Average Retirement Savings by Age 60. Are You Almost Ready to Retire?!?
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
In this video I'm going to show you three
things, what the average retirement savings is for a 60-year-old if you're comparing that
60-year-old against a population of savers, I'm going to show you that same number if
you add in the-non savers in this country, and I'm also going to show you what you
should have at 60 years old to retire in the same lifestyle that you're living
right now. Coming up next on Holy Schmidt. Holy Schmidt. So you're 60 years old, five to seven years
out from retirement, maybe a little bit more because of the pandemic that we're all in right
now and you want to know where you should be. Well, that's a very good question. And it's a
very complicated question because the pool of 60-year-olds spans the gamut from those that have
saved virtually every penny they've made up until this point in their life to those that have had
massive financial obligations, are deep in debt, and don't have a dime and everything in between.
So let's talk about each one of these categories. First, let's talk about the average retirement
savings for a 60-year-old when you're comparing that 60-year-old amongst a group of savers.
This number comes directly from the Fidelity 401(k) balances and it's quite accurate, it's
a good representation of where folks are.
Now, I want to point out two things. First, the
difference between average and median. Let's say you have five different 60-year-olds
and in their 401(k) one had $700,000, one had $100,000, the next one had $61,450, number
four had $45,000 and number five had $17,550. This totals $924,000 amongst those five 401(k)
participants. And that gives an average balance of $195,500. Now, even though I'm showing
you five balances here I could have easily have shown you 55,000 or 5 million and it
would have looked very similar to this. The average balance for a
60-year-old in their 401(k) is 195,500 and the median balance is 61,450. So
let's write these down. Average, 195.5K, median, 61,450. There are many, many problems with this
information.
If you went to fidelity.com and you got this information, and that's where it
came from, most people watching this video would just call it a day. They'd say, "There's
no chance I'm going to live well in retirement." That's because retirement funds like Fidelity,
Vanguard, et cetera, have a very strong interest in you depositing more into your account, which
is of course good for you, but it's also good for them. So let's take this information, I'm
just going to tell you what it actually means. The average balance of $195,500 is comprised of
a few, very, very large balances at the top. The flip side is this right here, 81% of Americans
have less than $5,000 in savings. The problem is this number right here, the $700,000, we'll call
those the trust fund and super saver 60-year olds. Some didn't have the same bills that you might've
had. Others lived very spartan and saved more than most. , Maybe they lived at home until they were
50, who knows? But they were able to sock away a lot of money but they don't represent the masses,
but they do skew the number of the average way up. This number, the median is the number that's more
important here because this is the more accurate representation of where you probably should
be if your average is $61,450 in your 401(k).
Now, what happens if you overlay this population
right here? 81% of Americans have less than $5,000 in their 401(k), 81%. So that brings these
numbers way down, in fact, the actual numbers when you factor in the non-savers are
an average of $39,191 and a median of $15,725. 81% of the population has almost nothing.
When you add that in 39,191 is the average and the median is 15,725. The question is, what should
you have? Well, they'll tell you it's 8X, 8X your current salary.
So if you make
$50,000 a year you should have $400,000. And before you shut the video off and pretend like
you didn't turn it on, let's talk about this. This assumes two things. One, it assumes that you
get a rate of return of six and half percent while you're working and 5% after, but more
importantly it assumes that you have the same exact expenses when you retire and therefore need
the same exact income that you're making today. The fact of the matter is when you retire you
won't have an endless mortgage that you need to pay off, you won't have college education
for your kids.
You may have already paid for your child's wedding. You might have already
taken the funds that you needed to set aside to care for an elderly parent or a relative in
need and put those aside and dealt with that. So at 65 years old a lot of your expenses that
you are paying for right now may or may not exist. Certainly by the time you get to 70, 75, 80,
those expenses are going to drop way down. So, while they say you should have 8X for your
savings in order to achieve the same income that you have now in retirement at six and a half
percent, I actually think for many people the numbers are about half that, as little
as 4X. So don't worry if you don't have 8X, you can't change the past.
Don't even worry if
you don't have 4X, if you don't have 195 thousand, or even 15 thousand because there are
things you can do now and even in retirement to help your income go up or expenses go down.
We'll talk about those in an upcoming video. If you like this video, please give it a thumbs
up so that other people can find it as well. Also don't forget to click subscribe and notifications
down below and that will alert you the next time I post a video, I try to post them twice a
week.
This is Jeff Schmidt, thanks for watching..
Posted in Retire Wealthy, Retirement Planning, Tips for Retiree's