So, How Much Should a 35-Year-Old Have Saved?

You may have missed it, but there was a bit of a “twitter storm” regarding retirement last week.

More specifically, a relatively innocuous post about how much a 30-year-old should have saved toward retirement got a lot of 35-year-olds stirred up. The CBSMarketwatch article quoted Fidelity as saying that you should have a year’s worth of salary saved by the time you’re 30 – but the real point of controversy appears to have been driven by the premise that by the time you’re 35, you were supposed to have twice your salary saved.1

The point, of course, is that it’s easier if you start early. But honestly, devoting 15% of your pay to retirement savings at any age is a daunting prospect, much less at a point when college debt and the prospects of a mortgage, kids and setting aside money for the kids’ college savings loom large. If this is “easy,” imagine what hard looks like!

I’ve been a consistent saver over my working career – never missed an opportunity to save in a workplace retirement plan, never worked for an employer that didn’t offer one, and always contributed at least enough to warrant the full employer match. And yet, I went a long time in my working career before I was able – having, among other expenses, law school debt, a mortgage, and three kids to help get through college – to set aside 15% for retirement (sadly, by the time I could afford to save at that level in my 401(k), the IRS “intervened”).

I don’t know how my 35-year-old self would have reacted to the article, or the twitter post, though I suspect I, like many of those who responded to the “tweet,” would have been a tad incredulous.

Ultimately, of course, the answer to how much you “should” set aside for retirement – regardless of your age – is largely dependent on what kind of retirement you plan to have, and when you plan to start having it. And, regardless of age, taking the time to do even a rough estimate on what you might need to quit working (or start retiring) is going to be time well spent.

Because while it’s possible to “catch up” later – it can be hazardous to count on it.

Footnote

  1. Controversial as this premise clearly was to those in the targeted demographic, it’s really just math. To get there, Fidelity assumed that a individual starts saving a total of 15% of income every year starting at age 25, invests more than 50% of it in stocks on average over his or her lifetime, and retires at age 67, with an eye toward maintaining their preretirement lifestyle – but you might be surprised at what even these arguably aggressive goals produced in terms of a replacement ratio at age 67.

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