Here’s how much Americans, by age, think they’ll need to save to retire:
- 20s: $1.20 million
- 30s: $1.44 million
- 40s: $1.28 million
- 50s: $1.56 million
- 60s: $968,000
The bad news? Survey respondents have saved only $89,300, on average, so far, according to the study.
Kiplinger
There it is again, that mystical $1,000,000 or thereabouts. It’s meaningless.
The real question is how much in income will I need in retirement to live the full lifestyle I desire for many years while coping with inflation.
That question has many variables including age at retirement, all sources of income, marital status and willingness to make changes such as relocating or simply reducing spending.
How frugal do you want to live, what are you willing to give up, how do you plan to spend time in retirement?
The lower the income you have that sustains your lifestyle, the easier it will be to reach your goal because Social Security will replace a higher portion of your working income.
$1,000,000 will provide about $35,000 to $40,000 in income adjusted for inflation. Add Social Security.
Does that meet your income needs in retirement?
QUINNSCOMMENTARY 
I still think that this question has it place if the people realize that they need a million dollars or more but they only have $89K. At that point you need to be asking what I can do before it is too late.
You may think that the mystical $1,000,000 or thereabouts is meaningless but it has its purpose. Many people think that even $1m is impossible. But it is a starting point. You can’t ask a 20-yr-old what his retirement should look like when he doesn’t even know what his current life should look like. Tell a 20-yr-old that they need $5 million and they will just give up and figure that they will have to work until they die so they will live in the moment instead of saving anything.
When I was 50, I went to both company and union retirement seminars. I had been warn by a retiree that medical costs were a surprise to him. I would ask at the seminars how to predict my retirement medical costs. No one would even guess. At the time medical costs were raising faster than inflation and Obamacare was about to become the law of the land. Nobody knew what was going to happen.
Even after I did retire, I did not understand that Medicare was not totally free. I didn’t realize that some parts you would have to pay for or that there was co-insurance. All I knew before that, that I was paying payroll taxes for Medicare and it was going to be free healthcare after 65. I really didn’t know what it covered. I’ll probably won’t fully understand the coverage until I use it a few times in a couple of years from now.
So what do you tell a 20-yr-old on how much his healthcare will cost after he retires? I am thinking that he might like a place to live and food too. A million is not enough but it is a wake up call and a starting point or you better figure out how low you want your standard of living.
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My brother in law was military and retired with half pay after twenty years*. His wife never worked, and divorced him and received half his retirement (plus retirement health benefits). He didn’t entertain negotiating either. He had no choice. They took it.
As a state employee, I believe my wife had a claim on my pension also, and rightly so. It may depend on which state you live in. It’s irrelevant now since we’re still married and she will continue drawing my pension when I’m gone.
*I believe he also earned SS benefits for his service time also.
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Surveys are good to find out what they are thinking but are not very useful for info to act on. What does a 20 something know about retirement or a 30 something for that matter. As to what they have invested thus far for retirement, I bet many can’t tell you. I also bet they don’t know what it would take to get their accounts to the level they say they will need.
On the flip side, I don’t think retirement needs are knowable at ages 20-40. It is just something you should figure on saving for in an IRA, 401K, or something like index funds in taxable. When I was in my 20’s, I had no idea what things would be like today. Me nor anyone else thought the income I have in retirement is this great or this worthless
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I was about to add …this worthless in terms of what a dollar will but in relation to what it was worth back in the 60’s.
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When I was working fresh out of high school (1980), I thought that I would have it made if I could earn $10 /hr or $20K a year. After a few years of working with high inflation I knew that I was wrong.
But what did I know then? I was probably 30 before I started taking retirement seriously. My son was about 5. I was finally getting the grasp on my 401k and retirement planning but that was still decades away.
After 45, we became empty nesters, my wife and I really starting looking at our retirement goals. Before that we were just throwing money at a hope of retirement. By 45, it looked like I was going to live until retirement.
In the end, I retired at 55 with no drop in our standard of living. Now that I am 61, looking back, I don’t know that I could have told myself to do anything more than I did other than save for retirement. My son is 36 and he is finally listening and learning what he needs to do to seriously save for retirement.
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One way is to set a goal of 100% base pay income replacement in retirement and adjust you investment goal as base pay rising.
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The real question is how much will I need to spend in retirement to live the full lifestyle I desire for many years while coping with inflation. Then one can ask if they have enough sources of income to cover their retirement needs.
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I retired in 2006 as a Programs Manager at the Headquarters, U.S. Marine Corps. I was 55 yrs. old w/36.5 yrs. service. My salary at that time of retirement was $135,000. I retired in the old “gold standard” system CSRS. Therefore, I get no Social Security. In my 17 yrs. of retirement, thanks to COLA increases, I have earned $1,616,000 in pension payments. To those who may say “I am lucky,” I say “No, I am not lucky.” I made the decision to go to work for federal Govt. right out of high school, knowing, at that time, I would have to work until age 55 before I could think about any retirement. During my working career I endured two divorces. One cost me my IRA, the second cost me my 401K. But, I maintained in each case I would not entertain any negotiation pertaining to my federal retirement. My pension this year is paying me about 94% of what I was earning when I retired in ’06. All in all, I cannot complain.
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