Save Your Age in 2016

[arebelspy]

IDK, is the definition of "poorest" == "lowest net worth"?

Cause people worth $0, with nothing, starving in Kolkata I would say are poorer than someone owing 250k in student loans from law school but making six figures. The latter has a lot lower net worth, but has shelter, food, probably a real cushy lifestyle.

A first worlder with $40k in consumer credit card debt and negative home equity has a much lower than net worth than a starving person in India, and by most normal metrics would be considered poorer. 

But you've illustrated that those metrics are clearly bad, if a person with a giant house and two SUVs is considered poorer than a leper who begs for table scraps in the Indian slums.

One possible way to clear this up is to look at the idea of lifetime capital, as we've previously discussed here.  When you are young you have lots of human capital because you can get a good job and work at it for 40 years.  When you are old you have lots of monetary capital but not very much human capital left.  In between you steadily trade one for the other.

So the consumer debt American has a higher net worth (and is thus less poor) by virtue of their future earning potential, which is what facilitated all that debt.  The starving Calcuttan has no capital and no opportunity to earn future income, by virtue of his place in the lottery of birth, so is poorer despite having no debt.

Ah, that's a good way to calculate it: NPV of all (expected/average) future earnings, plus current net worth.

[dragoncar]

IDK, is the definition of "poorest" == "lowest net worth"?

Cause people worth $0, with nothing, starving in Kolkata I would say are poorer than someone owing 250k in student loans from law school but making six figures. The latter has a lot lower net worth, but has shelter, food, probably a real cushy lifestyle.

Roughly 1 billion people live on equivalent to 1 USD per day or less.  I'd call all of them poorer than anyone who has the means to post on the MMM forum.  I'd say EVERY person here is richer than at least a billion people.  That's pretty staggering.

(Of course the statement was "poorest person here" but I was pointing it out to illustrate two things: 1) poorest doesn't just mean lowest net worth, and 2) we're all rich not just compared to some, but compared to MANY, perhaps even over a billion people.)

This is just the flip side of the discussion we had in another thread, where people argued that someone making $1 million, but spending all of it every year, was not "rich" (because net worth was zero).

http://forum.mrmoneymustache.com/welcome-to-the-forum/many-wealthy-people-become-out-of-touch/msg899426/#msg899426

[arebelspy]

Good point.

I maintain the same stance: rich comprises lifestyle, income, and assets. You can't just ignore part and focus on one to say someone is rich, or poor.

:)

[turketron]

I'm in! I turn 30 halfway through 2016 so $30k will be my goal. I hit $31k in 2015, and just got a $4k raise as of the first of the year so it should be doable!

[halyahs]

Im in. :)
I turn 25 next month.
Seeing as I put aside about that much for 2015 and we want a challenge i'll do age +5
and aim for 30k (stretch 35k)
wish me luck ;)

[SaskyStache]

I'm in. Turning 32 this year, and I should be able to save 12K in pension and an extra 20K CAD after tax. If we're talking USD the exchange rate might push it a bit out of reach, but hey that's an extra goal to work towards.

[francophile]

I'm in, with a bit of modification. I just turned 31 this month.

I have 35k in student and old consumer debt, now all at least moved on to lower interest refi's (props to Sofi!) and a significant goal for the year is to reduce that number by as much as humanly possible.

I live in NYC with my boyfriend in one of the cheapest areas we can still feel safe and happy in, so rent still takes up a big sad chunk of my 62k income.

But I'd like to set the goal for 31%, a combo of that money thrown at the debt, and the rest squirreled away in my 401k and emergency funds. Plus every extra bit of side hustle money will also be thrown at the debt.

[Anderson]

Well I just maxed my IRA for the year.

1/6/2019     $3000
2/23/2016   $2500

Brings me up to $5500 ..only $27,500 to go!

Sure hope we start getting some dryer weather here on the east coast so I can make a little more money(I work outside and and rain or shine but you can't always get as much done when it's super sloppy)

Loving this challenge!

[monstermonster]

I LOVE this challenge but it would take a lot of side hustle to do this. I'm turning 29 this year, and my gross is $39K. So after taxes, I'd be living on...$200 a year? Maybe not.

Definitely can do percentage, though.  This is a neat challenge.  29% of my income would be $11,030, which I can do by:

• 20% in my 401K - $7,040
• Max out my Roth IRA - $5,500

Currently going for $12,000 invested this year, the rest in cash savings. That should put me at around 50% IF I do it right, but 29% is a really good middle goal.

[Anderson]

Stashed $1,000!

Didn't have a very good earning month but managed to set aside what i consider to be the minimum. 

1/6/2016     $3,000
2/23/2016   $2,500
3/22/2016   $1,000

$26,500 to go!

[Zaga]

I like this one!  In previous years our best saving year was about $41K.  2016's goal is $49K, and DH just turned 47 (I'm 35), so that just about works.  This is dependent on me getting a job, which I've had some interviews and things seem to be picking up momentum, it's just a matter of time.

First quarter update, I have acquired the required job and we have saved $6386.50 and paid down debt by $5576.20.  Total of just under $12K and on track for almost $48K at this rate.  So far so good!

[robartsd]

Age as a savings rate percentage sounds like a great goal to teach young people. Anyone who can do that starting in their early twenties and keep up with it will be able to retire semi-early. A 22 year old saving 22% of 30k with a 2% raise each year would reach retirement at age 50 using the 4% rule assuming only 4% annual growth of invested savings. As long as real wage grows faster than 1% per year, the increase in savings would not come at the cost of reducing lifestyle.

[monstermonster]

Age as a savings rate percentage sounds like a great goal to teach young people. Anyone who can do that starting in their early twenties and keep up with it will be able to retire semi-early. A 22 year old saving 22% of 30k with a 2% raise each year would reach retirement at age 50 using the 4% rule assuming only 4% annual growth of invested savings. As long as real wage grows faster than 1% per year, the increase in savings would not come at the cost of reducing lifestyle.

The big issue is this assumes an annual raise. Which based on the annual raise thread isn't a given in a lot of fields/orgs.

Raises just don't happen at my organization, so if I want to increase by 1% each year, and inflation is 1% each year on the low end, that means my expenses have to go down by 2% each year. Which is feasible, but only to a point if you're on a middle class salary. (My housing costs have increased by 200% in 3 years for example.)

Unfortunately, rules of thumb are always challenging in personal finance, because, well, it's personal.

[pdxmonkey]

Age as a savings rate percentage sounds like a great goal to teach young people. Anyone who can do that starting in their early twenties and keep up with it will be able to retire semi-early. A 22 year old saving 22% of 30k with a 2% raise each year would reach retirement at age 50 using the 4% rule assuming only 4% annual growth of invested savings. As long as real wage grows faster than 1% per year, the increase in savings would not come at the cost of reducing lifestyle.

The big issue is this assumes an annual raise. Which based on the annual raise thread isn't a given in a lot of fields/orgs.

Raises just don't happen at my organization, so if I want to increase by 1% each year, and inflation is 1% each year on the low end, that means my expenses have to go down by 2% each year. Which is feasible, but only to a point if you're on a middle class salary. (My housing costs have increased by 200% in 3 years for example.)

Unfortunately, rules of thumb are always challenging in personal finance, because, well, it's personal.

I think it's a good rule of thumb. If you aren't getting raises of 1%+ a year to stay ahead it puts some pressure on you to do more to improve your career. Ask the boss for a raise, hop to another company for higher pay, etc. The rule would help people from getting complacent.

[sol]

If you aren't getting raises of 1%+ a year to stay ahead it puts some pressure on you to do more to improve your career. Ask the boss for a raise, hop to another company for higher pay, etc. The rule would help people from getting complacent.

I'm a federal employee, and thus my raises are set by Congress.  A total of 3% spread over the past six years, so sort of like 0.5% per year except it was three years of zero and then three years of 1%.

Am I getting complacent?

[Heckler]

Currently at 58% of our age stashed into accounts for Q1.  Should be no problem!

[Heckler]

If you are married, is the gauntlet to save yours + partners age?    ;)

OK, we're in!  We're currently at 28% of that goal.

[pdxmonkey]

If you aren't getting raises of 1%+ a year to stay ahead it puts some pressure on you to do more to improve your career. Ask the boss for a raise, hop to another company for higher pay, etc. The rule would help people from getting complacent.

I'm a federal employee, and thus my raises are set by Congress.  A total of 3% spread over the past six years, so sort of like 0.5% per year except it was three years of zero and then three years of 1%.

Am I getting complacent?

Possibly. 3% in one year is the lowest raise I have received in over a decade. What other factors are keeping you at your government job for 6 years while your real pay has been decreasing. Inflation has been more than 3% over the last 6 years so you have actually taken a pay cut.

[sol]

Inflation has been more than 3% over the last 6 years so you have actually taken a pay cut.

Trust me when I say that I, and three million other federal employees, are acutely aware of this problem.

To be fair, about a third of those folks are DoD employees who got significantly better raises than the civilian federal workforce did.  Republicans seem to hate federal employees, except for the military ones.

[3Mer]

I turn 50 this year, and will save $50K

3rd challenge joined today....

[Jim2001]

50 and plan to save at least $50K.  I'm in!

[Susan]

Saved 4200/28000 so far. Only 15%, but the big hits are expected in May and December, so right on schedule.

[pdxmonkey]

Going to hit this in retirement+taxable still, but my earlier goal of saving my age outside of retirement accounts looks like it is going to be a tough ask. Thinking about if there is anything else I could choose to optimize without a big impact on my life.

[Peanutty]

Ohhh I like this challenge idea! I turn 34 in 2016. I've saved $21k so far, but I'm now off work until September. Could be tricky to save the remainder but I'm going to do my best!!

[CodAlmighty]

Great idea for a thread!

Unfortunately I'm a bit of a late starter as I had credit card debts to clear so only started my 'stache in mid March.

I'm 29 and as of today I have £3,500 so I'm 12% of the way there. Hopefully I'll be able to catch up

[Anderson]

Put away a few more dollars!


1/6/2016     $3,000
2/23/2016   $2,500
3/22/2016   $1,000
4/13/2016   $2,750

$23,750 to go!

[Jim2001]

$19,773  TYD contributed to various accounts, not counting dividend reinvestment.  On track to exceed the $50K goal!

How is everyone else doing?

[Eric222]

So far this year:
Jan-May:  16k to debt pay down, 529/retirement accounts, and EF.
Ramping up starting in June (2nd job and a raise, woot!), so I'm on track. :)

[Heckler]

On track to invest our age (42) by end of May!   $38k stuffed away YTD.  Mortgage free is amazing!

[Whiskers]

Nice work everyone. Now, through May, I'm on track with hitting my age. Got the Roth and Vanguard contributions automated monthly. The 401 is on track, though contributions vary by month (compensation partially commission based)... Less than 7 months to go; hope to get there early and exceed the goal.

[JLee]

$19,773  TYD contributed to various accounts, not counting dividend reinvestment.  On track to exceed the $50K goal!

How is everyone else doing?

I maxed my IRA last week -- on track for $30,245 this year if I do nothing other than payroll deductions now! I have 7 months to find $1,755, which will happen far, far sooner than that. :D

[Goldielocks]

If you are married, is the gauntlet to save yours + partners age?    ;)

If you can't swing your age in thousands, try your age in percent.

If you can swing your age in thousands, and you are married, then try to save your age + partner's age in percent.  That would be pretty badass.   I suspect there's a pretty narrow demographic where that's reasonably possible, i.e. just younger people with larger salaries.

OK, I've got another one.  If you can save your age in percent, but can't save your age in thousands, try saving the square root of your net income minus your gross income.

Great idea. And if you can't swing that, try following this savings rate formula: EXP(-6.7+1.9*LN(age)-0.0005*age^2)

That graph is ass backwards, in my life.   Try mirroring it. 

e.g.  From age 22, dual income not much for expenses, therefore Savings rate of 50-60 percent without even trying to be MMM, then rapid decline in the kid years / 30's years, and upward swing once they reached about 10 years old, and likely massive savings rates (if not FIRED) in our late forties and fifties....

I pitching for FIRED, in late 40's because how much money do you really need in retirement?   Anyway...

[chesebert]

If you can't swing your age in thousands, try your age in percent.

I read "percent" as "pennies" at first glance,  and thought you were making a commentary on how the forums have gotten soft. ;)

The original goal does sound soft. I usually aim for 4x my age, although sometimes end up being 3x due to impulse buys of expensive crap. YTD I'm already at around 3x, I will go for 5x this year if I can keep my desires in check (cough... need new shoes....)

[JLee]

If you can't swing your age in thousands, try your age in percent.

I read "percent" as "pennies" at first glance,  and thought you were making a commentary on how the forums have gotten soft. ;)

The original goal does sound soft. I usually aim for 4x my age, although sometimes end up being 3x due to impulse buys of expensive crap. YTD I'm already at around 3x, I will go for 5x this year if I can keep my desires in check (cough... need new shoes....)

4x my age is 132% of my gross income, lol. That's pretty awesome that you're able to do that.

[Anderson]

Well I had a very good earning month with a couple big jobs getting finished and paying up.

Put away $8,000 and wrote the last mortgage check!

1/06/2016   $3,000
2/23/2016   $2,500
3/22/2016   $1,000
4/13/2016   $2,750
6/09/2016   $8,000

$15,750 to go.

Keep on rocking everybody!

[gggggg]

It's not possible to save my age in thousands per year. I am however able to save my age in percentage of pay. I'm 41 y.o., I'm currently saving approximately 50% of gross, after tax.

[mountainlife]

I'm 25 yrs old, and don't make $25k a year (fortunately! Because I love my job/lifestyle in the outdoors industry) but I am going to challenge myself to save at least $2500 this year. I don't have any debt or monthly payments aside from rent, so I am lucky to have control over where my *small* paychecks are going. I just got a raise, and hopefully will be getting two more this year, which should add to my savings goal!

[Eric222]

My goal for the year is to save $36k (not including student loan debt forgiveness). 
Progress to date:
Jan:  2.0k
Feb:  1.2k
Mar:  1.7k
Apr:  2.6k
May:  2.4k
June (est): 4.5k

Total over first 6 months:  ~$14k
Amount remaining:  $36k-14k = 22k
Amount needed per month:  22k/6 = 3.7k ~=4k

I started moonlighting in May, so the savings rate ticked up quite a bit.  At my current pace, it is going to be a close thing....but I won't complain too much if I fall short and still break 30k in savings for the year.

[SnackDog]

Saving $25K is hard if you are 25 and still in school.  Saving $50K is easy if you are 50 and own a bank.

How about saving your age as a percentage of gross income times a fudge factor of 1.5.

20 = 30%
30 = 45%
40 = 60%
50 = 75%
60= 90%
>60 retire

[nanu]

Saving $25K is hard if you are 25 and still in school.  Saving $50K is easy if you are 50 and own a bank.

How about saving your age as a percentage of gross income times a fudge factor of 1.5.

20 = 30%
30 = 45%
40 = 60%
50 = 75%
60= 90%
>60 retire

Isn't the MMM point of being a badass all about it being difficult? Otherwise everyone would do it...
I'm 28 and I save around 70-75% of my (after-tax) income for example (admittedly, I could [and should] do better, and I earn a lot for my age, making it easier to save a lot)

[MM_MG]

Missed this thread before.  With the goals we've set, we'll exceed our combined ages saved in 2016.  With a quick back of a napkin calculation, it looks like we are at 47% of the goal already.

[TheAnonOne]

I am 25, but aiming for 4 times my age (100k)

We already maxed our 401ks and IRAs plus we save 3-5k a month in taxable accounts. Age is only loosely related to income and savings ability...

[MM_MG]

We saved a lot more than our age.

Combined age:  84

Combined savings: $132,750

[OurTown]

I'll do this for 2017.  I turn 48 next year, I will save at least $48k.

[moof]

For 2016 I turned 39 and I saved $49k, and had an net after tax income of $120k for a 41% savings rate.  So I hit the number however I slice it.

For 2017 the goal is $55k and 45%, and I'll turn 40.

I am still murky on the details of the exact right way to calculate savings rate when dealing with assorted before/after tax issues, but that is what I am rolling with.  Roth money is more valuable than taxable account money, which is more valuable than 401k money, so I hate having a messy numerator.