Vanguard annual retirement readiness outlook

[pjigar]

Vanguard Retirement Outlook report

A lot of news outlets has picked up the data from this report and turned it into "Millennials on Better Track for Retirement Than Boomers and Gen X" story. But the report says a much broader story. Most interesting data (for me) in the report was "retirement spending need". Most retirement calculators/articles assume 70-85% of income as retirement spending need which is not true as shown in the report (then again this forum already knew that). Looks like the mainstream media couldn't see the forest for the trees, once again.

Summary: Everyone but the people in 95th percentile needs to save more/spend less/invest better for a sustainable retirement. No surprise there.

 

[HI Bill]

For me, the most telling graph in the paper was Figure 10: For those with savings in the 95th percentile, most saved 19-28% of their income. For those in the 50th-70th percentile, the savings rates were remarkably similar, at 7-14%. For those in the 25%, savings rates were 0-6%.

This ties in well with Figure 11, which shows that those in the 25, 50, and even 70 percentile hold too large of a cash position. When you get to the 95%, cash still seems to be around 25-30%, but that leaves the remaining ~70% in equities and bonds.

Until I started working on multi-million $ proposals, I could not fathom what a million $ was. Until I hit FI, I did not truly understand the power of compounding investments and time. You only live once. Experience can't be taught. Most folks can't, won't or don't plan for tomorrow, next week, or next month, much less next year, or a couple of decades down the road. I didn't get really serious about retirement until 2000. It took me just 20 years to reach my goals. Sure wish I had started with my first j$b in 1993!

 

[pjigar]

Thanks for pointing out the appendix data. I didn't read that far. The input data is really very telling.

Fortunately I started planning for retirement during the first year (2000) of my full time job. I always say "snowballing is real and it is unbelievable". Although I must say that the first decade felt like we were treading water due to the low savings rate and market turmoils of 2000/2008. But then the things just took off. Our nest egg has grown beyond our wildest imaginations.