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"By 35, You Should Have Double Your Salary Saved" - Do You?
- Thread starter BWoog
- Start date
The goal the article is talking about includes retirement savings.
Well, to give you a counter point since we're both going off anecdotal experience here, I ran the gamut when I got back from working abroad. Moved out to Cali because I was hired for a really, really low paid editorial job, then the company folded 6 months later in the 2008 crash. I spent 4 months struggling to make rent on my itty-bitty studio (on Rampart if that tells you anything) while I worked in a restaurant. Got my 'career' gig after that (took 4 rounds of interviews) which was also very, very modestly paid and worked my way up in the 5 years I was there. At that time I was 27 and started with $2k in the bank which was wiped out when I got laid off (no unemployment given). I'm 37 now, haven't worked properly in 3 years, as I mentioned, but I'm not too far off the goal in article. I just lived within my means, paid of any debt as soon as I could, and tried to save when I could. You could say I got lucky with my career gig, but I had been on many many interviews for others before it, and being laid off with no unemployment just 6 months into a cross country move is pretty devastating. I do understand that sometimes you get served hit after hit, but I think people are also hampered by what they think they need (cars, electronics, cable, etc.) rather than what they do and bad habits in general (credit cards, etc.). It's no fun saving...but you can.
It is good to see so many reaching the OP expectations.
Debt decisions. Gotta make them. Avoiding debt is never a bad choice IMO. A student loan was a debt decision I am very glad I didn't make.
Consumer debt using credit cards is the absolute worst. They're a disgusting scam by the banks so eager to encourage debt. Carrying credit card debt is probably the poorest economic decision you can make. If you lack the discipline, then scissor mutilation is the best thing you can do to your credit cards.
Assuming you actually have a salary, saving and investing should be a high priority and 10% is not unreasonable even if you're making minimum wage. It's not going to cripple your lifestyle as long as you are living within your means and following a budget.
Everybody is following a budget, right?
Debt decisions. Gotta make them. Avoiding debt is never a bad choice IMO. A student loan was a debt decision I am very glad I didn't make.
Consumer debt using credit cards is the absolute worst. They're a disgusting scam by the banks so eager to encourage debt. Carrying credit card debt is probably the poorest economic decision you can make. If you lack the discipline, then scissor mutilation is the best thing you can do to your credit cards.
Assuming you actually have a salary, saving and investing should be a high priority and 10% is not unreasonable even if you're making minimum wage. It's not going to cripple your lifestyle as long as you are living within your means and following a budget.
Everybody is following a budget, right?
Sounds like you're doing fine as they are using "savings" as an all inclusive term including retirement accounts. :)
Older than that, and fuck no. I did at one point, but all of it went on a house deposit... and I'm assuming half a million quid worth of house debt doesn't count as savings. lol
It sounds good on paper, but man it doesn't feel very good in practice. We're pinching literally every penny we can to try and get a home here (Seattle, WA), but the market is so insane that we have given up completely and instead are saving for a piece of property where we can build a house.
We operate on a very strict budget and save over 50% of our net income every month.
Don't get me wrong, based on pure numbers investing is the way to go. I just don't like the way the argument is presented as 4% interest vs 7+% as some kind of no-brainer. There are legitimate reasons why someone would want to pay off their home early instead.
I suppose you're right when viewed through that lens. My viewpoint is that you're investing in something that grows at 3% while also attacking 4% (or more) interest against you. So you're saving your future self $100,000s and growing your money at 3%. Perhaps that doesn't work out to 7% growth though when figured. I might model that in a spreadsheet to check myself.
The increase in value of the mortgage is more steady than the market you're investing in.
Obviously, past performance is not a guarantee of future performance. That said, we have 80 years of data to pull from. 7% historically isn't very good. Now current events, automation and a bunch of other things may ensure that the market doesn't maintain that trajectory. Nothing is certain.
Yeah, way better than most people. My wife and I make good money but due to medical bills and more, there's no way we could afford to save 50%. Not even 10% really. Luckily my retirement automatically comes out.
I'm in the 80ish as a white Male some college lol. I'm on disability trying to get a degree, so I don't even make enough to pay basic bills on my own.
Close. 33 and almost there. 401K and Roth have been pretty good to me. Decent savings account set aside in case shit hits the fan as well.
Oh boy...I'm a few years away and only have about a 1/3 of my salary saved. :(
And possibly I'll have even less at 35 if things goes the way I think it's going. There's no way I'll get to that unless I win the lottery or luck out on a really good investment. So chances are extremely slim. -_-
And possibly I'll have even less at 35 if things goes the way I think it's going. There's no way I'll get to that unless I win the lottery or luck out on a really good investment. So chances are extremely slim. -_-
Do any of y'all live in Los Angeles? How the fuck can you save? I'm 31 and not only do I not have a penny saved, I'm $20k in debt. I make decent money ($55k a year) and have a roommate but I'm still living paycheck to paycheck. I fucking hate it.
I'm just speaking to the volume of people at poverty/below is a significant variable in this discussion. I just think theres a little more to it than just effort that's hampering people's forward mobility.
You've been fortunate enough to keep it going. And yea, some people are making mistakes. But that surely isn't the rule for everyone that's not making the cut. There are some larger issues at play.
Yes. I've been stupid, but I'm still lucky enough to have a job with a 401k, and the ability to not live paycheck to paycheck. I work hard to keep my job, but that's out of the hands of people a lot of the time. I know I'm lucky in this economy to be in a good spot.
This isn't to discount our hard work. Which some people take the word luck to mean. Someone could have your identical story, but one damaging event could have thrown that all off.
31 and yes, I thank/blame my parents who weren't good with money so I decided very young that I don't want to live in poverty among other things they were a bad example of. Also I don't live in the US. I practically saved everything I could since my first job... I even refused to buy a car until I was 30!
I've become less stingy as I get older, I'm splurging on restaurants and travelling. But you gotta live!
I've become less stingy as I get older, I'm splurging on restaurants and travelling. But you gotta live!
I'd fucking crush with that paycheck here in Florida. Too bad everything is relative.
I won't deny that living in Philly with three roommates certainly gives me the ability to put that 20% away each paycheck. I'm hoping to move to a better city and live with fewer/no roommates so yeah it'll be RIP this plan at some point...
Born in 85, I have almost 10x my gross salary in savings.
To be more accurate, investments. Half of all monies are from gains in the stock market, most of it came from investing in Sony back when they were worth $23/share (now $47).
I graduated with 0 debt because my parents paid for college. Forever grateful. I took nothing from them after graduation and gave them a month's worth of my salary every year until I got married in my late 20s.
I started working in a developing country at US$1,000/month. I worked 70-80 hour weeks and managed to climb to a good position over time. I do not drink, smoke or have expensive habits (my wife on the other hand..). I saved as much as possible while never letting my wife and I feel like we were scrimping. We took expensive annual holiday trips.
I also suffered a break in employment for about 6 months the past year. Started a company which failed and looking for a job was tough and rough. Found one and it looks like it's not a stable gig and I'm planning ahead.
Millennials have it rough. The market is very tight and this isn't the good old days when you could buy a house while working as a grocer. Still, good luck, hard work, smarts and generally performing above your peers will yield positively.
There's no mistaking luck is a huge factor, it's no coincidence Bill Gates, Steve Jobs and other computing moguls were born within the same decade. But I ain't got time to blame luck or external forces. I channel my willpower to push forward and climb.
To be more accurate, investments. Half of all monies are from gains in the stock market, most of it came from investing in Sony back when they were worth $23/share (now $47).
I graduated with 0 debt because my parents paid for college. Forever grateful. I took nothing from them after graduation and gave them a month's worth of my salary every year until I got married in my late 20s.
I started working in a developing country at US$1,000/month. I worked 70-80 hour weeks and managed to climb to a good position over time. I do not drink, smoke or have expensive habits (my wife on the other hand..). I saved as much as possible while never letting my wife and I feel like we were scrimping. We took expensive annual holiday trips.
I also suffered a break in employment for about 6 months the past year. Started a company which failed and looking for a job was tough and rough. Found one and it looks like it's not a stable gig and I'm planning ahead.
Millennials have it rough. The market is very tight and this isn't the good old days when you could buy a house while working as a grocer. Still, good luck, hard work, smarts and generally performing above your peers will yield positively.
There's no mistaking luck is a huge factor, it's no coincidence Bill Gates, Steve Jobs and other computing moguls were born within the same decade. But I ain't got time to blame luck or external forces. I channel my willpower to push forward and climb.
I live in La. I didn't have any student debt though coming out of college so that helped a ton. That and rent was cheaper.
Don't forget that if you don't own, you still have to pay rent money to live somewhere, which is entirely lost money. While you aren't paying much towards the principal when a mortgage is initiated, the amount added to the principle each month grows over time and adds up.
There's a NYT calculator that does a good job of telling you whether renting or owning is better. It mostly comes down to the cost of owning versus renting in the area you live in.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
What kind of fucking medical school is this that you were that desperate to apply to? Average debt for a 2017 grad is expected to be right around $200K.
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I'm 34 and I meet this criteria if it includes retirement accounts. I also work in finance so I'm paranoid. BUT...
...this shit pisses me off. Of course millennials don't want to be lectured about this. From experience, a very large portion of people retiring today credited with being "cheap" "good with money" or "saved his whole life" is full of SHIIIIIIITTTT.
It's a bullet proof pension, social security, and more often than you think - inherited assets. For millenails to retire on their own savings + Social Security - they should be making six figures by 35. Which fucking sucks and is not a reasonable expectation.
...this shit pisses me off. Of course millennials don't want to be lectured about this. From experience, a very large portion of people retiring today credited with being "cheap" "good with money" or "saved his whole life" is full of SHIIIIIIITTTT.
It's a bullet proof pension, social security, and more often than you think - inherited assets. For millenails to retire on their own savings + Social Security - they should be making six figures by 35. Which fucking sucks and is not a reasonable expectation.
This seems to be primarily aimed at Americans, for whom I guess private retirement saving is kind of all there is?
Here in Sweden we have a public pension system, which is paid into every month by you and your employer. The total is 18% of your salary I believe, but only a few percent of that comes out of your salary through taxes. The largest part is paid by the employer as part of the employer fee. Is America's Social Security kind of this, or...?
In addition to that, most get 4.5% (more if you're lucky) on top of their salary paid into a different pension system by the employer. This isn't a contribution matching system as seems to be common in America (401K?), you don't put anything into this yourself. You just get it on top of what you make. I guess you could view it as your salary really being 4.5% higher than your contract says it is.
So this is what you get by doing "nothing" (except for having a job). This still will only give you (in the normal case) something like 60% of your final salary by the time you retire, so private retirement savings are of course recommended. Which I personally do have, but at 33 I'm a long way off from 2x my salary. Making steady progress though, so I'm not worried.
Here in Sweden we have a public pension system, which is paid into every month by you and your employer. The total is 18% of your salary I believe, but only a few percent of that comes out of your salary through taxes. The largest part is paid by the employer as part of the employer fee. Is America's Social Security kind of this, or...?
In addition to that, most get 4.5% (more if you're lucky) on top of their salary paid into a different pension system by the employer. This isn't a contribution matching system as seems to be common in America (401K?), you don't put anything into this yourself. You just get it on top of what you make. I guess you could view it as your salary really being 4.5% higher than your contract says it is.
So this is what you get by doing "nothing" (except for having a job). This still will only give you (in the normal case) something like 60% of your final salary by the time you retire, so private retirement savings are of course recommended. Which I personally do have, but at 33 I'm a long way off from 2x my salary. Making steady progress though, so I'm not worried.
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Impossible to predict but nobody can complain about not having any investment opportunities. The last 9 years have been the best ever for stock market gains and even over 40 years with buy and hold stock or mutual funds, people have done very well. The fear of risk in the stock market gets grossly overblown and often gets used as an excuse to not save and invest.
Nah, I'm good. Haven't you guys seen my massive wall of video games behind me on YouTube? That's my retirement plan.
word on the street is that floyd mayweather has $123 million in a checking account. im not sure how to think about his salary, but that is certainly doing it wrong.
you are not doing both of those things. the house is growing at 3% (in this example) whether you pay the mortgage or not. consider you buy a home worth $100. you put down $20 and borrow $80. the house immediately appreciates by 3% so its worth $103. the mortgage is still $80 and your equity is worth $23. if you had immediately made an additonal $5 principal payment you would have $28 in equity (and $5 less in a checking account or whatever) and a $75 mortgage, but the house is still worth $103. it affects your equity return but not the asset level/house return. you are only saving the interest, which is the 4% return in your example.
paying mortgage interest has tax advantages, so the effective rate is generally lower than the listed rate. you would want to take that into account when making the decision as well.
the mortgage does not appreciate in value. thats why inflation is so good for debtors. if you mean the interest rate is certain, while the equity market return is not, then i agree. my wife and i actually pay down our mortgage a bit because it is risk reducing should one of us lose a job or something.
you can get almost 150 years of data here: http://www.econ.yale.edu/~shiller/data.htm
it doesnt have a total return series, but my back of the envelope calculation on that suggests its 7.4% in nominal terms. so 7% is a reasonable long term assumption since its what the market has done over the long term.
Not quite 35, but going by my current budget, that's not gonna happen until I'm like 40, barring any huge salary raises in my near future. I just managed to get 6 months' expenses saved and start investing any extra cash I save, but even with 9-10% returns YOY it's gonna be a while before I hit double my yearly salary in savings and investments.
Clearly, "experts" can make generic rules that perfectly apply to someone.
If you're a lawyer, dentist, MD or PhD there's a pretty good chance you won't manage this, if we're talking on net asset terms (which is the only relevant metric).
However , long term income potential is increased for such cases so rules like this are really not generally applicable (except for humanities PhD, you won't ever be rich, sorry).
If you're a lawyer, dentist, MD or PhD there's a pretty good chance you won't manage this, if we're talking on net asset terms (which is the only relevant metric).
However , long term income potential is increased for such cases so rules like this are really not generally applicable (except for humanities PhD, you won't ever be rich, sorry).
wow. i am not even sure how this is possible considering the limits on retirement accounts (unless you dont make much? or your retirement account is just AMZN shares...). that is crazy good.
when i was first working after school and living in new york, i committed to putting as much as possible into my retirement account since i had been sold on the power of compounding over that long a period. really happy with that decision now. i guess i had to live in a small apartment with roommates for a while but worth it.
I could never pull this off. Lots of similar opportunities in my field to make bank but basically live in equivalent of mining towns.
You're right. I still think it's wise to build equity and move down the amortization table early on in the mortgage for practical, peace of mind reasons. But I acknowledge that mathematically it doesn't make sense. I just hate paying interest.
I meant the value of the home. I believe the poster I was responding to used those words and I used them without thinking. Homes will generally track at least with inflation and it's a steadier course. The stock market is more volatile, but has better payoffs over time.