How Much You Should Have in Your 401(k)—By Age

[Music] breaking news America is broke and headed toward a retirement crisis would you say it's time for everyone to panic yes I would K and I'm not just being dramatic like those fearmongering cable news anchors or your niece when the tag on her shirt suddenly becomes itchy according to a recent study from Ramsey Solutions nearly half of Americans aren't saving at all for retirement and those who do save aren't saving enough enough that's about as sad as that scene in Titanic where Rose killed Jack by not scooting over just scoot a little bit Rose just a scos would have done would have done it you could have saved a man's life by scooching but here's the deal you don't have to be one of those people you don't need anyone's permission to start saving right now to make your retirement dreams a reality so how much should you be saving and what if you're behind and you're already in your 30s or 40s or even 60s well in today's video we'll take a look at what average Americans have saved for retirement by the decade so so you can see how your nest egg Stacks up PS don't stack eggs it's very dangerous and more importantly I'll unscramble what a grade A Nest Egg would be for your current age that's right we're going to crack this case wide open so you can hatch a plan to retire with dignity But first you know what would be excellent if you would like and subscribe to the channel and maybe share this with your friends because as we know now sharing is important just ask Jack from Titanic oh wait you can't because he's dead rose a scos it's all it would have taken I'll never let go I promise okay let's take a look at what Americans have saved for retirement broken down by age group according to recent data Americans in their 20s average balance $10,500 contribution rate 7% okay that's it's not a lot and let me just say 7% it's not going to get the job done and I get it you know you're young you probably haven't earned much yet but the earlier you start investing the better even just 5 years years can make a huge difference and could really impact when you'll be able to retire the important thing is to just get started building a strong financial Foundation as soon as you can build that habit and this starts with getting out of debt building an emergency fund as soon as you've done that it's time to start investing and what I recommend is 15% of your income going into retirement accounts look if you're in your 20s you're very young you still have high natural levels of collagen you know what no cap and dulu means and you can sleep on a futon without needing two weeks of physical therapy to recover and on top of that you also have time and compound growth on your side and those two things combined are a pretty powerful wealth building Force so take advantage of them ASAP do not squander these years here's what I mean let's say your annual salary is $50,000 investing 15% of your income would be 7,500 a year or 625 a month if you invested that amount every year for 30 years starting at age 25 and we're assuming a 10% rate of return you would have $1.3 Million by age 55 and that's if you never increase your contribution amount so you could and should have way more than that because you'll likely make more money than you are today that's the power of time and compound growth so the bottom line get started early so how much should you have saved for retirement at this age well an 8 plus in my book would be $50,000 or more by the end of your 20s but if you don't have that don't for freak out if you're debt free and investing 15% before age 30 I'm still going to call that a win you've got plenty of time left to build up that Nest EG all right moving on Americans in their 30s average balance $338,500 contribution rate 8% so the average American in their 30s still isn't contributing enough to their retirement and I'm guessing this is because a lot of people in their 30s are starting families they're taking on mortgages they still have debt hanging around and at this point in your life you might not even be thinking thinking about retirement yet you've subconsciously said to yourself that sounds like a problem for future me I'm now I am future me I face sucks but that's a big mistake this is the time to make saving for retirement a priority if you're in your 30s you still have debt and no emergency fund that's why you're only investing 8% you're doing too much at once and you still have a mess to clean up here's what you need to do pause investing that's right I'm telling you to stop investing just for a little while to get these prerequisites knocked out so you can get back to invest way more than 8% and research shows that the top indicator of investment success is your savings rate aka the percentage of your disposable income that you're actually putting into retirement so let's get that 8% up to 15% to make sure you're doing enough to reach those retirement goals so how much should you have saved by this age let's do the math using that same $50,000 salary and a 10% expected rate of return from our last example to see what a great a nest egg would be for someone in their 30s if you're 35 years old right now and you started investing 625 bucks a month at age 25 you likely have around $131,000 in your retirement fund if you've got that much sitting in retirement you're on track to retiring a millionaire that's a good thing yes yes yes next up Americans in their 40s average balance $93,500 contribution rate 8% so if you're in your 40s you're probably making more money than you ever have before and because of that it's easy to fall into the Trap of keeping up with the Joneses buying expensive cars and going on vacations you can't afford that's called lifestyle creep and look I'm not mad at you for using some of your hard-earned money for a girl's trip to Branson to see Yakov smaroff or the world famous bald numbers whatever flips your flops it's your life I said a flip flop a flippy a flippy to the Flip Flip Flop and it don't stop just make sure that you're also thinking longterm and putting enough of your paycheck into your retirement accounts so how much should you have saved by your 40s well using the same salary and expected rate of return from our last example let's say you're 45 years old and you started investing $625 a month at age 25 you should be around $472,000 in that Nest Egg which is well above the average we saw earlier but if you're in your 40s and you haven't even started saving for retirement yet there's still time and there's still hope the average salary for Americans in their 40s is around $59,000 so if you started investing 15% of that Sal salary starting at age 40 and did that every year until you retired you could still retire with a million doll net worth so have hope next up we've got Americans in their 50s average balance $160,000 contribution rate 10% okay still not looking good here but remember this is an average and clearly average sucks but it also means a lot of people have more than that and a lot of people have less than that so how much should you have at this age if you're 55 years old right now and you started saving $625 a month at age 25 you should have about $1.3 million in that Nest Egg plus some gray hairs and a full arsenal of dad jokes I used to hate facial hair but then it grew on me but if you're closer to average and you're feeling way behind Don't Panic you still have time to get back in the game here are some things you can do to catch up if you're in your 50s number one cut all unnecessary spending so you can increase your investment contributions number two put every single pay raise or bonus toward your Investments maybe even take on a side job or a side hustle number three take advantage of catch-up contributions in your retirement accounts which is an additional 6,500 bucks for a 41k and $11,000 for an IRA number four you may want to downsize your home if that mortgage is a heavy burden and keeping you from investing more and number five lastly if you still have any Consumer Debt hanging around what are you doing pay that junk off you chicken-hearted chucklehead what did you call me let's talk about Americans in their 60s average balance in the 401k $182,100 contribution rate 11% now most people I know would like to step away from their career at some point in their 60s so they can focus on time with family or pursue other passions like traveling gardening or sexagenarian parkour what it just means people in their 60s okay it's not a dirty reference Google it don't Google sexogenarian parkour that's a more specific reference but sexogenarian just means someone in their 60s I digress looking at the average numbers though we see a different story lots of Americans have to keep working well into their 60s because they didn't build these habits early enough and maybe you're okay with that a recent survey found that more than a third of American workers say their retirement dream involves some sort of work that's great that's not a bad thing but if you're going to work in your retirement years it should be because you want to not because you you have to so what would a grade A Nest Egg be at this age well if you're 65 years old and you've saved $625 a month for 40 years you should have about $3.6 million in that Nest EG way to go you looking at you Barb looking at you Gus when I'm 60 we're all going to be named Ashton and stuff it's sad all right we're not done yet you can't forget about people that are older than 60 and that would make them 70 so let's talk about Americans in their 70s average balance $171,400 contribution rate 12% now this last number is truly heartbreaking it's clear that many Americans simply aren't prepared for retirement I mean 171 Grand is nowhere near enough to cover Healthcare expenses in the later years of your life but again keep in mind that this number is an average there are also plenty of millionaires with a high net worth who are comfortably living out their dream retirement they've used Common Sense they've worked hard and they've built wealth that will help them leave a legacy for their families and their communities and that's where I want you to end up with enough to live and give like no one else so hopefully by this point you haven't fried your nest egg and you still have millions of dollars sitting there allowing you to give save and spend to your heart's Delight all right I hope this video was helpful for you or at least eye opening let me know in the comments if you're on track if you're behind or you're ahead with your retirement goals and if you haven't started yet don't put this off as the old saying goes the best time to plant the tree was 20 years ago the next best time is today so get out there and stick a big old sugar maple in the ground doesn't even have to be a sugar maple could be a spruce flowering dogwood for all I care just get to planting all right build that habit and if you need some hope for your financial future check out my new book called Breaking Free from broke you can get your copy with the link in the description below as always make sure to like subscribe and share this with your friends who couldn't tell the difference between a weeping cherry and a crab apple listen we can't all be our thanks for watching I'll see you next time

Channel: George Kamel

Views: 505,324

Keywords: money, budget, how to save money, personal finance, financial advice, finances, money trends, investing, crypto, retirement, smart money, george camel, george kamel

Id: UuRCnY-pRnc

Length: 11min 2sec (662 seconds)

Published: Mon Jan 22 2024