Retirement Savings Research: Are You on the Right Track? Ep #176

A recent Charles Schwab survey of 401k participants found that they believed they needed to save at least $1.9 million for their money to last through retirement. When Schwab did this survey in 2019, the target retirement savings was $1.7 million. People are projecting needing $200,000 more over a short two years! So let’s pretend that your number is $1.9 million for retirement. What will it take to get there for the average person? What are some tips to help you get on track? Listen to this episode of Best in Wealth to learn more![bctt tweet="In this episode of Best in Wealth, I look at some retirement savings research to help you determine if you’re on the right track. Check it out! #wealth #retirement #investing #PersonalFinance #FinancialPlanning #RetirementPlanning #WealthManagement" username=""]Outline of This Episode[1:36] Teach your kids financial literacy[4:43] How much do I need to save for retirement?[7:51] How to reach $1.9 million by retirement[9:55] The median retirement savings across different age groups[16:57] My top tips to help you achieve your savings goals[21:56] Are you ready to get focused and disciplined?How to reach $1.9 million by retirementWhile the prospect of having $1.9 million seems daunting, you know that saving early and often will increase your chances of reaching this goal. A 401k or 403B is a great way to start saving and can help you build your nest egg. These plans are capped at $19,500 in 2021 unless you’re over 50, then you can contribute an extra $6,500.You can also contribute to a Roth IRA/IRA, which can be up to $6,000 annually (or $7,000 if you’re 50+). What about a Backdoor Roth IRA or the Mega Backdoor Roth IRA? It’s highly technical but that’s one of the reasons we all need trusted advisors, right?The median retirement savings across different age groupsEvery three years, the Federal Reserve examines the changes in US family finances, including how much people have saved in retirement accounts. Using data from the 2019 survey, The Center for Retirement Research at Boston College calculated the median retirement savings across several age groups:The median IRA/401k balance for someone 35–44 is $51,000.The median IRA/401k balance for someone 45–54 is $90,000.The median IRA/401k balance for someone 55–64 is $120,000.If you’re looking to get to $1.9 million by retirement and you’re a median saver, how much will you need to save to hit that mark? For the sake of this experiment, I’m going to assume an 8% savings rate (a number slightly lower than the average US stock market return). It’s better to be conservative than not save enough.A 35-year-old who has saved $51,000 is clearly in the best position to save more. To get to $1.9 million you’ll still need to save $900 a month over 30 years. Can you do that? Of course you can. But older workers would have to save far more. A 45-year-old with $90,000 saved has to save $2,475 a month to hit the $1.9 million by age 65. Can you save that much a month? These are the questions you need to be asking yourself. A 55-year-old with $120,000 saved has to save $9,000 a month to hit the $1.9 million by age 65. That seems extremely daunting, right?[bctt tweet="What is the median retirement savings across different age groups? If the numbers describe you, is it enough to last through retirement? Learn more in this episode of Best in Wealth! #wealth #investing #PersonalFinance #FinancialPlanning #RetirementPlanning...