Median Investment Savings at 55-64 is $90,000

[Chris Pascale]

https://www.yahoo.com/finance/news/heres-much-average-american-60-140000455.html

These are only stock market investments, though. I'd hope there are some paid-off houses in these families, and some old fashioned pensions

At 40, I'm above the median, but am no superstar by any stretch: Got my Roth going at 25 with $25/month, and my job matches up to 5%.

A big part of my retirement equation includes multiple pensions.

[GilesMM]

Seems like most people plan to retire late with a paid off house, 401ks and/or pensions and SS. It can work.

[Scandium]

I'm kind of surprised by Fig 55 in the vanguard study. Average person making <$50k has $30k saved, that's actually not that bad. Not great, but I feel less terrible than what we usually hear. And equally; people making $150k+ only has average of $400k, and median of $225k saved? You make that kind of money I'd expect more! 

[harvestbook]

Whenever I hear something like "The average person is/has/does X," my first reaction is "Don't be average."

Don't have an overreaction for "median" yet.

[Scramblin Rover]

Whenever I hear something like "The average person is/has/does X," my first reaction is "Don't be average."

Don't have an overreaction for "median" yet.

Don't be middling?

[mistymoney]

I'm kind of surprised by Fig 55 in the vanguard study. Average person making <$50k has $30k saved, that's actually not that bad. Not great, but I feel less terrible than what we usually hear. And equally; people making $150k+ only has average of $400k, and median of $225k saved? You make that kind of money I'd expect more!

Are you assuming the've been making that money all along?

Back in the stone age, the companies I worked for you needed to work years and years to get a promotion. So if someone is in their 50's making 150k I would suspect that was a long slow increase of salary across 20 years.

[PDXTabs]

I'm kind of surprised by Fig 55 in the vanguard study. Average person making <$50k has $30k saved, that's actually not that bad. Not great, but I feel less terrible than what we usually hear. And equally; people making $150k+ only has average of $400k, and median of $225k saved? You make that kind of money I'd expect more!

I think that they are only counting the money in their employer sponsored Vanguard defined contribution retirement plan (which you can only put so much in per year): https://institutional.vanguard.com/content/dam/inst/vanguard-has/insights-pdfs/22_TL_HAS_FullReport_2022.pdf

[blue_green_sparks]

Glad I figured out that guidelines based on pre-retirement income just didn't apply to us, otherwise I would still be chained to a desk. Tracking our actual living expenses to the penny for a few years was the key.

[Acastus]

I have wondered about how in depth the retirement savings statistics are. Vanguard and Fidelity report the average and median account values every year. Do they sum up all accounts for a given person, or do they just scrape account values across the board and call it a day? I am guessing the latter. Lots of people leave a trail of accounts behind them. They may well have more money than the surveys indicate when you add them up.

A second issue with the statistical data is it does not include pension equivalents. While Corporate America abandoned pensions decades ago, many government workers still earn a pension. It's not just the bureaucrats in Washington. Think teachers, police, and firefighters. I think about 35% of the workforce still has one as a benefit. If you will  get a pension, then you don't need as much nest egg.

[BicycleB]

I have wondered about how in depth the retirement savings statistics are. Vanguard and Fidelity report the average and median account values every year. Do they sum up all accounts for a given person, or do they just scrape account values across the board and call it a day? I am guessing the latter. Lots of people leave a trail of accounts behind them. They may well have more money than the surveys indicate when you add them up.

A second issue with the statistical data is it does not include pension equivalents. While Corporate America abandoned pensions decades ago, many government workers still earn a pension. It's not just the bureaucrats in Washington. Think teachers, police, and firefighters. I think about 35% of the workforce still has one as a benefit. If you will  get a pension, then you don't need as much nest egg.

Pretty close, according to Bureau of Labor Statistics!

26%, they say. Linked article mentions percentage, then discusses details regarding how many of the pensions are "frozen" - closed to new enrollees. https://www.bls.gov/ncs/ebs/factsheet/defined-benefit-frozen-plans.htm

[Scandium]

I'm kind of surprised by Fig 55 in the vanguard study. Average person making <$50k has $30k saved, that's actually not that bad. Not great, but I feel less terrible than what we usually hear. And equally; people making $150k+ only has average of $400k, and median of $225k saved? You make that kind of money I'd expect more!

Are you assuming the've been making that money all along?

Back in the stone age, the companies I worked for you needed to work years and years to get a promotion. So if someone is in their 50's making 150k I would suspect that was a long slow increase of salary across 20 years.

Yes I'm aware, but as you say it's usually a slow, gradual process. Most don't make 50k, then 200k the next year. So I still expect someone in the upper range should have quite a bit saved, in both 401k and taxable. But of course this tracks with all the studies showing that the natural instinct of most people is to spend most of what they make, whether that's 30k or 250k.

[Acastus]

I'm kind of surprised by Fig 55 in the vanguard study. Average person making <$50k has $30k saved, that's actually not that bad. Not great, but I feel less terrible than what we usually hear. And equally; people making $150k+ only has average of $400k, and median of $225k saved? You make that kind of money I'd expect more!

Much of this is population selection bias. The real stat is not how much everyone making under 50k have saved. It is among those making <50k AND have knowledge, budgeting, and lifestyle that enabled opening a brokerage account.

[charis]

Seems like most people plan to retire late with a paid off house, 401ks and/or pensions and SS. It can work.

Of course it can, people do it all the time.  I know retired folks with a paid off house and only SS who are living exactly as they were before retirement, with no pensions or 401ks.  Heck, if we had no mortgage and no kids in the house, we could probably live on SS pretty easily, if we wanted to work that long.

[Log]

Piling on with the pension comment.

My mom just retired without even factoring her 457 (or old 401k from before she went to public sector) into her retirement plan. She's been working for longer than she needed to because she budgeted retirement entirely based on her pension and social security.

I think a lot of people don't even conceive of an annual withdrawal rate from their retirement savings, they think that's just a giant savings account to cover the big infrequent things like cars, medical events, or a new roof on the house. That's part of why Americans are so obsessed with owning their houses rather than renting—if they don't have a pension, they're trying to think of how to live off social security, and think the only way to do that is to not have a monthly rent/mortgage payment. We know that if you put the value of a home into an index fund, you're dividends and returns will safely pay the rent in perpetuity, but Americans are not financially literate enough to realize that investments are an income stream, not just a big savings account.

[ixtap]

Glad I figured out that guidelines based on pre-retirement income just didn't apply to us, otherwise I would still be chained to a desk. Tracking our actual living expenses to the penny for a few years was the key.

Before we found bogleheads and MMM, our plan was to take a multi year sabbatical and spend down our taxable account, then go back to work to fill up retirement accounts for our old age according to whatever rule of thumb we were aware of.

The difference between 10x and taxable and 30x in total portfolio was only two years by our projections. Turns out, between MBR and great returns, we achieved 30x before accumulating 10x in taxable.