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Since most of us are getting a later start in life through spending more time in school pursuing bachelor’s and master’s degrees and struggling with student debt, retirement is probably the furthest thing from most of our minds. While I’m busy deciding whether I want to spring for guac, my employer-sponsored retirement is running on auto and I sincerely couldn’t tell you how much I’m contributing, what my employer is matching, or whether or not I’ll have enough money for my retirement home in Cabo as soon as I hit 65.
For our parents and grandparents, this wasn’t that big of a deal. With low costs of living and minimal lifestyle inflation, those retiring in the 70’s only needed around $166,000 in retirement to live comfortably. That’s easy, right? Wrong. For us, it couldn’t be more different. If you’re 20 years old now and want to retire with the same quality of life as that $166K retirement forty years ago, you’ll now need to save $7 million.
Well, fuck.
Entrepreneur breaks it down this way: “a 25-year-old with a starting salary of $50,000 would have to save around 14.65 percent of their salary throughout their career.” Broken down, this means that we all need to be saving $7,325 a year, or $610 every month. Considering this is double my student loan payment, I’m going to go ahead and say that I’m in trouble. Of course, we’re not all 25-year-olds, and with the future predicted increases in inflation, the younger you are, the more you’ll need to save. For those of us born in the early 80s, USA Today predicts that you’ll need to rack up at least $1.8 million, whereas for those born in the late 90s, you’ll need at least $2.5 million if we maintain our current living standards until the time we die. Most of us plan on not living with multiple roommates and actually owning a home though, and as living expenses and future health problems arise, so will the amount of money we need to save.
If you’re on the younger end of our readership, compound interest is in your favor – while the oldest millennials will need to save $2,000 a month to hit that retirement amount, if the youngest ones start saving $1,000 a month now, they’ll hit approximately the same goals. Many of us have varied ages, incomes, and amounts already saved, so Entrepreneur recommends using a retirement calculator like this one (https://www.nerdwallet.com/investing/retirement-calculator)to help you figure out what you need to do to hit these goals. To give you guys way too much insight into my personal finances, I’ll need to save around $850 each month at my current salary to have that retirement hustle of my dreams. Honestly, that sucks.
It looks like in the future, I’ll be foregoing guac on my Chipotle order and settling for coffee instead of bottomless mimosas so I can start scrounging up all of my pennies in order to not retire as a hobo. While it’s too late for me to start saving thousands of dollars in my teens, it’s not too late for me to marry a millionaire and make my current problems go away. If anyone knows of a mid-forties DILF with a large nest egg, hit me up, because I’m not quite sure I’m ready to give up my Starbucks budget anytime soon. .
[via Entrepreneur]
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Steph W.
Steph W. is a new Master's degree graduate with an intern's salary and six-figure taste. She realizes her expectations far exceed reality, so she spends her days pinning away Loubs she pretends are in her physical closet instead of her virtual one. Her hobbies include attempting to trapping her boyfriend into marriage before he finds out how insane she is and pretending that Black Box wine tastes as good as the kind she could afford when she was gainfully employed. Send her tips for getting out of student debt at recruitchairtsm@gmail.com
@therecruitchair
But what are the top 50 ways to save for retirement?
Next column, top 10 cities for millenials to save money in to retire.
And I bet they’re all in the Midwest.
Double your monthly loan payment? Oh you poor thing, you must barely be able to mop your tears with all of your extra money.
Good thing only the good die young. I’m all set.
$166k/yr in retirement? Why do you need that much? Assuming your house is paid off and you have no debt, you should be able to live on less than half of that in retirement. A few rounds of golf, some margs and burritos down at the cabana, and a couple tabs of Viagra and I’ll be all set.
I think that $166K is total, not yearly.
Fair enough, but the estimated safe withdrawal rate to not run out of money is 4%; $7M would throw off $280k/yr. that’s an assload of money.
The average inflation rate over the last 60 years is slightly over 4%, so let’s assume they’re compounding that over 40 years. Also, you’d be surprised how many people say they need $20k a month for retirement spending.
By the time we’re 69, you would need almost $200k/year to maintain the same lifestyle as someone making 50k today
No yearly.
4% was normal when people died at 70 now it’s closer to 2.5 to be conservative 2. I’m a financial planner it’s the other post I know anything about haha.
What are the “Top 10 Cities to Retire Poor In” though??
Wait, I’m supposed to save money?
We need a lot more to live on than we think now. Most of our generation isn’t saving enough. Largely because we have so much student debt and we buy homes later than most the housing prices are so inflated in most cities.
At 25, you need to save 8% of your annual salary with a $50,000 salary and annual raises to reach 2.25 million. Not that bad.
Your financial irresponsibility stresses me out.