How much should I have saved for retirement?

Question

I am 20. The general age for retirement is 65. The average lifespan of an American is up to 85 to 95ish...

And please don't say it depends on (xyz) i am looking for an average amount.

Answer 1

It's been said that if you are 65 today and wanted to retire comfortably - you need about $1,250,000 accumulating compounded interest. You're 20. So double that for your retirement. However, take heart, you're on schedule.

If you are thinking about a savings and retirement at 20 - then start now. Wherever you are just open a money market fund or Roth IRA and have 10% of your income AUTOMATICALLY deducted from your checking into this account each month. If you do that, you will retire a millionaire.

The only rule is that you arrange for automatic deductions (have a 401K if your company offers one) - do not touch this account under any circumstances until retirement. You can set up another account for emergency funds.

Read The Automatic Millionaire by David Bach
& The S.O. Getting Rich Book

http://www.SoGettingRich.com

Answer 2

The best answer is as much as you can afford to save. If you can only afford $20 a month right now then that's fine. Just try to find ways increase the amount - especially as you get older. There are limits on how much you can contribute each year to certain types of retirements accounts and you should always contribute the maximum allowed if you can. But there is nothing wrong with saving even more, you just have to be aware the gains would be subject to capital gains taxes.

If you are investing in mutual funds or other investment tools, I would recommend you put the largest percentage of you money into very aggressive funds because you have more tolerance for risk while you are young.

The best thing you can do is take a percentage of your income and put it into savings before you do anything else. Then treat the balance as your disposable income. That way you are saving first and basing your stand of living on what you have left after putting away some money.

Answer 3

Sorry - but it does depend on too many factors for there to be one "average" answer.

For someone retiring today, who doesn't live a lavish lifestyle and doesn't have debts, and receives social security, retiring with $500,000 will probably give them a very comfortable life, and less will still let them live reasonably well.

But you are 20. And the full retirement age for social security is already up to 67, and might well be higher by the time you get there - plus social security will probably undergo many changes in that many years. And since there's no real way to tell what inflation will be over those years, it's hard to tell what even $2 million would buy 50 years from now.

Sorry not to give you a more definitive answer. You are wise to be thinking of this.

Answer 4

Statistics do show that 80% of your current income will be same when you retire...that is without including inflation, if your life insurance is paid off, you don't have a mortgage anymore, you don't want to travel or pay for your grandchild's education, and so on and so forth. The best way to figure out a gameplan is to sit down with a financial professional and discuss how much you want to have on a monthly basis when you retire and how to tie up all the lose ends before that time comes around. Also, you'll want to start to pay for long term care as soon as possible so that doesn't kill your retirement plans in the long run.

Answer 5

Most people will tell you that you will need 80% of your pre-retirement income in order to retire comfortably and at the same standard of living that you have at the time of retirement. If you want to travel, you'll need more. If you plan to sell your house and move into something smaller, then you will need less.