Why Vanguard Says You Can't Retire On The Average Salary

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Vanguard Report: institutional.vanguard.com/co...
00:00 $173,000
00:58 Prescriptive v Descriptive
02:31 Income Percentiles & Needs
04:10 The Data - By Income
05:01 The Data - By Generation
07:04 - What You Can Do - Personal
08:59 - What You Can Do - Employer
09:42 - What You Can Do - SS
Some of my favorite books: amzn.to/3KF3tlr
Camera & equipment I use: amzn.to/3Z20lof
Disclaimer: Please note that this video is made for entertainment purposes only and not to be taken as financial advice. Always make sure to do your own research.
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11 июл 2024

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Комментарии : 336

@jonathanfoster2263 7 месяцев назад

one thing I think many people forget is, you wont be saving %15-%25 of your income in retirement every year.

@MeowmyandMe 7 месяцев назад

Nope but you will likely be paying at least that much for health care, which (for many) a company used to cover

@duneme 7 месяцев назад

IF you where saving 20%+ for Retirement (most don’t come close!)

@Marty1857 7 месяцев назад

We did well to manage 10% of each month's net towards savings, and we couldn't maintain that every month of the year. We own our home and most bills are cyclical (utilities, insurance, internet, gas, maintenance of car/home) but it would just take one major event to crush us. And I feel that we are in a better position than most others our age that we know, socially.

@michaelswami 7 месяцев назад

But unless you are still employed (always an option), you save 7.65% that was taken out for social security and Medicare and 15.3% if self employed.

@CaedenV 7 месяцев назад

Yep, this is why most people plan to live on 50-80% of their pre-retirement income. If your home is paid off around retirement age, and you no longer need to save for retirement, then that is 2 large bills off of your plate that you no longer need to pay for through retirement. Your medical bills may increase a bit in retirement, but for most people moving from a high deductible plan to Medicare will see a decrease in overall expenses for many years, so that may not be an issue either. And if you are living on less money, or that income is coming from a Roth or HSA, then your tax burden can dramatically decrease too. The other big one is 'last purchases'. If you are 60 and buying a car... you likely won't need to save up to replace that car. If you are 55 and replacing your roof... you probably won't need to replace it ever again. As these maintenance and replacement costs roll off, that is also lifestyle costs that no longer need to be accounted for. Life really does get cheaper in retirement... or at the very least, a lot of costs become more discretionary instead of required.

@hsvkid 7 месяцев назад

I retired 9 years ago. Never made $100/yr. Always lived below my means. Saved, invested and have more than enough to do whatever I want.

@papaarnie 7 месяцев назад

I digress from Vanguard's analysis. My wife and I started saving a bit late in our careers. We didn't earn handfuls of money as we both worked in healthcare on staff and mid- manager positions. But save we did! We started saving at age 30 when we got married. We lived on half, so to speak, and steeled ourselves for the ups and downs of the market. We are now semi-retired at 66 years old and based on all the retirement calculators we've used, we have more than enough and some to pass on to heirs. We held steadfast to this rule: Pay yourself first!

@morriselee 7 месяцев назад

Great comment and bravo to you for your disciplined money habit! You couple are the minority in this consumer-focused and financial education-blind society.

@adamp6320 7 месяцев назад

All the metrics should be based on projected expenses, not income. I never understood this, as income can and does vary wildly over decades but you can get a good handle on what your "needs" based expenses will be, which with a little discipline won't go up and down wildly with changes in job. Also a lot of people do try for FIRE and spend very little of their income, saving 50% even (I'm more about 30%). If I take away the mortgage and savings rates, I can easily live my current lifestyle on 40% of my current income in retirement.

@buy.to.let.britain 6 месяцев назад

i only work part time, and this free's up a job for a future boomer to return to work ?

@miragexl007 3 месяца назад

Absolutely.. People can live far less But it's difficult. Sitting home all the time or just exercising or doing very cheap. But ohobbies doesn't fulfill 365 days a year 20 years.@@adamp6320

@gauravipal9518 7 месяцев назад

Any retirement readiness that is linked to income is fatally flawed. Let us say I currently spend only 50% of my income and invest the rest, then even assuming NO reduction in income, I just need 50% of my income in retirement. In case we assume at time of my retirement, my home is paid off, my commuting cost reduces and professional expenses reduce, then maybe just 40% of income needs to be generated through investmenrs and social security. At an identical income, the lower your expense to income ratio, the higher will be your investment corpus and lower the retirement income needed and vice versa. The key to retirement success is your current expense and expense to income ratio, NOT your current income.

@jeffmorton5539 7 месяцев назад

Agree, same here. I save half so will be comfortable w half as debt free too.

@rarelycares8416 7 месяцев назад

I agree, it should not be linked to gross income. After taxes, health benefits, 401k and other "fees" I pay before I get my check I only get to keep about 45% of my gross pay. And from that I also save in a Roth and other investments. So to say I need 70% of my salary is ridiculous. I have saved since I was 20 and I will have more than 70% of my gross pay in retirement...but I will be living high on the hog, or still saving.

@jameschaves5723 7 месяцев назад

Agreed, I earn $100,000, save $30,000. Tell me how is it I will need $100,000 in retirement

@adamp6320 7 месяцев назад

So much this. It's annoying how often the link to income is parrotted by everyone. If I quit my job and go work for minimum wage, is that realistic to link my savings to my current income? NO. Stupid Millionaire Next Door formula is the worst for this, as it assumes you're a good saver or not based on savings to multiples of current income.

@Sondan1988 7 месяцев назад

Gaura I have never thought of it that way. Thank you

@scottthomas1894 7 месяцев назад

Great video Erin and thanks for the link to the Vanguard report. However, I have to add that I have now been retired for two years and I have said to myself on numerous occasions that I did save too much. I have total security but now I wish I had more experiences when I was younger and my wife was still alive.

@janan3382 7 месяцев назад

You have a valid point. My husband and I are very conscious about experiencing life together. Thankfully we can balance that out with saving aggressively for retirement by living a simple, debt free lifestyle. Unfortunately a lot of people can’t balance the two out and spend two much on travel and things.

@dantheman6607 7 месяцев назад

It’s like a balance we never know the future. We work and save but we have to try to live in the present too. Congrats though on your savings that is an accomplishment many never reach.

@heidikamrath1951 7 месяцев назад

I’m sorry to hear that you are now in retirement alone, without your wife. This story is not uncommon. Bill Perkins makes a big point of getting experiences in along the way in his book Die with Zero. An excellent read.

@ErinTalksMoney 7 месяцев назад

💙

@jameschaves5723 7 месяцев назад

My wife left me because she thought I was saving “too much” and we were missing out. Within 2 years she had burned through the divorce settlement. Today I’m continuing to live as we did and she is on dating sites.

@ellingeidbo8469 6 месяцев назад

Don't forget that this is now. Since wealth distribution is unlikely to change over the future the same shift that happened to my parents will likely be happening to us, where the amount needed to comfortably retire keeps increasing as corporate monopolization and price fixing continue to drive down the purchasing power of the dollar.

@williamheilman7904 7 месяцев назад

Once again, spot on ! Remember Vanguard will also solicit their ability to help you grow your 401k dollars for a fee. I always wonder if there estimates create just a little worry to stimulate their advisory business ? With your guidance and online proficiency many can sidestep that extra fee. Thanks again !

@SuzanneU 7 месяцев назад

My husband is fully retired, I'm taking the soft route and working 12-15 hours/week. We have money for life and will have some for our heirs. Our advisor says we're a testament to the power of modest lifestyle couple with consistent saving.

@ErinTalksMoney 7 месяцев назад

Love it!

@dlg5485 7 месяцев назад

Lifting the income cap for SS tax liability is a more sensible solution to extend the program than cutting or delaying benefits, which are already too little for most recipients. I don't support any cuts or delays in eligibility. There are better ways to solve the problem that don't negatively impact low income Americans.

@andyklapper8484 7 месяцев назад

Two thoughts on this - 1) Your current income needs to take into account if you are putting money into your retirement plan. If you are making $100K and saving $20K (nice round numbers for this example), then your living on income is $80K, not $100K. 2) You income can INCREASE in retirement, depending on what you plan on doing. Even if your plan is to spend a couple months a year camping at national parks each year, that is more vacation spending then you had before retirement. (and yes, look up the smile spending curve). Your expenses will only go down if you A) spent a lot of money on work (dry cleaning, buying coffee/lunch most days, transport to work & back, ...), and B) you don't pick up expensive hobbies after you stop working. You could be trading dry cleaning for golf fees, or plane tickets.

@larriveeman 7 месяцев назад

well you not living on 80K, your living on 100K-IRA/Savings-social security tax - federal/state taxes-health insurance ect...

@JBoy340a 7 месяцев назад

I think everyone should follow Erin's suggesting of planning as if social security is not going to be there. When I first started working my father pulled me aside and told me to assume that SS would not be there for me. He said, my SS contributions would fund his retirement, but I needed to save for my own retirement. I took that advice to heart and started saving and investing in my 20s. I am now in my mid 60s it looks like SS may be there for me, but having assumed that it would not be, SS will be an unplanned, but welcome, extra retirement income.

@kxjx 4 месяца назад

That means you retired several years later than you otherwise could have.

@Couchlnvestor 6 месяцев назад

As a 31 year old, single no wife no kids no debt with the exception of a small mortgage with a net worth nearing 650K n investing 27% of my pay the messy middle has been a huge blast for me! Should hit a net worth over a million by next year.

@tonyflaminio2719 7 месяцев назад

Excellent content Erin, appreciate you digging deep into the report and sharing it. Love all your graphics. Also, I’m a visual learner that helps me so much.

@dstevens518 7 месяцев назад

"It's best to direct your efforts into things you can control." That's just it though, so many can't control themselves. The evidence in credit card debt is all around us. We're not just talking about low income folks having a hard time making ends meet, we're talking about people making six figures that are living paycheck to paycheck. The theme of this video really rings true to me. Help yourself NOW, buckle down early and then put it on autopilot when you get close enough to relax and enjoy. Problem is, most are too busy enjoying early, then just end up with bad habits they can't break, even as they worry more and more with time running out on them. Stop worrying, DO something! Finally, kudos to you for always telling it like it is. I'm sure you're more than aware there are worse financial advice channels on YT (literally, nearly all of them) that have more subscribers, cause they're busy patting their audience on the heads, and not actually trying to help them. I love folks that don't sell out, and stay true to themselves. Your kid won the parent lottery.

@jameschaves5723 7 месяцев назад

I have to agree. Erin says what most people don’t want to hear!! The truth hurts.

@ignitionSoldier 7 месяцев назад

Thanks for the great video. I think I will read that report for myself to see everything Vanguard has to say.

@jroysdon 7 месяцев назад

It's much easier to cut your spending prior to retirement, becoming accustomed to a lower level of expenses (saving and giving the difference). This pre-conditions a person to live on less, making a transition to "retirement spending" much more gradual and less impactful.

@BradColemanisHere 7 месяцев назад

Well said. We're gonna be fine, but that's mainly because we started early. I'd be interested in finding or creating a chart of what percentage of income each age should contribute to retirement. This income number Vanguard threw out there is sort of pointless due to it being so much higher than what people actually make. If we all used percentages then I'd think we could convince more people to start in their 20s even though they have low incomes just starting out.

@Curbalnk 6 месяцев назад

Hi Erin, I'm 40 and currently venturing into the stock market, my ultimate goal has always been to retire at 55, is it possible to raise over $8million in portfolio size before my retirement at 55, I earn about $800k annually.

@kashkat987 6 месяцев назад

with the current state of things in regards to inflation and economy $8million might possibly not be enough for retirement

@Shultz4334 6 месяцев назад

@@greekbarrios bravo! i'm 46, inherited money from a childless relative and traveled overseas, got married to a lady almost my age, but the only issue is how to preserve and grow my wealth in view of retirement, can your advisor be of help please?

@velayuthman 6 месяцев назад

Thanks for sharing. I curiously searched for her full name and her website popped up after scrolling a bit. I looked through her credentials and did my due diligence before contacting her. Once again many thanks.

@syka75 6 месяцев назад

$I'm a uhnw private wealth advisor. The $8 million properly invested should easily support a healthy and growing retirement.

@GeneralZeroOfficial 5 месяцев назад

Yes. I have a little under a quarter of that and I'm estimated to retire at 65 with $15 million.

@KaironQD 7 месяцев назад

Thanks for breaking down this headline into what Vanguard was actually measuring! There's so much sensationalism in article headlines, but it's great to understand the ACTUAL data at the bottom of what Vanguard is saying here and what sort of perspectives or viewpoints it can yield!

@donh8833 6 месяцев назад

I worry for my relatives who are getting close to retirement and didnt save much. I was looking at a 20% surplus in 2019. But 20% inflation and 2 bad stock years plus being out of work 6 months made things...borderline. Thank goodness i put that safety buffer in. Recovering 20% at 52 is going to be tough woth boys hitting college age soon.

@anthonybutler3157 7 месяцев назад

Descriptive budget in retirement I find much more useful. Great analysis and presentation.

@lovethomassowell 7 месяцев назад

Thank you, Erin. Your review of this research makes it far more accessible. The details in the research are not to be missed though and appreciate that you linked it here. I suspect most of the viewers/commenters here have their act together on their retirement accumulation/withdrawal planning. A content suggestion: The 2030's Great Depression & How To Plan For It. The economic research for this depression forecast has detailed and updated for over a decade by ITR Economics. None of the reasons for the depression will surprise you and they have quite a few details on their website. ITR Economics is a highly regarded business economist research firm that many mid-sized business use for accurately forecasting/planning for economic cycles. They have been around for decades and have a 90%+ accuracy rate in forecasting. If you are pleased with their credentials, it would be a compelling interview to have one of the two brothers walk through it on your channel.

@kevinkanter2537 7 месяцев назад

ITR Economics touts that its overall forecast accuracy since 1985 is 94.7% at one year out. BUT since 2015 w/ “Prosperity in the Age of Decline,” the prediction was: The next Great Depression will start in 2030 and likely last through 2036. After this six-year period of economic decline, it will take roughly four years to fully climb a description of the great depression is quite different from the above take ----- from wikipedia timeline: In most countries of the world, recovery from the Great Depression began in 1933. In the U.S., recovery began in early 1933, but the U.S. did not return to 1929 GNP for over a decade and still had an unemployment rate of about 15% in 1940, albeit down from the high of 25% in 1933. Some say that WW2 actually finally brought a social network and employment to the US. .... not challenging but a good plan should not be affected by a depression --- especially one based on a forecast 15 years into the future. The economic literature is rife with such predictions most of which failed. what are you or your "namesake" doing pushing a "forecast" on a financial planning channel? Is there some indicator such as hi P/E ratios predicting reduced returns of a portfolio --- or is there a different financial planning model beside live below your means?

@lovethomassowell 7 месяцев назад

@@kevinkanter2537 Thanks for the interest and your comment. Not a fear monger but think of it more as a stress test for our financial plans. I used ITR's forecasts for many years as did many of my business peers in YPO and Vistage. They were highly accurate, gave insightful strategies based on the stage of the cycle, and allowed me a competitive edge over my competitors. The book was published years ago but the forecasts have been periodically updated - the most recent was last year. They also give specific planning advice on how to prepare and also take advantage of this depressive cycle. You are a RU-vid viewer and this video from one of the ITR economists might be fun to watch. ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-dloC6HM6IcU.html

@BoxOfRain 7 месяцев назад

I agree that it is difficult for people who don't have access to a workplace savings program - but there are a lot of people out there who cannot save because they don't have the income. In my retirement, I volunteer for a community service organization. About 15 - 20% of the children in our area qualify for free or reduced price meals - meaning that they are "food insecure". And we're living in a upscale, middle class - nearly all white - small city outside of Grand Rapids. Anyone who has trouble feeding their kids will not be saving money into a 401K or IRA.

@diggernash1 7 месяцев назад

Or, it is too easy to qualify for reduced lunches. Identify which cell phones these parents currently use. It will be enlightening.

@rayzerot 7 месяцев назад

@@diggernash1I'm okay with it being easy for kids to get onto reduced lunches if it means that I know for sure that they'll be fed

@diggernash1 7 месяцев назад

@rayzerot Nothing would stop you from using your own resourcesnto feed them. Otherwise, you are saying, "I'm good with other people's money feeding kids for whom I am concerned." That isn't being charitable.

@donaldlyons17 6 месяцев назад

Yeah but people like Erin seem to live in their own world.... I can't explain it either because everyone can't save because they don't have excess or are burned out from saving and seeing it not work.

@carlr458 6 месяцев назад

@@diggernash1"ensuring all children can eat is bad" is one heck of a stance to take.

@travis1240 7 месяцев назад

On social security - you mentioned ways benefits could be reduced, but they could instead (or in addition) fix the income side.

@clbcl5 7 месяцев назад

If I use S/S and 4%, it would give me more per year of money to spend than I ever have had. So with no debt I'm more comfortable now than ever.

@JohnPMiller 7 месяцев назад

Off-topic, but my AAA car insurance just increased 30% since last year. No tickets, no accidents, no claims, same car (but now a year older). Has anyone seen this? My brother's USAA insurance increased 20%.

@MeltingRubberZ28 7 месяцев назад

My house insurance went way tf up as well.

@davew3935 7 месяцев назад

Yes, we have AAA and it went way up. Costed it out with several other insurance companies and all were higher than AAA!

@LiamRappaport 7 месяцев назад

Shop around, you may be able to get the same coverage from another provider. That’s what I did with State Farm/progressive. There seems to be industry-wide increases though in the last year or so.

@bryanwhitton1784 7 месяцев назад

Reading the replies to your post and thought I would give some food for thought. You may have noticed wild fires, hurricanes and associated floods and mudslides depending on where you live. All of these cost the insurance companies huge amounts of money. They have to make ends meet and make a profit to exist. The way they do this is to increase the cost for insurance, all types of insurance. It doesn't matter specifically what your history is what matters is the cost total for operations. Insurance is a collective system where the insured are billed for the collective costs. Everyone pays some so the few who are directly involve can be covered. This is why the cost for PG&E's poor maintenance and resulting huge fires are so infuriating to me. The quantity and size of recent hurricanes potentially due to global climate change is going to hurt everyone whether you are in Florida or Colorado. We are all in this together and will all pay the price together.

@dantheman6607 7 месяцев назад

Yes my home owners and auto went through the roof.

@craigschray4486 6 месяцев назад

Yes, market performance is HUGE! I've been hammering money into my 401k and roth, but my funds have just fairly recently gotten back to where they were a few years ago. Hopefully in another year that'll change and things move forward dramatically.

@joedessenberger2048 7 месяцев назад

We started saving in our 20s. Every promotion or pay increase resulted in a conscious effort to put part of that increase towards investments. Enjoy a little and save a little with each pay change. This has been instilled in our working age daughter now and she is off to a great start. Excellent video and advice!

@williamheilman7904 7 месяцев назад

Thanks!

@ErinTalksMoney 7 месяцев назад

Thank you! 🙏

@mr88cet 6 месяцев назад

2:54 - Interesting table! Just to crunch the numbers: 96% of $22K = ~$21K 83% of $42K = ~$35K 68% of $61K = ~$41.5K 43% of $173K = ~$73K So, the higher-paid do use less $$$ in retirement, _in percentage terms_ , but still considerably more in absolute terms. Not particularly surprising, but enlightening to hear the actual numbers!

@fredswartley9778 7 месяцев назад

Great video. It's good advice to not depend too heavily on social security. We should hope for the best, but plan for the worst. Since I work for myself I have to take responsibility for my own investing. Roth IRA.

@howardfriedman7077 7 месяцев назад

fred: So you think your tax rate will be higher in retirement?

@fredswartley9778 7 месяцев назад

@@howardfriedman7077 yes

@northtexan95 7 месяцев назад

One nitpick ... saying Social Security will run out of money is 2033 a headline aimed at grabbing attention while being inaccurate. At worst you're talking about a 20% reduction in benefits if nothing happens. That's is a big number but far from those payments going away. Also, the idea that congress would allow that many voters to lose benefits is something not likely to happen.

@drbcrb 7 месяцев назад

Another huge factor is where you reside. There are high cost areas and low cost areas and the difference can be huge.

@ErinTalksMoney 7 месяцев назад

True true!

@dantheman6607 7 месяцев назад

I’ve never seen that table with upper income earners need to replace 43% and lower up to 90% but it makes sense. I’m upper income and think I’ll need about 50% of my current income if that.

@j10001 7 месяцев назад

3:00 Would you please try to add column and row headings on tables, axes labels on graphs, etc? This helps if we want to screenshot one of your awesome insights or data points! In this case, a screenshot won’t show what the last two columns mean

@tonyflaminio2719 7 месяцев назад

Thx ETM, l learned something new I did not realize that Social Security was progressive I guess I should have. I don’t have a problem with that. I’m just glad that I learned something new today. Thank you.

@GeneralZeroOfficial 6 месяцев назад

Vanguard has been telling me that I won't have enough in retirement for my entire career. I make almost $200k at the age of 33 and save and invest damn near 100% of my income after essentials. On top of that, I have 20% of my salary added to my pensions when you factor in my employer match. Vanguard's calculations still say I'm going to be at half of what I need to be (if social security isn't reduced at all)... I dont trust their reports about this at all. They just want people to give them more money.

@edskins59 7 месяцев назад

if i can survive making $80k/yr while working and paying for mortgage, i think i'll be fine retiring with $60k/yr with no mortgage. Vanguard's analysis is what makes retiring folks consider retiring abroad. I know i can for less than $2,000 and comfortably I might add.

@neilcook1652 7 месяцев назад

I will have a financially comfortable retirement, because I have educated myself to know what is required and disciplined myself to do it, not rocket science and anyone who can be bothered can achieve it, many won’t and then will spend decades moaning how terrible the world has been to them, sad, take ownership of your situation.

@thomaschew2191 7 месяцев назад

We are at the age where some of our friends and family are going into retirement. Some of them are in decent financial shape, some of them I think feel that they have worked X amount of years and now it's time to retire forgetting that things cost money. I get stares from some who ask when are we retiring and my answer is when we are convinced we are going to be able to support ourselves through thick and thin. And yet we are debt free and a paid for home, saving 50% of our income for our future. It might turn out that we miss some life experiences but that's ok we have time off and we have funds to do things we just rather have little to no money worries at a time in our lives when there isn't much we will be able to do to increase our income.

@rickchandler2570 7 месяцев назад

Everyone’s number is different. Maybe they are right when looking at the average American. Planning retirement is more than just putting money away. Getting out of debt and living below your means is key in my opinion. For at least 10 years prior to retirement, I was debt free (including mortgage) and my last yearly wage was $180k and I didn’t spend anywhere near half that amount. This allowed me to retire at 54, move overseas and live on less than what I was in the US.

@mikebridges20 7 месяцев назад

My wife and I started our retirement savings as soon as we could after college (back then we had to wait a year before being eligible). Started off at 2%, increased it up to 10% over the next few years, and stayed there until later in my career (we chose to cut our lifestyle and have my wife stay home when our first kid was born in 1985) when we started maxing out our 401k. We're 66 YO, have zero debt, and have a nice nest egg. I know this segment was focusing on the Vanguard report, but I think getting and staying out of debt is one of the best things you can do to maximize your saving potential.

@garynovak7977 7 месяцев назад

Nothing beats being completely out of debt for financial peace-of-mind. It also makes every other financial decision easier.

@dstevens518 7 месяцев назад

There's lots of ways to earn, save, invest, and prepare for a successful retirement. Unfortunately they all require self-control, discipline, and time.😂 It's not rocket science, but it does require old faahioned fortitude

@Tyrantking7 6 месяцев назад

Things have gone downhill at Vanguard since Jack Bogle passed away.

@markwilhelm168 7 месяцев назад

Pre-retirement income based recommendations never made sense to me because they don't define it as gross or net. You spend net not gross. My retirement income is the same as pre-retirement net income which was 50% of my gross. I am in a lower fed income tax bracket, no longer pay SS income tax, my state doesn't charge tax on retirement income and I am no longer saving 20%. Save more, live on less and retire sooner.

@brandon8531 7 месяцев назад

Great points. I’m not retired yet but I’m trying to take these points into my calculations

@NovelNovelist 7 месяцев назад

LOL, I looked at it sideways and saw the "173,000" chapter name and thought it was the video length! :O

@CormacNJ 7 месяцев назад

Biggest change from my working years to retirement years is that while working I saved part of my salary in a pension plan and IRAs and 403B. Now I don't "spend" money to fund my retirement accounts. I still invest in a non-IRA mutual fund. Only not as much as my working years.

@ValkyrieIA 7 месяцев назад

Have been looking for more descriptive information by different income thresholds. Thanks for this. Surprising that the higher earners have such a large drop in spending. Is this an overall average of full retirement and could it be broken out further by the 3 stages of retirement? I.e., go, slow, and no-go. I am working toward 100% replacement as we want to do a fair amount of travel that was deferred for years. Maybe that is too aggressive and maybe 115% in go, 85%in slow, and 30% in no-go.

@ErinTalksMoney 7 месяцев назад

I kind of did a double take at that drop as well. I wonder about the factors that contribute to it - like perhaps higher income earners are perhaps more likely to have their mortgage paid off? That would cause a significant drop for sure.

@madmeh2929 5 месяцев назад

Total up your current actual spending, and adjust for health insurance and other changes in retirement. Hard to be specific on health and housing costs, but most others are under your control.

@vchap01 7 месяцев назад

What really matters is how much money is left for investing after all the costs. There are a lot of high earners who are living paycheck to paycheck and have a lot of debt. And there are millionaires who have never earned the "average salary" as defined by Vanguard. Retirement spending changes typically include increased medical costs that hopefully would be offset by not investing anymore, less traveling, etc.The bigger spending changes happen when you pay off student loans and mortgage that hopefully should happen earlier in life. That allows you to invest significantly more with the same salary. Any analysis that mentions salary numbers without expenses and debt is pointless. If the later numbers are provided, you can easily adjust the amounts to fit your situation.

@mr88cet 6 месяцев назад

7:08 - it indeed seems reasonable that saving more would have the most impact, but I suspect the most-basic key is to kill off credit-card debt.

@leehaskins307 7 месяцев назад

I grew up in the 80s and 90s… that was status symbol years…. me and my wife had big status cars… lexus, audi, infiniti, mercedes… I just bought a hyundia elantra N-line a few years ago and think its the most comfortable and fun card to drive… the day of the status symbol I think are mostly over…. at least for me….although for christmas my wife wants a rolext watch…. so maybe not… lol...

@vinyl1Earthlink 7 месяцев назад

If you're a good saver, you can probably spend more than you spent when you were working. Remember, if you were saving 30% of your income, you were only spending 70% of your income when you worked. Moreover, you were paying over 7% FICA, which you don't have to pay any more. So you would only need 63% of your working income to be able to spend exactly the same amount. Furthermore, what does cut back in retirement really mean? If you are in your 40s and 50s, and have three teenagers and five cars, and live in a big house and buy out the grocery store every week, how does that compare to your life in retirement?

@AJohnson0325 7 месяцев назад

I’m investing in dividend growth stocks so I’ll get a raise every year in retirement and pay almost half as much taxes as I do now. I was raised not to count on social security or anyone to save me. I still want to invest in retirement too. The way I look at it, if you’re still investing in retirement then you’ll never run out of money. Warren Buffett made almost all his money after the age most people retire. After working for 40-50 years, people should be living like kings. Save that money!!!

@jimv77 7 месяцев назад

I knew I wanted to retire sooner and not work forever on my first day at work during orientation and filling out 401k paperwork…15% maximum …..that was back in May 2000…..Now I can see the finish line…..I can even smell it……I thank my 23 year old self. Anyone out there in their 20s…30s…..I wish you could have a crystal ball…..compound interest is magical…..

@Coover90210 7 месяцев назад

They prey on fear. They tell you that if you invest 10-15% over a 40 year working period, enjoying compounded returns, that your nest egg *MIGHT* be enough to allow you to withdraw 4% a year for 20 years. But to be safe you better invest more, work longer, and retire on less. Something smells.

@shawnbrennan7526 7 месяцев назад

SS should be considered part of your life insurance, not your retirement investments. That was the initial concept behind SS anyway: you lived beyond the point where you can work, so here’s a safety net check.

@howardfriedman7077 7 месяцев назад

Shawn: John bogle always said that you should look at SS as the fixed income portion of your investment allocations. He would say that a solid benefit was like $300,000 in bonds.

@shawnbrennan7526 7 месяцев назад

Sounds about right. Today the average SS benefit is $1,800 per month or $21,600 per year. The 4% rule would call that $540,000, but that rule implies a 50/50 mix and 30 years.

@tyrehester5550 7 месяцев назад

I have a very comfortable retired life. Worked 44 years, retired at 65, didn’t start SS until age 66. First year was hard but we planned/saved for it and basically bought nothing extra. We currently live off 68% of my final salary and I have only withdrawn savings for a family member’s medical expenses. Budgeting is the key to being comfortable. YNAB is What we use. Love your channel 😊

@ErinTalksMoney 7 месяцев назад

Thanks for sharing!! 😊

@blackhawkteslatech 7 месяцев назад

well I agree because the lifestyle will not stop - new iPhones, newer cars, vacations, restaurants, hobbies. Most could not retire because of lifestyle that is not easy to stop

@paparrinsky 7 месяцев назад

Thank you Erin! Awesome analysis you present of the Vanguard’s report.

@robnelson6545 7 месяцев назад

Part of the drop in spending is because they don’t have the expenses of kids anymore which is not correlated with retirement per se

@johnnyboyvan 7 месяцев назад

Lol 😆 I retired with 52k a year and am doing really well. All bs!! My DB pension allowed me to retire early at 57 and made in my final year 100k.

@transitengineer 7 месяцев назад

Overall this was an excellent overview and, a very well done summary of this study by Vanguard. However, one area that, I disagree with you on is what employers should be doing. Private companies and firms should create what, I had access to in the the 1990's a pension plan for all employees and an optional 401(k) plan with an employer match (say 50 percent match up to the first 10 percent). Which would mean at retirement a worker would have a pension of about half their salary, social security for about another 30 percent of their salary, and a 15 percent amount added from each paycheck into their 401(k) account. These three sources of income added together, should be more than enough to replace or exceed a persons salary when, they were working (smile...smile).

@hogroamer260 7 месяцев назад

I think it depends on your lifestyle and you want to be debt free. We have all we need and do what we want on just over $100k.

@bidergilette5356 7 месяцев назад

Erin, could you do a video explaining how SIPC insurance works? For example, am I fully protected if I have multiple accounts (IRA, Roth IRA, taxable acct, etc.) over $500K each at one brokerage firm? Thanks!

@BAC2BAS6 7 месяцев назад

Erin - I enjoy your financial content; however, sometimes it is too much content to follow. maybe cover all the details over 2 or 3 weeks. just a thought

@princesskaitlinhazelwood4703 4 месяца назад

I started working in the mid 90s at 26 years old. I saved 10% for the first three years which was the maximum my plan allowed. My employer matched 5%. When it changed rules in year 4, I saved 15% and employer matched 5%. In year 61/2, I changed jobs and still put in 15% and employer matched 8%. I also earn a pension. I have plenty to retire. Husband always put in 15%. In late 40s, we paid off house and could do irs maximum. After 50 we did catch up contributions. Now working on Roth 401ks. Bought kids prepaid tuition plans for college and working on those ur housing costs. Live simply, pay off debt, and save at least 15%. Helps both hubby and I have pensions and healthcare into retirement. Didn’t have big salaries till 40s. You can do it. Slow and steady 😊

@mikeymikeshooms3581 5 месяцев назад

Best advice i heard was plan as if ss doesn’t and won’t exist

@Donkeyearsa 4 месяца назад

There are two numbers that everyone needs to have for retirement. The first is what they need to retire on which covers all of their base needs plus emergency money for medical care. Only older people retire and that means medical care needs to be considered. This is what is needed to be spent when the economy is in recession. The second number is what one wants to spend. This is doing all of the fun things that one wants to do but can do without if the economy goes in recession.

@jimfurr6420 6 месяцев назад

2024 will be a game changer - nasty stuff coming...

@onewomanandsomesongs 5 месяцев назад

I find one of the keys to a decent retirement is to be debt free, that means a mortgage if you own a home. Yes, it's good to have retirement funds saved, but if you are debt free it goes a long way towards making retirement more comfortable.

@davew3935 7 месяцев назад

Interesting that the generational impact chart skips those who are 42-48 years old and 54-60 years old.

@Swist1213 6 месяцев назад

I have had the social security tax deducted from my income for 50 years. I recently started collecting. Image how much money I would have been able to invest or save if that money hadn't been deducted over all of those years. It will be interesting to see what kind of 'fix' will be created before the money runs out.

@MatthewBennettFPV 7 месяцев назад

“Nobody gets to retirement and says “oh shoot, I saved too much””. Isn’t that the “one more year” people that keep working to have more money they don’t need and then lose out on the best years of healthy retirement? Working to build money you won’t need is just time wasted working, unless you really love your job enough that you would do it for free.

@ErinTalksMoney 7 месяцев назад

Very true!

@harrycee656 4 месяца назад

Investment companies also want to fear everyone to save more. The more we save the more fees they collect and money they get to work with. Additionally, there have been quite a few people that retired recently and voiced that they wish they retired 5 years earlier because they needed less than they were told. They were blue collar lab technically.

@honzasgarage5125 7 месяцев назад

Would be interesting to see how spending habits of people actually change as they retire

@MeltingRubberZ28 7 месяцев назад

Let me stop contributing to SS and let me increase my Roth. I'll take 0 from SS even though I've probably contributed 100k to it already. Edit: keep the change ya filthy animal

@LiamRappaport 7 месяцев назад

I’d gladly take that deal as well.

@bryanwhitton1784 7 месяцев назад

SS doesn't go down in a bad market. It gives a guaranteed income. A ROTH or 401K investment is tied directly to the market which can have huge fluctuations. Having a guaranteed income for part of your retirement is a prudent thing to do. I once thought a self directed retirement would be the best thing to do as well. But the last two downturns of the market has changed my mind on this. SS is a good hedge against these downturns.

@bigfoot14eee99 7 месяцев назад

@@bryanwhitton1784 The funny thing is during the 2008-10 recession, while my colleagues were crying about their losses, and stopping to contribute to 401k, or worse, cashing out, I went to 100% stocks and doubled my contribution. Rode it until 2018 when I started diversifying again, and cleaned up.

@MeltingRubberZ28 7 месяцев назад

@@bryanwhitton1784 have you done the math? I could start from 0 today, have meager gains until I retire, and still have more than SS. Guaranteed income for me is my rental properties, cash, or bonds, as well as zero debt in retirement. I'll take the gamble.

@MeltingRubberZ28 7 месяцев назад

@bryanwhitton1784 also, the entire reason we are having this discussion is because SS is not guaranteed so I don't agree with that assumption either.

@martyi398 7 месяцев назад

Suzie Orman went on record a few years back saying that folks would need to save a cool 5 million dollars for a comfortable retirement!

@goyoy6433 6 месяцев назад

I started saving late(31), but I'm grateful my company made available a 401k match with Vanguard. My home is paid off, and I'm anticipating retiring at 59.5 as the diving payout in my retirement savings is just under 30,000 a year. That coupled with my pension would hold me over until I hit 62 when I'd be comfortable for my lifestyle. You guys in you mid 20s, save. 50 years old comes very fast..trust me 😊

@tonyflaminio2719 7 месяцев назад

❤Finance is Personal

@howellwong11 7 месяцев назад

I don't see why not. Most of my accounts are with Vanguard 30 years ago.

@thehospitalguy1657 7 месяцев назад

When our auto enrollment started it maxed out at 10% which I am not positive if that is the amount needed. Our employer does also add an additional 4% for those that put in at least 6%. Any word on if the auto enrollment amount will go higher?

@user-pd4fp3dj3u 6 месяцев назад

I am a boomer who served in the military from 1984 to 2008. I did not take advantage of TSP when it became available and I carried debt until my fifteen year in the Navy. I have saved and invested but not nearly enough. At 60 it is scary thinking about retirement, however after running the numbers between a military pension, VA compensation benefits and Social Security my income will be over $70K a year. I tried to get the younger generations saving and investing as early as possible or their older self will hate them.

@williamrogers1219 5 месяцев назад

Automatic enrollment in high-cost 401k plans without a company match may not be the panacea one thinks. Workers should not be beholden to a company 401k plan, rather they should be able to invest in a low-cost provider of their choosing. This would be similar to workers choosing which bank to have their paychecks directly deposited. Company matches should be invested directly in the account of the worker's choosing. The maximum amount of retirement savings should not be a function of whether a worker has access to a 401k plan or not. None of these issues were addressed in Secure 1.0 or Secure 2.0 retirement bills because the insurance companies supply 401k plans with their expensive mutual funds and plan fees.

@robertl9065 7 месяцев назад

I’m pretending SS doesn’t exist. Been saving 10-15% of my retirement income (including matches) since I was 22. I’m now 45. I also have a really good pension that I’m 10 years into which is rare for a Genxer. And though on paper it seems like I’m doing well in saving for retirement, I still don’t feel like it’s going to be enough. I can’t imagine what most people my age that have no savings are going to do. It’s sad.

@Hikingguy359 7 месяцев назад

The biggest factor to higher retirement balances is not increasing your retirement contribution by 1%, but rather it’s increasing your income.

@donaldlyons17 6 месяцев назад

Right but income is often not talked about much because increasing it is so difficult to do..... Making a few dollars a year likely is not difficult but making thousands of dollars extra per year requires some luck and good conditions.

@frankish5314 7 месяцев назад

Actually I disagree.. We got to retirement at age 52 and honestly we did save too much, mainly because I forgot to project what our pensions and Social Security would be worth. I'd put that in the "good problem to have" category...:)

@sidewinder3434 7 месяцев назад

For the average Joe ( or Jane) no extensive travel.. no dining out every night..no buying a new car (BMW ?,lol) , no retail buy now, pay later , no credit card debt (such as $10,000) .. Live debt free ,INCREASE savings !

@diytwoincollege7079 7 месяцев назад

Vanguard better raise their returns in a big way if we are suppose to make 173k per year.

@Dave-sw2dm 7 месяцев назад

They dont want you withdrawing from the account. My retirement estimate shows I can have the same take home pay. I currently spend 2/3rds of my take home pay, but do make a large purchase every few years to replave a vehicle.

@Iffy50 7 месяцев назад

61K puts you in the 70th percentile? I live in northern Minnesota in a city of 100K people. I drive by McDonald's on my way to work and they are paying $18/hour. That works out to $37,440/year if you work full time. I have a feeling that those percentiles will change a significant amount once the new data is analyzed.

@SteveG1337 7 месяцев назад

1)This is new data…. 2)McDonalds is not a career unless you are aiming for management roles there. General shift workers are intended to be young folks with zero experience to make some money until they move on to a real career. 3)These are household incomes…so marry well and your spouse will bring in a nice contribution to the household income. Even your burger flipper example of $18 an hour for 2 individuals, would put them in the 70th percentile. That just goes to show how many folks are not working full time and riding the government handout money train, instead of being incentivized to actually go get a job.

@vmobile890 5 месяцев назад

In california senior mobile home park surrounded by million dollar homes comfortable live of $40,000 a year pays for all expenses and have a few hundred left over .

@bobackerman54 7 месяцев назад

My dad did get to retirement and saved too much ... because at the point he retired (he delayed doing so) my mom was dead within 14 months ... my mom was INCREDIBLE... every day my dad misses her SO MUCH ...

@brandon8531 7 месяцев назад

So sad. I have that fear as well.

@bobackerman54 7 месяцев назад

@@brandon8531 thank you for your response ... i pray you have a LONG and HAPPY and JOYFUL a retirement as possible ... i do not have as much as MOST FINANCIAL ADVISORS would recommend, but it is enough ... life is for LIVING ...

@sandybeach3576 6 месяцев назад

I retired with 11,000 dollars per month and I get along just fine.

@raffaelepiccini3405 4 месяца назад

“Nobody gets to retirements and thinks ‘oh shoot I saved too much’” Unfortunately I don’t think it’s true… you can save too much.. and your regret wouldn’t be having too much money obviously, but rather, not having done things while you were younger… maybe you wanted to take a big trip with your family, but you didn’t because you needed to save money for retirement, in that case if you end up having extra money from social security it would be very frustrating thinking you could have after all taken that trip when you still had a fully working body

@larriveeman 7 месяцев назад

being debt free is one of the biggest pluses in retirement

@g.t.richardson6311 7 месяцев назад

Total crap Neither my wife or I ever made more than 75000, I retired at 60 couple years ago, she is younger and will retire at 59.5 in may 2025. (Note-I still work pt on my own terms doing property maintence for a young guy who owns 20 properties.. gravy money) We both have or will have pensions, but nothing over the top, but our net worth is 1.5 and zero debt, put 3 thru college, and adding in SS (whenever we take it) our monthly income covers all bills even if we go buy another house and 2 cars with plenty left over.

@vincentdesalvo1464 6 месяцев назад

Another article to scare the crap out of you to save more than you need and work longer than you need too get to that pie in the sky. Once that mortgage is paid off you can really step-up saving. Most people say, I make $XXX a year and I need 70% of that to live on, wrong. Remember you need to think about all the deductions that are coming out of that check of yours, so just count your take home pay only. I found that I only need about 50% of what I bought home to live on. Unless you don't how to control your spending and know the different between needs and wants than you will work a lot longer. Oh, I'm retired and never come close to that number they give and when I need something I get it without a second thought.

@SunshineFL 7 месяцев назад

Not everyone has the same retirement. We are all different. Not everyone has the same debt. Finances. Just control your debt and expenses. Have a budget. Build an emergency fund. You will be fine. I know some people who work pt to supplement their income.

@donaldlyons17 6 месяцев назад

Which suggest they are not rich from having worked a lifetime!!!!

@CaraMarie13 6 месяцев назад

Another thing that is within our control is taking action to unionize your employment and holding politicians accountable for the policies that are allowing companies to get filthy rich off our backs. And i know in this country the message is to look at what you are doing to make it harder on yourself but it'd be nice if one of these days we took a look at the bigger picture.

@Sondan1988 7 месяцев назад

I guess I would have to ask if you are debt free when you retire, where in the USA do you need $173,000 to retire Erin ? You know where we live and we live very modestly on about $40,000 a year now.

@howardfriedman7077 7 месяцев назад

Two people, living next door to each other, could have wildly different expenses. It is not just about location.