Average retirement savings

[spiders]

There are always ways to save money.

You can spend $25 to park your car and then $120 to actually get in on your first day at The Magic Kingdom.

You can also spend $50 with parking included and get a season pass to Six Flags. Add another $75 and you can get a season long dining pass.

If you want to replace your Disney trips with Six Flags then go for it. No doubt, you’ll save a ton of money.

 

[Pea-n-Me]

Haha. I did the same. CT. #4

We’re in top ten - MA.

We are still in our first house! And we had PMI for a while! Of course, our first interest rate was 11.5%!

 

[rigs32]

I'm part of the NYS pension. I'm tier 4. Tiers 5 and 6 make it much less attractive to stay in government jobs for your entire career, but it also shored up a possible shortfall. I don't have much concern that I won't be able to collect the promised benefit.

 

[GreatLakes]

You both conveniently deleted my part where I said that higher incomes doesn't mean you can't be irresponsible in the process. I'm not talking about upgrading your lifestyle or car with every pay bump. It's not about keeping up with the Jonses. Would you consider it irresponsible for someone to buy a $400k house with 20% down to be irresponsible? I wouldn't. But would you consider it irresponsible for someone to buy a $400k house with 5% down when there were similarly sized, lower priced houses that would have allowed him to put 20% and avoid PMI? Yeah, I think that's probably not a good move. This guy I work with still drives the same car he had 15 years ago when he was making a lot less money. It's a real beater. He drives it to work and back and that's it. It was probably a $15k car when it was new. Well, now he makes $160k and he really wants a 4Runner. The 4Runner he wants is $50k. Is that irresponsible that he wants such a giant upgrade? Should he really only be looking at the cheapest Kia's even though he can clearly afford something much nicer?

You may not be able to make the same life choices today as you once were able to 20-30 years ago. That's great that you bought a house early on and are still living in to this day. Most people starting off aren't buying houses and that's not because they're irresponsible. If anything, to me, that makes them more responsible. 20% down is a lot of money and trying to avoid PMI is always a smart decision. Is the average 24 year old really going to put down 20% on something and then if so, what? Is some $100k starter home really going to meet their needs 20 years from now? Heck, screw 20 years -- how about in just 5 years when they might be married and pop out a few kids?

People get caught up with the Jonses because some of them think that the Jonses are being irresponsible. Yes, some of them are but some of them just flat out make more money and have different priorities with how they choose to spend their disposable income.

I don't dispute any of that. I was commenting only on the assertion that higher incomes obviously have higher bills. That is simply not true. They may, they may not, but it isn't obvious or inevitable.

 

[DLgal]

I don't dispute any of that. I was commenting only on the assertion that higher incomes obviously have higher bills. That is simply not true. They may, they may not, but it isn't obvious or inevitable.

Well, taxes are a bill and higher incomes have higher taxes due. So, yes, as income increases, so do liabilities. That is very obvious.

 

[MillauFr]

Well, taxes are a bill and higher incomes have higher taxes due. So, yes, as income increases, so do liabilities. That is very obvious.

Many people are reducing their expenses by moving to a lower cost state. That is why Washington State is growing so fast. The state is a tax haven for high income individuals. People are flooding in here from California.

 

[MillauFr]

If you want to replace your Disney trips with Six Flags then go for it. No doubt, you’ll save a ton of money.

Yes but at what trade off. The extra money I spend going to Disneyland is worth every penny. There are way too many trouble makers infesting Six Flags Magic Mountain. Disneyland does a great job keeping them out.

 

[barkley]

Would you consider it irresponsible for someone to buy a $400k house with 20% down to be irresponsible? I wouldn't. But would you consider it irresponsible for someone to buy a $400k house with 5% down when there were similarly sized, lower priced houses that would have allowed him to put 20% and avoid PMI?

depends on a number of factors-

what makes the more costly home a better choice for them (school districts, lower property taxes, reduced commute, better upkeep so lower initial repairs/maintenance costs...),

what the real estate market is like in the area where pmi necessary purchase would be required. is it reasonable that housing values increase such that waiting a year or two would make the buyer priced out of the market while buying now would enable them within a few years to gain equity such that they can drop pmi,

interest rates-right now with record low home loan rates, buying in even with pmi could be MUCH less costly than the difference in interest waiting to save that extra 15% might result in.

sure they could buy the lower priced house but i don't feel someone should buy any house they don't want just to be buying a house.

Is the average 24 year old really going to put down 20% on something and then if so, what? Is some $100k starter home really going to meet their needs 20 years from now? Heck, screw 20 years -- how about in just 5 years when they might be married and pop out a few kids?

our starter home was (adjusted for inflation and wages) in that ballpark and we were in it for 7 years. it worked fine in our 20's, into our early 30's, worked fine when the kids came along and would have continued to be fine but we WANTED a different home and could afford it so we CHOSE to 'move up'. there were many in the neighborhood who had bought as singletons, raised their kids in them and saw no need to upgrade.

i honestly don't know many 24 year olds looking to buy. i was late 20's when we bought as were most of my friends. but i also don't know many late 20 somethings looking to have kids so i don't see that as a huge factor these days. seems most of my oldest's (27) peers are rather scared off home ownership probably b/c of what they saw/experienced personally within their families during the last recession (allot saw their parents lose homes, saw how the value of a house can drop by hundreds of thousands overnight). on having kids being a factor-they like most their age are putting off having kids. the historic low birth rates for the 20/early to mid 30 somethings isn't just a fluke-it's by very vocal choice on their part.


p.s. we bought our first house w/5% down. within a few years it appreciated such we were able to eliminate p.m.i. but we wouldn't have been able to afford to buy if we had waited. the entire cost of the p.m.i. was a wash due to buying during a buyer's market at an interest rate we could afford including the p.m.i.

 

[mrodgers]

If you are dipping into an "emergency fund" often your budget has missing line items. Water heaters break, roofs need replacing, and car insurance is due every 6 months. Those aren't emergencies.

$15/hour
approximately $1600/month income
Rent - $900
Food - $500
Gas - $120
Electric - $150
Water/sewage - $40
heat - $100
Car insurance - $100
Total living expenses - $1910

Yes, water heaters, plumbing problems, car repair, medical problems, it all would be an emergency, including normal living expenses when they would be higher than your income. Could you explain how you add line items into the $15/hour budget above for those items? How would you add retirement to that budget? How would you add clothing? I guess you could eliminate gas because you have to have a car first and there's no way to buy a car on that budget. Those should also be saved for above your emergency fund.

What constitutes an emergency then?

The emergency fund is talked of in the personal finance sense as being there to replace your income in the event of job loss until you can get another job. It's not there for emergency situations that come up. Those things should already be budgeted (if able, see above). The emergency fund should not be included in savings for future car or home repair or to cover your medical out of pocket.

 

[barkley]

Many people are reducing their expenses by moving to a lower cost state. That is why Washington State is growing so fast. The state is a tax haven for high income individuals. People are flooding in here from California.

has been a huge haven for retirees for ages. why retire in california and pay state and federal taxes on pensions and such when a move up here eliminates state income taxes-it's the reason most of my neighbors and i made the move. NOW we've got the newer aspect of many more employers allowing people to permanently work from home. here on the less expensive eastern side of the state we had already seen an influx of well paid earners from the west side of the state who found our housing market much more affordable and appealing so they telecommuted from here, but within the last few months the rural properties are a skyrocketing in value with massive bidding wars due to out of state buyers who thought they would have to wait for retirement to take advantage of our tax breaks and lower cost of living but now that they are untethered to a physical office they have to report to they are eager to move from the states they will remain employed in.

 

[cvjw]

i honestly don't know many 24 year olds looking to buy. i was late 20's when we bought as were most of my friends. but i also don't know many late 20 somethings looking to have kids so i don't see that as a huge factor these days. seems most of my oldest's (27) peers are rather scared off home ownership probably b/c of what they saw/experienced personally within their families during the last recession (allot saw their parents lose homes, saw how the value of a house can drop by hundreds of thousands overnight). on having kids being a factor-they like most their age are putting off having kids. the historic low birth rates for the 20/early to mid 30 somethings isn't just a fluke-it's by very vocal choice on their part.

My 24 year old and his partner are buying a house next week. We helped him with the 20% down payment. His interest rate is 2.5% and his half of the mortgage payment will be half what his expensive midtown Atlanta rent is. We are very pleased for them.

 

[cvjw]

$15/hour
approximately $1600/month income
Rent - $900
Food - $500
Gas - $120
Electric - $150
Water/sewage - $40
heat - $100
Car insurance - $100
Total living expenses - $1910

Yes, water heaters, plumbing problems, car repair, medical problems, it all would be an emergency, including normal living expenses when they would be higher than your income. Could you explain how you add line items into the $15/hour budget above for those items? How would you add retirement to that budget? How would you add clothing? I guess you could eliminate gas because you have to have a car first and there's no way to buy a car on that budget. Those should also be saved for above your emergency fund.


The emergency fund is talked of in the personal finance sense as being there to replace your income in the event of job loss until you can get another job. It's not there for emergency situations that come up. Those things should already be budgeted (if able, see above). The emergency fund should not be included in savings for future car or home repair or to cover your medical out of pocket.

Live somewhere cheaper or get roommates. No one has to pay that much for rent.

 

[mjkacmom]

Live somewhere cheaper or get roommates. No one has to pay that much for rent.

Lol my son pays $750 with 2 roommates in a crappy house in a high crime are, 1 bedrooms state at $1200 and are not nice.

 

[mrodgers]

My experience is that most everyone can save.
My DH started his 401k when he was making $6.50 an hour (1992) and living with three other guys on bunk beds in a one bedroom apartment.
Today, in 2020 DH has over 900k in retirement. Never having made more than $30 an hour. And he is 47.
Compound interest when you start saving at age 19 is impressive.

I started at $6.73, 3 years later than that and I'm a year older. Company match is 2:1 up to 3% (you add 3%, company gives 6%) Divorce probably would have devastated him just as it does everyone. I just recently got my 401k back to over $100k. I will be looking to die while climbing on equipment doing material cleanouts. My hope is to be dead by 70 as I don't think I'll be capable of climbing on equipment at 70 as I am now.

 

[Pea-n-Me]

I started at $6.73, 3 years later than that and I'm a year older. Company match is 2:1 up to 3% (you add 3%, company gives 6%) Divorce probably would have devastated him just as it does everyone. I just recently got my 401k back to over $100k. I will be looking to die while climbing on equipment doing material cleanouts. My hope is to be dead by 70 as I don't think I'll be capable of climbing on equipment at 70 as I am now.

That’s pretty good if you have a $300 deficit every month! I hope that, between that and SS, you’ll be ok when the time comes. A roommate’s not a bad idea. How do you manage every month?

 

[mrodgers]

Live somewhere cheaper or get roommates. No one has to pay that much for rent.

Gotcha!

Toledo, Ohio is the most affordable city in the U.S. for rent with an average rent price of $550. Three of the top five most affordable cities are in the Midwest.

Knock $350 off the $1910 total. Down to 1560 with a $1600 income. That $40 has to pay car repair, house repair (for what's not included in rent), emergency fund, clothing, and everything that is not a need.

People keep spouting the 15% number for retirement. That's $360 on a$15/hour income. That's not doable.

 

[mrodgers]

That’s pretty good if you have a $300 deficit every month! I hope that, between that and SS, you’ll be ok when the time comes. A roommate’s not a bad idea. How do you manage every month?

I did not say I make $15/hour. I was using $15/hour as an example since that is what everyone seems to consider a "living wage". It's still not so much a "living wage". I do not have a deficit in my monthly budget. I do have to work overtime to make up for the child support so I have something over basic needs and take care of some of my kids' needs.

 

[dclpluto]

$15/hour
approximately $1600/month income
Rent - $900
Food - $500
Gas - $120
Electric - $150
Water/sewage - $40
heat - $100
Car insurance - $100
Total living expenses - $1910

Yes, water heaters, plumbing problems, car repair, medical problems, it all would be an emergency, including normal living expenses when they would be higher than your income. Could you explain how you add line items into the $15/hour budget above for those items? How would you add retirement to that budget? How would you add clothing? I guess you could eliminate gas because you have to have a car first and there's no way to buy a car on that budget. Those should also be saved for above your emergency fund.


The emergency fund is talked of in the personal finance sense as being there to replace your income in the event of job loss until you can get another job. It's not there for emergency situations that come up. Those things should already be budgeted (if able, see above). The emergency fund should not be included in savings for future car or home repair or to cover your medical out of pocket.

if you rent you do not have to worry about water heaters breaking down. Plumbing problems you will also not have to worry about.
where do you live that Heat is 100 dollars a month? I get your point but some of the things you have on there doesn’t make sense.

 

[GreatLakes]

if you rent you do not have to worry about water heaters breaking down. Plumbing problems you will also not have to worry about.
where do you live that Heat is 100 dollars a month? I get your point but some of the things you have on there doesn’t make sense.

Wouldn't heat be covered in either the cost of gas or electric? My furnace is gas so my gas bill includes the portion for heat.

Other than people out in the country using propane, heating oil, or newer homes with geothermal I would think a renter would take care of their heat in their gas or electric if it isn't included in the rent.

Around here water is almost universally covered in the cost of rent and covering your gas is about 50/50. at least it was the last time I rented.

 

[Starport Seven-Five]

$15/hour
approximately $1600/month income
Rent - $900
Food - $500
Gas - $120
Electric - $150
Water/sewage - $40
heat - $100
Car insurance - $100
Total living expenses - $1910

Yes, water heaters, plumbing problems, car repair, medical problems, it all would be an emergency, including normal living expenses when they would be higher than your income. Could you explain how you add line items into the $15/hour budget above for those items? How would you add retirement to that budget? How would you add clothing? I guess you could eliminate gas because you have to have a car first and there's no way to buy a car on that budget. Those should also be saved for above your emergency fund.

Offhand:
-Get a roommate and move to a lower COL area (locally).
-Cut that food budget in half. $500 is what we spend for 2 people and we're not even trying.
-How is electric that high without heat included? $250/month is more than we pay for gas+electric on our 2400 sq foot house in the middle of winter.
-Car insurance also seems high (unless the person is living in Michigan).

My frame of reference is a decade old now but my first apartment after college had a budget like this (I made $20/hr at the time):
Rent - $950
Food - $250
Gas - $80 (I lived 4 miles from work)
Electric - $30-60
Water/Sewage - $20
Heat - included in electric
Car insurance - $50
Internet - $40

That totals $1435 which had a good buffer at $20/hr. I was contributing to my 401k to get the employee match and saved ~8k in my savings account that year. A couple grand of those savings were likely from selling stuff though (I've always been a bit of a hustler ).

There are always ways to save money.

You can spend $25 to park your car and then $120 to actually get in on your first day at The Magic Kingdom.

You can also spend $50 with parking included and get a season pass to Six Flags. Add another $75 and you can get a season long dining pass.

If you want to replace your Disney trips with Six Flags then go for it. No doubt, you’ll save a ton of money.

You can also do a Disney Trip staying offsite or a Disney Trip staying at the GF. Very different trips and costs.