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I was going to say, $1 million net worth not counting home equity is, last I checked, almost 9% of US households. As you note, that's higher at older ages, for obvious reasons.
Including home equity, in very rough numbers with some rounding, $1 million plus net worth is the upper 10%, $5 million+ net worth is the upper 1%, and $25 million+ net worth is the upper 0.1%.
In a retirement thread, I think it's important to consider age which is why I picked the 60 to 64 age bracket number. 20% of people at or quickly approaching retirement age are worth $1 million when you include home equity.
The astounding thing is how quickly it drops off. At age 60, 50th percentile is only $225K. 70th is $550K. 2/3 of the country has a very large problem.
I figure someone like Suze Orman is taking phone calls from average people who are talking nonsense about retiring early. Somebody with no pension, no employer-paid health insurance beyond COBRA if they stop working. Their $200K in home equity and $200K in a 401(k) sounds like a lot of money. Saying "You need at least $5 million to retire at 55" is shock therapy.
I've been maintaining a "Geoff never works again" contingency plan in my spreadsheet since I turned 50. It looked pretty grim then. Every year, it got a little better as I accumulated wealth and got closer to Social Security and Medicare. I'm 60 now. It wouldn't be awful but I'd have to cut some lifestyle things I prefer to keep.
Is a $1 million portfolio unusual at age 30? Yep. At age 60? It's pretty common.
No, it isn't "pretty common", your info is patently false. I encourage you to read the voluminous information out there about the retirement crisis in America, most people are retiring with nothing. Just because 10-15% have a good nest egg does not make it common, on the contrary it makes it anything but.
I figure someone like Suze Orman is taking phone calls from average people who are talking nonsense about retiring early. Somebody with no pension, no employer-paid health insurance beyond COBRA if they stop working. Their $200K in home equity and $200K in a 401(k) sounds like a lot of money. Saying "You need at least $5 million to retire at 55" is shock therapy.
I don't think so. At the very least, she clearly didn't do any research about people in the FI movement or she would know better. I expect better from the "Money Matriarch of the World" or whatever the heck she called herself. At the worst, she's just an attention wh*re.
I know this guy is a clickbait king, but that budget is a little ridiculous.
$24k/yr for a kids' 529. With a 3% CAGR that's ~$600k when he/she hits 18. Hopefully that's not what college costs 17 years from now or I'm in trouble as I have a 9 month old and a 3 year old.
$2k/yr for a term life insurance policy when you are already drawing down on a $5 million portfolio....
$21k/yr for food for 2 adults and a toddler......
$2.7k/yr to drive 4,500 miles in a Honda Accord.....the math is pretty easy to do here folks. Even at the low end of the fuel economy for a Honda Accord that's $15.90/gallon. Seems like someone is skimming
Edit: Haha, he made a change to the budget on the car to account for maintenance after he saw my comment at the end.
Back in 1990 some brilliant financial adviser told me I would need $5 million to retire. I did not know much of anything about financial matters but I knew I would never have $5 million so I decided I would never be able to retire and therefore there was no point in putting away retirement savings.
I eventually figured out both of our conclusions were stupid (his that I needed $5 million and mine that since I would never have $5 million, there was no point in even trying to save for retirement), but in the meantime I lost five or so years of saving. Of course it did not hurt me much because I would not have been able to put away much anyway.
Is a $1 million portfolio unusual at age 30? Yep. At age 60? It's pretty common. It all depends on where you are in your career. Towards the end of your career, you've accumulated the wealth you're going to create.
$1 million portfolio isn’t common at all, it’s doesnt matter what your age is.
Quote:
According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings by age in the U.S. is:
Americans in their 20s: $16,000
Americans in their 30s: $45,000
Americans in their 40s: $63,000
Americans in their 50s: $117,000
Americans in their 60s: $172,000
I've been maintaining a "Geoff never works again" contingency plan in my spreadsheet since I turned 50. It looked pretty grim then. Every year, it got a little better as I accumulated wealth and got closer to Social Security and Medicare. I'm 60 now. It wouldn't be awful but I'd have to cut some lifestyle things I prefer to keep.
I've been doing a similar thing, but since my early 30's (as an FYI, by net worth didn't even turn positive until I was 31). I've often said that EVERYONE can retire early! I could have at age 35 - it's just that my lifestyle would have consisted mainly of eating out of dumpsters and sleeping under sheets of cardboard beneath freeway overpasses.
It's gradually improved since then, and like many things, at certain points things accelerate suddenly. In particular, the last decade has seen a sizable improvement in my professional situation, and equity markets have been good to everyone. Let's just say that we could retire fairly comfortably now, and even more so in about five years (lord willing and the creek don't rise, as they say). And we are FAR short of $5 million.
As for the the Suze Orman bit - of course it's ridiculous. The 4% rule gets bandied about, and it's not perfect but it's a decent rule of thumb for people retiring at age 60 or older. If you have a half million, that's $20K in today dollars. Add on any amount of Social Security (and in general* terms, the first 10K of average inflation adjusted salary earned over your career gets 90% as an SS benefit, so that's another 9K per year right there, and 32% on everything from 10K to about 60K, so 30K/yr average would get 15.4K/yr in SS benefit, 50K/yr average would get you 21.8K), and you're not doing godawful. (Not to mention Medicare to help mitigate medical expenses, and hopefully a low or no mortgage on the house). $1 million is 40K plus any SS benefit - that's a pretty decent living for almost anyone, and certainly not starvation.
$5M is ~200K. Really?!
*- I could spit out the exact SS calculations but this is close enough for the discussion.
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