If you plan to retire, it's good to know what age do most people retire in America. You don't want to be a misfit and retire too soon. Otherwise, what are you going to do with the rest of your life? You also don't want to retire too late and miss out on doing all the things you want to do.
Many Americans are in a difficult financial situation with only about $17,500 in retirement savings for those between the age of 56 and 61. With such low retirement savings according to the Economic Policy Institute, you'd think most Americans are never going to retire.
The truth is, most Americans do eventually retire. Let's look at the age most people retire in America so you have a baseline retirement goal to shoot for.
What Age Do Most People Retire?
According to the Life Insurance And Market Research Association (LIMRA), 69% of Americans retire by age 66. Roughly 51% retire between the ages of 61 and 65. By age 75, 89% of Americans have left the labor force.
It surprises me that less than 1% of Americans retire before age 50. With the way the Financial Independence Retire Early (FIRE) movement has taken off, as well as the rise of freelance work, you'd think the percentage would be higher.
Further, I've been writing about retirement on Financial Samurai since 2009. Tens of millions of readers have read this site since. I'm hopeful that during this time, more people have built more wealth and have been able to retire earlier as a result.
Take a look at this graphic below that shows what age do most people retire in America.
How Are Retirees Able To Survive?
LIMRA estimates the average American household has about $253,200. But most of that is owned by the wealthy.
The median holding is just $17,500, which matches up well with the Economic Policy Institute's estimate of $17,000 (from 2013). 75% of Americans have less than $100,000 saved.
The reason why most Americans are able to retire by 66 despite so little wealth is due to Social Security, a traditional pension, and retirement work plans. LIMRA reports that some 41% of retirees have annual income less than $25,000. Of retirees with income over $50,000 a year, about 80% draw from a pension or retirement plan.
Unfortunately, very few Americans under 40 will have a traditional pension that can fully support a retirement anymore. And even if there was such a thing as a pension, with the typical American changing jobs every three years, there's no way today's workers will stay long enough to ever collect.
Retirement Savings Is Mostly Up To You
Therefore, the focus on retirement savings needs to be on maxing out a 401K, an IRA, and other pre-tax retirement plans while also saving additional money in after-tax investment accounts.
Just in case there's a job change, a need for liquidity, or the desire to retire before the 10% early withdrawal penalty goes away, having a robust after-tax investment portfolio is a wise move.
For added security, it's wise to build even multiple income streams to reduce concentration risk. There's not one person I know who retired before the age of 50 who doesn't have at least three income streams beyond a traditional retirement plan.
To learn more about building passive income, take a look at my newly updated post: Ranking The Best Passive Income Investments. This posts highlights the best passive income investments to support your retirement. Because frankly, having a 401(k) and Social Security is not enough.
Part-Time Work For Supplemental Retirement Income
Despite the anemic retirement income figures, the gig economy enables millions of Americans to work part-time and supplement or replace a full-time income source.
I'm pretty sure if all went to hell, I could earn at least $50,000 a year driving for Lyft, assembling furniture for Task Rabbit, and being the friendliest greeter at Walmart. But then, by working 50+ hours a week, I wouldn't really be retired.
Working to help supplement your retirement income is what I call Barista FIRE. You're essentially working to build an income buffer or cover an income gap between your desired lifestyle expense and how much your taxable passive investments spit out.
You might even be able to get subsidized healthcare if you work enough hours.
The one expense that is really weighing heavily on my wife and I in retirement is our healthcare insurance. We pay a whopping $2,380/month in unsubsidized healthcare insurance for a family of four.
Keep Housing Costs Low To Help You Retire
The key to surviving retirement on a low income is owning a home debt free and having sufficient medical coverage. With health and living expenses taken care of, surviving off just $2,000 a month, while challenging, is doable.
I highly recommend trying to keep housing expenses to 10% of your annual gross income. If you do, retiring early becomes much easier.
If you're fortunate enough to have children who call you back, they might even come to your rescue if things get too difficult. That said, raising children can be very expensive.
For those living in a high-cost area of the country with a couple kids, earning $300,000 a year only provides a comfortable middle class lifestyle. You won't be able to retire before 60, let alone 50.
You'll Stay Busy In Retirement
Although I left full-time work at age 34, I've never stopped doing some things here and there to keep busy.
For example, I've continued to publish three times a week on Financial Samurai since 2009 out of enjoyment and mental stimulation. As a result, this site brings in some advertising revenue to supplement my retirement.
Regardless of what age do most people retire in America, you should always stay active once you retire. Most will be fine because most will retire to something, not from something.
Your focus simply shifts from something you're sick of doing to something that's much more interesting. If you're lucky enough to love what you do, then by all means work until the very end!
New Research Suggestions Reducing The Traditional Retirement Age Of 65
Although most people traditionally retire in their 60s, new research from Bill Bengen, creator of the 4% Rule, suggests we may be able to lower the retirement age by 5–10 years. Bengen now believes a 5% safe withdrawal rate is appropriate for retirees, allowing workers to retire with 20X their annual expenses instead of 25X.
Retiring comfortably in your mid-50s is an exciting prospect for many who feel burned out and ready for a change. This age strikes a perfect balance—young enough to enjoy an active lifestyle yet old enough to have built substantial wealth.
Want to learn more? Listen to my conversation with Bill Bengen himself, where we dive into safe withdrawal rates and strategies for retiring earlier.
Manage Your Retirement More Effectively
Check out Empower’s free Retirement Planning Calculator, using your real data to run thousands of algorithms to see what your probability is for retirement success.
Once you register, simply go to Planning -> Retirement Planner to run your various retirement scenarios. There’s no better free tool online to help you track your net worth, minimize investment expenses, and manage your wealth.
Real Estate Diversification
Real estate is my favorite asset class to help you retire and stay retired. It is a tangible asset that is less volatile and produces retirement income.
Look to diversify your real estate investments across the country where valuations are lower, net rental yields are higher, and growth rates may be higher. The global pandemic has accelerated demographic shifts towards lower cost areas of the country due to the work from home trend.
Check out Fundrise and their eREITs. eREITs give investors a way to diversify their real estate exposure with lower volatility compared to stocks. Income is completely passive and there is much less concentration risk.
If you are bullish on the demographic shift towards lower-cost and less densely populated areas of the country, check out CrowdStreet. CrowdStreet focuses on individual commercial real estate opportunities in 18-hour cities.
Both platforms are free to sign up and explore. I've personally invested $957,000 in real estate crowdfunding across 18 properties to earn income 100% passively. I've personally invested $300,000+ in Fundrise and Fundrise and CrowdStreet are sponsors of Financial Samurai.
What Age Do Most People Retire In America is a Financial Samurai original post. Sign up for the free Financial Samurai newsletter for more nuanced personal finance content. More than 60,000 people have already!
I am retired at 55 on one income. I pay 70 per month for family healthcare, 500 for my luxury 3 bed 3 bath apartment, eat in restaurants whenever we want. and have 50% monthly money left over to travel the world. I budget for a trip to other countries 4 times a year. All this on a 401k. How is this possible. The secret is to open your eyes, think outside the box, and to leave your comfort zone. Find a country to live in that the dollar goes further. As far as needing purposes when retired. It’s all a matter of opinion. Everyone is different. Some people need have a purpose and others are content with having more time with family, exercising, and enjoying not having to be part of the rat race.
Can you share how you pay so little for healthcare? I pay about $2,350 a month for a family of four for a silver plan.
Where is your $500/month luxury apartment?
My eyes are wide open and would love to learn more. I’ve found kids to be quite expensive. How many kids do you have?
Thx
I’m happily retired at 62. Please don’t tell anyone , but I had nothing when I retired and now I still don’t have anything. Except I collect as much from SS as I did working If you count in transportation costs, eating out for lunch Im ahead of the game. Something I never saw coming. I thought I would be working untill I was 99. Retires that are up all night worrying about how they broke there monthly budget won’t live long. If you have money you will spend it. That is what its for. If you don’t have money then you can’t spend what you don’t have. Simple math.
I’ve only had an IRA for 2.5 years and I’m at 16K even though I’ve not put in the max for 2017 yet. I guess I’m almost average. Except I’m in my early 30s and have time to fix this.
One principal rule for retire early is VERY simple, that is to start your Roth IRA ($5500 a year) and 401k contributions (at least up to the match percentage from employer) at your early 20’s.
You will have several million dollars when you reach 62 years of age.
Honestly I don’t know enough to analyze this well. The area is West of the strip, behind the Orleans Casino on Tropicana (many blocks away), and is semi industrial type area as I recall. There are at least two large mobile home parks there. That area has some warehouses and businesses and self storage in the area. I would imagine tenants will be heavily people with jobs on the strip, casino workers who want close commutes. I don’t think of it as a particularly kid friendly, residential, dog walking area. It is not far from Chinatown which is on Spring Mountain Rd and has many apartment complexes around it.
I googled the name which I’m sure you have done, and then read Yelp and Google reviews by tenants. Of course you can expect complaints, there are always some. But it is a data point.
I don’t understand the financing much, what the “conversion” means, or how the preferred stake is treated but I have only one comment related to the deposit of 28 months of payments into an account controlled by Realty Shares. This may not be applicable because I don’t understand but it reminded me of the blown up 12% loans I mentioned to you before. In those, let’s say the loan was a 1st trust deed $3M on vacant land with an apprasal (later proved grossly optimistic) of $6M. 50% LTV. Interest only, term 2 years, very typical. The funds were borrowed to ‘refinance prior debt, and contribute to soft costs of development’ planning grading things like that. The borrower then always gave a personal guarantee to place his own assets at risk. The note had all the normal default penalties, acceleration clauses and everything you would expect. Then as a further incentive often there would be a stipulation that the borrower would place an amount of the loan, say $1M into an account controlled by the lenders, to be released for the first year’s interest payments and other releases to the borrower to be gated by the lenders getting confirmation of various construction steps being done. All standard.
In the end all blew up as I said. Here’s my comment. If you lend someone $3M, and they agree to place $1M back into an account you control, and $360K of that (12%) is prepaid interest, all they have done is sign a paper and hand you back a portion of your capital which was yours anyway, as taxable interest. The loan manager would send everyone a monthly check making them feel great their investment was indeed yielding 12%. In fact they were only sending them back a tiny part of their own money each month, as taxable interest. The rest of the money got to the borrower. It later turned out that when things started to go wrong the loan manager let them slide a bit on the construction milestones that gated their release of the rest of the funds to the borrower, and released anyway with a stern warning that things had to shape up. Meanwhile it was all going to hell, not only on that deal but on many others at the same time with other lenders. For the first year there was no default of course, the interest was there it was borrowed money to start with. And in fact no default happened until all the funds had been released so there was nothing left in the escrow account. Then they defaulted and started trying to negotiate extensions and terms. Not another penny was ever received.
This is only a parallel but it reminded me of that. In your case, the property should generate income. In our case, it was vacant land and generated none. That is a key difference. So it may not be relevant.
I am not a finance guy, so I don’t understand a lot of this. But I stand by my one statement on all this crowdfunding stuff. If money is being raised, something will be invented or found to put it in, even if not optimal, and if lots of money is being raised because lots of investors have money lying around they want to earn high returns on and don’t know what else to do with, the less desirable projects will get funded too because there is so much money to be placed. Then more will be raised. Second, when high net worth people with lots of cash in San Francisco can’t find investments in SFO they can see and touch and know something about, so send it to Kansas where they have never been to invest in midwest projects with pretty prospectuses and term sheets and great stories to get great returns not available in SFO, I see a poker game where the skilled player is in Kansas and the patsy is in SFO. I also think the insiders in Kansas who know the area and markets passed up on this great deal so it had to be sold to the out of towners loaded with cash. I’m not a fan and saw a lot of CA money vaporized here in Vegas during the last downturn where the lenders bought wonderful turnkey deals (condo conversions) where the sharp shooter was the borrower who skated away and lenders lost everything in the end. What was amazing on the conference calls I was on was how little these investors in CA knew about what they were buying. They simply had way too much cash and had to find a place for it, so they did. So I have VNQ an index of publicly traded REITs and expect to earn much less but with less risk on my securities RE.
Many thoughts. Maybe some major issues due to age. I’m 59, from the semiconductor industry, retired (not my choice) 19 years ago. I can honestly say of all the people I knew I can’t think of a single one who chose his own retirement. In every single case, something happened which he did not plan. Layoff, downsizing, firing, buyout, recession, occasionally medical, but in each case the retirement was not his preference, it was after a few career cycles of something happening and a rebound or attempt, the cumulative baggage combined with age forced the person to give up trying to get back in the game even at a lower level and say “That’s it, I’m retired!”
Next the self managed 401k/IRA system vs pension. Already in my time you were on your own unless you had some government gig, the defined benefit pension funded by employer was gone. And of the folks I know, 100% either grossly underperformed or completely destroyed their retirement by trading their 401k/IRAs into oblivion or making very bad investments or being in at very bad times and not having patience. I think about so many people I know, otherwise intelligent and educated, who with 30 years of investment under their belt have negative total returns. That means if all their lives they had simply placed every cent of their savings into a checking account, never earning a penny of interest, but every penny still there, they would be ahead in life of where they are. That is an amazing fact. You can call them hardened gamblers or whatever you like, but human nature is not to place money into an account you control, in stocks and bonds, and sit there patiently watching during a 4 year downturn while the balance goes down 57% as it did in the last big downturn. They trade. We all know it will likely end up badly, but they do it anyway. Inevitably they are out of the market when it rebounds, then jump in later just as it is about to downturn again. You can’t change human nature.
Right now everyone is a genius and feels very proud of their abilities. Recently I spoke to an engineer much younger than me, mid 30’s, who said it is all happening again. He talked about how his co workers walk around with their phones and Scottrade apps, placing trades in and out of individual securities day and night, trading their IRAs. Some 401ks allow individual stock trading. Every single one of them hopes they will earn >20% a year doing this, and for the present time some have. The more adventurous play options. They play. Play is the word. They love to play. It is exciting. Maybe in the end some will keep some money. Most have never seen a downturn, have no clue that markets can go down for incredibly long periods (during which coincidentally your job seems at greatest risk), and think how stupid everyone is who doesn’t understand markets as they do right now, getting up in the morning checking some graph and feeling like XYZ is about to pop, buying it, maybe checking a quote at lunch, selling and capturing a gain tax free in their IRA, then heading to lunch to brag about it. It sounds like 1985 to me all over again. Somehow I doubt 30 years from now most of these people will have compounded gains in their accounts that the tables forecast, and like many real cases I know, some of them will even have less than their total contributions in their account with a loss to show for their 30 years of activity. Or maybe a break even. Maybe a 1% annualized gain.
You’re right about the excessive trading hurting overall returns. It’s hard to stay patient during volatile times. And you’re right about everybody thinking they already financial genius now.
For those of us who have survived the past to downturns, this current bull market is blessing to give us another chance to make some good returns and then cash out before everything implodes.
I’ve taken a good amount of money off the table this summer by selling my rental property iVe owned since 2005, Right before the big crash. I feel good about it even though I may be early.
I’m still long real estate, but just not as long. Reducing debt feels great, and reduce responsibility.
See: https://www.financialsamurai.com/why-i-sold-my-rental-home/
As you know, because you wrote a horror story article about my comments on my real estate results long ago, you live in an extreme coastal market blessed by fantastic gains limited supply and filled with moneyed buyers with top jobs and credit strongly desiring to buy. I am the sad case who moved to Las Vegas in 2004, leaving the Bay Area behind only to watch my new market peak a couple of years later then crash down 80% in some extreme cases and now 13 years later have recovered to perhaps a gain of 20% over 13 years on typical properties though I have some much worse. There is no comparison, you live in a world and write a blog about a different country and an alien people to me.
Last night I noticed a number of tv ads from law firms about bankruptcy, short sales, and how they would represent you to your bank to ‘save your house’ getting either a principal reduction on a loan (by threatening bankruptcy) or cash for moving, an allowance for you to go on with life in a negotiated short sale. The ad claimed they can get a bank to give you moving money to give up your house and walk away from all the delinquent payments and your debt while the bank takes a huge loss on their mortgage but gets to move it off their unperforming book. A buyer comes in and buys at today’s price, the bank takes a huge loss, and you get some cash to get you out the door and on your way. An old story I’ve heard advertised many times in the 2008-2014 era. What struck me is that we are in 2017 and such ads are still bringing in business for law firms focusing on this. There are still many ‘owners’ who possibly haven’t made a single payment on their house in years, where the bank has opted to not foreclose because either they are backed up with more foreclosure inventory than they can handle for years or they are letting you house sit and pay utilities for them free for years while they hope for some recovery in value.
In my case, the 2004 purchases of townhomes at $200K, bottomed at foreclosure prices of $40K around 2011, the project remains distressed, and I have noticed as of today prices in that project have recovered to a new recent year high of $170K. Still $30K loss after 13 years. I contrast this with your capital gain from which you took money off the table.
In my case taking money off the table would mean selling at a loss (actually due to depreciation a taxable gain now), and 13 years later having less money than originally invested to use for later opportunities. Such opportunities one should not wish on their worst enemy.
Again, different planet, different country, alien people. Please don’t mention crowdfunding. We strongly disagree on that, I understand the referral fees are probably lucrative but as you know I see it as a means to take easy money from people thousands of miles away who have too much and basically sell them a prospectus. I guess no different than investing in a start up which pays the founders well, tries for the best result, and if it blows up whoops sorry ‘we’ lost your money.
Did I tell you that here in Vegas circa 2004 there were tons of mortgage brokers raising money for private financing of land buys for development, offering 12% returns, with loan to value never more than 50%. Safe, backed by first position trust deeds, who wouldn’t do that instead of a 5% CD? Stable, monthly returns. Of course the smartest people were the borrowers, because if things worked out great, everyone got paid, often the greedy lenders would be clamoring to lend again at 12% on the next deal. But of course when land prices crashed (95% drop in the case of vacant land), which no one thought possible, we learned that the loans weren’t worth the paper they were printed on. All had backups of personal guarantees from the developers too. Years of court efforts later, we learned that the borrower who has your money also has the power to use it to fight you in court and never pay you and he too can file BK or flee the country with his assets. Judgments are uncollectible. 100% losses of all principal made in these investments were common, sometimes more than 100% due to the legal costs. A few of the lenders I knew lost their entire net worths some more than that because they had levered to borrow at their good credit rates to lend at 12% and committed suicide rather than face their own bankruptcies. Yeah, I was there too. 100% losses of principal, 3x$50K loans for me, but no leverage and no suicide. 3 different borrowers, different projects, for diversification. It did no good when every project and every borrower went down. I have an extreme talent for being in the absolute worst place at the worst time. You seem to have the exact opposite talent for being in the best market and best place at exactly the right time. (Your Tahoe downturn was like having a knee scraped compared to the war like casualties I have seen.)
The best laid plans of mice and men. Things can, and do, blow up in incredible and unpredicted ways.
Hi Len,
Would you be buying in LV now? My crowdfunding fund just bought a multi-unit property there and I’m shaking my head after such a huge run up in prices!
Are we really in a different world though? You were just here 13 years ago. Would you have taken profits if you were me this summer in San Francisco?
Sam
If I buy a SFH today I can earn perhaps 4.5% net if honest about my expenses repairs and vacancies, plus/minus any capital appreciation/depr. (A/C is a major repair and expense item here which you wouldn’t have in your rentals, it is used heavily, is expensive to service and repair, is classed a health/safety emergency when it breaks, and is way underestimated.) 20 years history here shows appreciation maybe 1-2% per year ignoring the huge disruption up and down in the boom bust. Really it hasn’t been more, and there is no constraint on further construction. At those returns, with the work required for me to keep a house rented, I am not interested in buying anything, it is too much hassle. Again the tenant pool is different than yours. People with stable jobs and lives have no problems buying their own house. And there is a troubled, eager to rent, tenant pool which you have to constantly work to avoid, more arrive continuously new to town because it tends to attract people with hopes and dreams and a history of problems. It’s a hassle. It isn’t MBAs and engineers moving to do creative work in corporate jobs needing to find a place to settle. It is a completely different pool of people. Often they are running away from something somewhere else, with hopes to come here for a fresh start a new job and new luck. What better place to hope for new good luck?
If we are talking about buying a wreck, at a huge discount, and putting major repairs in, that is a different subject and more like a job, I’ve done it and managed it and it is work. Also there are 20 offers on every wreck because everyone has the same idea so I don’t compete there, I’m too lazy and others are willing to pay too much.
Your fund bought MFH and I have nothing to base an opinion on, they are making a bet on future economy and average rent. Right now people seem to think the sports franchises, hockey and football, that are moving here mean a boom economy. I simply don’t get how that brings in so much money into the economy to matter. Yes, some rabid fans (most I think already live here) will pay $1000 to get a seat to watch a game. They will go eat in a restaurant drop bucks and tips on bar tabs and parties. So what? Is that going to generate enough new wealth to affect the average rent? What I want to see is a major company investing in an electronics/cyber business that hires 10K new employees, professionals, who need college degrees to do their jobs, have 401ks, stock options and do work with their minds and not their hands, and make $100K or more. I do not see that anywhere. Where would they find the 10K people, import them? We have one large university which offers engineering and hard science, but also offers a BA degree in “Beverage Management.” Yes, true. I see restaurants, bars, hotels, sports franchises, gaming, and tons of party related lower skilled jobs that earn a wage plus maybe tips. Some are management, some make large tips I acknowledge, but it’s not the kind of thing that truly drives appreciation.
Your crowdfunding fund has to invest all the money it is raising to keep growing and earning fees. During the last bubble here that blew up I saw retail shopping projects, condo conversions that made no sense to me, and the reason had nothing to do with viability or market, it was that there was way too much money coming from outside of the state hot money needing to be parked in an investment. Money was everywhere. I guarantee investments will be found or manufactured to suck up all the funds raised, so that more money can be raised.
One other thing. Imagine we have a downturn in the US economy. We are totally dependent on tourism, that is the economy. Vacations and party trips get canceled. It gets felt quickly. The economic base is too narrow.
In the Bay Area you have finance, pharma, electronics, web based stuff, and everything else. When one is down maybe the other is up. We have adult recreation, everything is that sector.
Would I have taken profits in SFO? I did in 2004 at a fraction of today’s prices. Had I not done that, I would have been itching again to do it every year since, terrified that a crash was around the corner. I doubt I would have been able to hold out until 2017 as you did. And I would have been way too scared to buy a rental like that in 2005 with such a huge price anyway. I can’t imagine finding tenants who can pay $9K a month.
Different world? I’d guess everyone you know or interact with, including your tenants, all have advanced degrees in finance, law, engineering or some science. All make over $100K and work professional jobs. I’m thinking right now not a single neighbor of mine here, and not a single one of my tenants went to college. They are: masseuse, prison guard, section 8 single mom, security guard, secretary, baker working the night shift in bakery, counselor at school with unemployed ex-cop husband, retired city bus drivers. None of them pays more than $1400 a month in rent.
Thanks for the insights. Really.
I guess I wasn’t itching bc I lived in the house for 9.5 years, and had nowhere else I wanted to go.
I had 5 tenants, each pay around $1,800 each to live in the house. Not too far away from $1,400, and their salaries were more like $70,000 – $100,000.
Here’s the skinny on the latest LV Multi unit deal with a target 13.3% IRR, which I’m not a fan of. Let me know your thoughts.
The RealtyShares DME fund invested $600,000 in a preferred equity investment in Vernazza Apartments, a 168-unit garden-style apartment complex in Las Vegas, NV, only 3.5 miles from the Las Vegas Strip, 4.5 miles from McCarren International Airport and 8 miles from downtown Las Vegas.
Although technically a market rate property, residents in occupancy during the conversion maintain protected below market rents for a period of up to three years, and as of May 2017 only 54 of 168 units (~32%) had rolled over to market rate units.
The Sponsor has successfully raised capital on the RealtyShares platform for three prior deals, and all payments for those investments are current. For Vernazza Apartments, the Sponsor is contributing $3.5mm of capital to the deal (100% of JV equity), putting its own money at risk before any losses would be incurred by RealtyShares. Additionally, the Sponsor is expected to set aside 28 months of preferred current payments in a RealtyShares controlled account.
I find this hard to believe. Are there truly that many people in their 40’s and 50’s living over their means? You can make $100-$150k, save for retirement, pay a mortgage and for a car and still be comfortable. Instant gratification and keeping up with your neighbor is more rampant than I ever thought.
I truly think one main reason for this is divorce. It sucks to be them. I retired at 63, my wife at 61 and we will be comfortable going forward.
One observation I’ve made about broke people I work with making in that 100-150k range is the biggest portion of their budgets go towards debt. Student loans, car payments, and mortgages bury them. The second biggest is taxes. By the time they get down to their fun money, most of their income has been eaten up by those things so even though they make good money they feel broke constantly. Its crazy how much better financially they could be doing if they just went into frugal mode for 1 year right after college and hammered their student loans, and held off on buying a new fancy car for a couple years. I don’t think most people ever stop to think how paying so much interest servicing debt all their life means they’ll have so much less money to actually spend on things, and all they can think is they want things now so its worth it.
I agree with the divorce as well. Sad as it sounds its a terrible idea these days to marry someone if their income, net worth, and outlook on saving/spending/investing isn’t the same as yours. If you happen to be a high income saver/investor and marry a lower income spender it means you get wrecked should you ever get divorced.
I’m not surprised savings are so low. I work in a relatively high paying job where pretty much everyone in my department is making six figures, and quite a few of them are only saving just enough to get the company match. If the average person making good money like that is saving 10% or less I could only imagine people making less are saving significantly less, if anything at all.
A lot of people are just total failures with finances. I have so many coworkers that the company we work for is their first really well paying job. Many of them have student loans and other debts…so you think they’d be like heck yeah…I’m making more money than I ever have…I’m going to hammer down my debts before I get used to spending more…instead many of them are just like heck yeah…I’m making more money than I ever have…time to go finance a fancy new car and start going out to expensive restaurants every weekend!
Its crazy…its like they want to be debt slaves forever and don’t realize how much easier saving becomes when you aren’t dumping 1000+ a month into a car payment and student loans before you even pay any of your other living expenses. So many of them think I’m nuts for maxing my 401k, but, they don’t even get the after tax dollar cost of their student loans and car payments, bills which I don’t have, is relatively more expensive than the 18k pre-tax in a high tax bracket I dumped into my 401k this year.
I was thinking about the reason for this, and perhaps it’s because they really love to work and they really love their jobs? Because I didn’t like my work and I didn’t like being away all day, as a result, I saved like a madman my entire career.
I’d like to think that for their sake, but for some of them it seems like spending is a way to cope with holding on to a high paying job they hate. Ironically that just makes it so they’ll have to spend more years of their life there, especially the ones who factor overtime pay into their spending habits rather than saving it. The alternative they face is to take a pay cut but maybe find something they enjoy doing more…but then the big spenders end up miserable because they are broke all the time and can’t pay for the lifestyle they think they deserve.
Makes me glad to be on the path to be one of the 1% who FIRE before 50 and avoid the whole debt slave consumerist life style that so many people get themselves trapped in.
Hi Sam,
The statistics are misleading. If the pollsters had asked how many people can comfortably retire at a certain age, rather than what year you phisically retired the numbers would look much better. I’m 46 years old and could comfortably retire now. However, since I own a profitable business and come and I go as I wish I choose to stay “working”. “A grand total of 3 hours this week ” For the purpose of this study I would not be retired. That doesn’t make much sense to me. Compare me to the retired guy who writes a blog, drives uber, watches the neighbors pets. Who sounds more retired to you?
I love stats, but what I love even more is the authors perspective. Most of these pollsters have an agenda and phrase their questions in order to elicit the desired response.
Thanks, Bill
My Megacorp retired me at 55 in July of 2016 so that was not completely planned. I had planned to retire on my own terms April 2018.
I’m a year into this and have considered part time work to fill some gaps in my day. It has been a big adjustment having someone give you back 50 hours a week.
Fortunate to have a pension and 31 yrs of 401K savings and the buyout severance pkg. What I’ve found is there are the $12 an hour jobs or the all in full time jobs like I had (north of $100k a year). Not much “in-between” so to speak. Considering going the non-profit route with my cost accounting and IT Project Management background. Seems like I’m wasting my masters degree at times…Ha.
On the contrary! I would say 31 years of work after your masters degree is a degree well spent.
Cheers!
is that you Craig O. in W. Seattle? :)
Man, that first graphic isn’t what I’d expect at all. I think there would be a little more of a leaning towards people retiring before 55 than the ~4% there. Based on the other chart about % of households with little to no savings, it does fit that the amount of that subset that could retire would be another small group.
I like the addition of the audio-“book” (audio-article? audio-post?). I hope to see it more in the future
Thank you FinancialSamurai for these action-demanding posts . Because of such, I have found myself with the stockbroker to buy some shares in a Utilities. And just this week I have registered for an IRA, I intend to save for my dream home for 10 years, before any thing else. These are not things typical of a 21 year in a Subsaharan Africa.
Thanks FinancialSamurai for the life giving posts
One Love.
I was also surprised to see the <50 number so low. I figured the FIRE movement had gotten around more. Then again, maybe it just means that chart will look drastically different in 10-15 years when all of us on track right now get there :)
I think these figures are slim for a couple of reasons. First LACK of financial education. So many people don’t know about the power of compounding how saving more early and consistently can help. And then trying to stay healthy. If you stay healthy, your expenses for healthcare should stay low throughout working years and increase but not by a heck of a whole lot in retirement years hopefully :-)
Interesting statistics. My parents are both right there with the 51%. My grandparents, however, were ‘forced’ to work longer. Mentality was quite different back in the day, they didn’t make saving money a priority, and neither did most elderly people I know.
Is that your voice? just curious :)
Professional voice actor that charges $500 per reading. Not bad huh? Hope readers and listeners appreciate the money and time spent on offering free material.
Tell me about yourself.
Do it yourself! More engaging to hear your own voice.
But I’m trying to learn how to tell/get other people to do something so I don’t have to do anything. It’s something I’ve noticed time and time again that it’s much easier to tell someone to do something than to do anything yourself.
What’s your story?
You don’t like the voice?
It’s kind of staggering that less than 1% of retirees are below 50. I wonder what the figure is for below 40? I knew the FIRE community was small, but damn…Hey, at least this means we will be in the top 1%, which I know FS likes to preach.
My parents are the most wonderful people but saving was never their strong suit. I am grateful everyday that they have a paid off house and are going to be able to retire on the generous military pension and excellent military healthcare of my home country.
“The key to surviving retirement on a low income is owning a home debt free and having sufficient medical coverage. With health and living expenses taken care of, surviving off just $2,000 a month, while challenging, is doable.”
Health expenses for me are the biggest elephant in the room. I’m saving at a rate that could easily put me at FIRE at 50 (or sooner based on market returns) with current saving, but I’m 32, and healthy (no prescriptions even!). I’d love for you to do a post or point me to some that shows good guidance on what to plan for healthcare costs for FIRE until you can get medicare!
Just budget $600 – $1,200 a month in healthcare premiums, depending on age after 32 and type of plan (silver, gold, platinum) and you’re good to go!
I think we’re going to look back and realize the failure 401ks and the like are for most people. Pensions just provided a level of security in retirement that a 401k can’t (for most people). My mother will retire soon, but she also has a pension that nearly doubles her social security income. Between those two, she can cover her base expenses and then some.
Some sort of hybrid between the two would a step in the right direction. Strong company matches with forced savings that is in a professionally managed cash-balance plan perhaps. Still portable, but without the need for HR to try to pick a list of mutual funds and employees to try to determine their own asset allocations. Most corporate pension plans actually do a pretty nice job on the investing front.
That being said, I love my 401k plan!
The only reason 401ks fail is because people do not save enough.
My parents retired in their 50s, and both got part-time jobs just for something to do. Between their jobs, pension, and social security (don’t wait to take it – even if you don’t need it you can then invest your checks), they haven’t really even touched their retirement accounts yet.
I’m 35 and working to be done by 40. I should have all debts paid off by that point, as for income I already have rental properties, I could work part-time…I just need the 3rd leg of my stool. I’m not sure what that will be yet, but I’m blogging and working on some children’s stories – which even if they never earn me any money at least allow me to feel creative!
Neat post! The stats on savings for retirement are crazy. $17K is not nearly enough! I guess it is good that people have flexibility to supplement their income with part time work, but overall it sounds like they should be reading more Financial Samurai!
51 percent retire before the government stated retirement age. That’s pretty good. It’s better than I would’ve have expected.
I am curious to see what will happen in the next decade or two with people that retire but have only $17k in their accounts? Can they rely in social security?
I am from Germany and here you can basically rely on social security if you have to. It is not an easy lifestyle, nor is it well regarded in the country if you have to life like that, but the state definitely doesn’t let you life under a bridge.
So is there any “back up” plan for those people in the States?
Kind regards
Harald