximate values. You can dig into the third significant figure of each variable, create your own graphs, or just pick the numbers out of the tables.

[BigNick]

Quote:

Originally Posted by spanky79 Hi, my wife and I are 31 years old and consider ourselves pretty aggressive savers. However, one of the problems I have always encountered when researching savings habits is that so often people simply give percentages, ie save 10% of your income, or put x% of your income into a 401k or whatever. However, that's really not that helpful of a metric when trying to figure out how you are doing compared to others your age. After all 10% of a 50k income is 5k, while 10% of a 150k/year is 15k. And really percentages are kinda worthless in the sense that bills aren't based on a % of ones income. Regardless, what I think would be much more helpful are the actual figures, ie, 35 year olds generally should have 50k in their savings account, or by age 40 people should x-amount of dollars in savings. But those statistics are just never available.

1. Why do you care how others your age are doing ? Is there a prize ?

2. The main reason to use a percentage of your income is that generally, working-lifetime spending is a function of income, and retirement spending is a function of working-lifetime spending, with those functions assumed to be reasonably consistent across a wide variety of people. So in your case, working-lifetime spending, including taxes, is 90% of income, and you might typically expect your retirement spending to be 60-80% of working-lifetime spending. Some people will have higher or lower values, but not by too much, since in any case both functions are bounded at one end (100%) by "financial gravity" and at the other end (0%) by the need to buy Ramen noodles.

3. On the other hand, the dollar amount of money spent varies far more widely, and thus, so do savings. A 35-year-old couple with a kid in rural Kansas with $50K socked away already is doing pretty well. For a professional couple of that age paying rent and day care in Manhattan, $50K is a reasonable emergency fund. If the latter couple wants to retire in comfort where they are, they're probably going to want $100K/year minimum; the couple in Kansas could live like royalty on that amount.

[GaryInCO]

Quote:

Originally Posted by W2R I don't think there is any one amount that you should have saved at a given age, but you have to save sometime. Personally I had nothing at age 50, and went from there. That's the hard way to do it, though.

You had nothing at 50, and retired at 61!? Howinheck did you manage that??

[MichaelB]

Quote:

Originally Posted by spanky79 Hi, my wife and I are 31 years old and consider ourselves pretty aggressive savers. However, one of the problems I have always encountered when researching savings habits is that so often people simply give percentages, ie save 10% of your income, or put x% of your income into a 401k or whatever. However, that's really not that helpful of a metric when trying to figure out how you are doing compared to others your age. After all 10% of a 50k income is 5k, while 10% of a 150k/year is 15k. And really percentages are kinda worthless in the sense that bills aren't based on a % of ones income. Regardless, what I think would be much more helpful are the actual figures, ie, 35 year olds generally should have 50k in their savings account, or by age 40 people should x-amount of dollars in savings. But those statistics are just never available.

If you compare yourself to others you may get a false sense of achievement and security. You also may limit yourself to their lower standards. You would be better off setting an objective and milestones and then measuring your progress. For example, $2M, adjusted for inflation, after tax, by age 60.

[harley]

Quote:

Originally Posted by spanky79 However, that's really not that helpful of a metric when trying to figure out how you are doing compared to others your age. After all 10% of a 50k income is 5k, while 10% of a 150k/year is 15k. And really percentages are kinda worthless in the sense that bills aren't based on a % of ones income.

Actually, I think those metrics are much more useful than straight numbers, and I also think that bills pretty much are based on a percentage of one's income. A person who makes 5x another person's income is liable to have a relatively higher rent/mortgage, more expensive car, more HBO channels, eat in fancier restaurants, etc, even if they are fairly frugal. The person making more money probably does have the freedom to save more dollars, but all in all I think knowing the percentages gives one a better estimate on how they are doing based on their lifestyle. Knowing your peer's real $ amounts is just voyeurism. Which, I must admit, can be a lot of fun, even if it's not really that helpful.

[W2R]

Quote:

Originally Posted by GaryInCO You had nothing at 50, and retired at 61!? Howinheck did you manage that??

Like I said, it's not easy!

LBYM.

When you live on a bare bones budget for years and years, and get used to it, you plan for lower expenses so you don't need as big of a nestegg. By the time I was 59-60, I had accumulated that minimal bare bones retirement nestegg and was saving more just in case, while waiting to qualify for retiree medical at age 61.

Then, as life would have it, I came into an unexpected inheritance so now my income is more than what I originally planned to spend in retirement. I am trying to spend more too. Without it I already had enough to retire at 61, but without home renovations, the iPhone, and similar fluff in the budget.