March 29, 2024 • 62 mins
“I’m 35 and I feel far behind in life." You’re wrong. You’re at the best time to start! In this episode, Jen and Jill discuss the amount (theoretically) you should have saved for retirement at certain ages without disregarding what you truly care about and want to do in life.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Episode three ninety three, how much to have saved for
retirement at thirty, forty and fifty.
Speaker 2 (00:09):
Welcome to the Frugal Friends podcast, where you'll learn to
save money, embrace simplicity, and de liver your life. Here
your hosts Jen and Jill.
Speaker 1 (00:27):
Welcome to the Frugal Friends podcast. My name is Jen,
my name is Jill, and today we are talking about
how much you should theoretically have saved at retirement for
retirement at certain ages. We are not going to throw
random numbers like you should have two extra salary, three
(00:47):
extra salary. I don't care what your salary is. I
care what you care about and what you want to
do with your life.
Speaker 3 (00:54):
Okay, yeow, come at the game.
Speaker 1 (00:59):
You got to You got to make them understand. It's
not an arbitrary number. It's not an arbitrary calculation. Like
there are things that you can think about. You don't
have to know exactly what you want to do in retirement,
but if you start thinking about who you are now
and start thinking about what those things cost to be
(01:21):
who you are, you can start to think about it.
Speaker 4 (01:24):
I still like to have a bit of a metric
to kind of know, because this is something people don't
totally talk about because it is a little fluid, but
still getting some version of a baseline, and I do
think that we will help you to define what that
is in this episode. I'm super excited about it. I'm
excited about these articles. And we also pulled you all
(01:48):
in the friend letter before we get into those articles.
So for those of you getting the friend letter, you know,
at the bottom of it, we always are asking some
version of a lightning round question. You can answer and
some and even respond to us give us more information.
It's a really fun way of engaging. Now we're incorporating
it into our episodes. So we asked you all how
(02:10):
much do you have saved for retirement? And the majority
of you are right in this middle portion of the answers.
Somewhere between eleven thousand to two hundred and fifty thousand
is where the majority of you fall. That's a big,
big span.
Speaker 3 (02:29):
Yeah, most money and numbers.
Speaker 1 (02:30):
Most people are in the eleven you know, eleven thousand
to fifty thousand, because if you're single, that's going to
make more sense if your dual income. Our second highest
answer was one hundred, like one hundred and one to
two hundred and fifty thousand, so that makes more sense
if you're a dual income household, so that it does
make a lot of sense. And but we just want
(02:52):
to normalize. Also, whatever you have saved is good, and
the only bad thing is if you have if you
want to have a Rolls Royce in retirement and maybe
you only have ten thousand saved to forty, that might
be bad. But the only bad thing about it is
that you may want to shift away from a Rolls
Royce and start enjoying toyotas, like that's that's the thing.
(03:15):
Whatever you have saved is good. Like we got some
responses feeling like like I feel like I'm so far behind,
I'm getting closer to pay off my debt and maybe
investing is not number one on your list right now,
that's okay as long as you're doing something to improve
your finances. Don't feel like you're behind, don't feel like
(03:36):
you don't know enough to catch up or to be
where you want to be. All this we want to
normalize and encourage you to do what you can with
what you have.
Speaker 4 (03:48):
Yeah, this episode is for you. If you're finding yourself
feeling as though I don't know, am I behind, but
based on what So let's define it for our different
life stages.
Speaker 1 (03:59):
But first, if you need more of this outside of
the front, outside of the Frugal Friends podcast, get the
friend letter Frugal friendspodcast dot com. We are talking about
investing stuff. We mostly talk about freebies, savings tips, smart
buying practices, so like not deals, but how you can
(04:21):
get really good quality stuff without paying the overage of
you know, hypie brands and social media viral nonsense.
Speaker 4 (04:31):
Which those things are going to help you save both
now and in the future. And those are practices and
habit formation that will carry with you into retirements. Yeah,
there's benefit across the board and friend.
Speaker 1 (04:44):
Letter absolutely Frugal Friends podcast dot com. And if you
are looking for more information about saving for retirement, we
just did a couple really good episodes about your roth Ira.
We're doing this roth Ira challenge and this is kind
of the wrap up of that roth Ira challenge. We
(05:05):
want you to feel confident in saving so that you
can take advantage of this relatively low maximum threshold investment
like tax advantage opportunity, so you do not get twenty
twenty three backs. So few things in life have a
grace period. Your IRA is one of them, and so
we want you to take advantage of it in the
(05:27):
capacity that you have. So we have those and then
we also have episodes like two ninety one what to
Do if you have nothing saved for retirement and episode
two seventy five Understanding your Workplace Retirement Accounts with Delian Barrows.
Speaker 4 (05:43):
So this first article, I'm so stoked on it. I
found it fascinating. It's from retire Guide and it's called
average Retirement Spending in twenty twenty three Typical Expenses and
Budgeting Tips. The whole point with this article was to
help us understand average spending habits of current retirees so
(06:03):
that we can inform our own retirement savings plan avoid
accumulating debt. I think for many of us, retirement can
feel so far off. We don't really know who we're
going to be, what we're going to need, what the
economy is going to look like, and so that can
be hard to make a plan to save because what
(06:26):
will I even need, what will inflation look like by then?
How much money is going to be a worthwhile amount?
And while a lot of that is still shielded from
our understanding, it is helpful to learn from those who
have gone before us, those who are there right now.
And it may not be an exact description of what
(06:47):
it's going to look like for us, but it is
again one of those launching points of well, what are
they doing? It's probably not going to look too much
different for me, and or I can make my own
decisions to make it look a little bit different for me.
But not that the exact amounts of money are going
to work for us. But to be able to talk
(07:08):
in some of these percentages and where is the majority
of money going, how is time being spent? Is really helpful.
So they gave this first little statistic that, according to
the Bureau of Labor Statistics, on average, people ages sixty
five and older spent about fifty two thousand dollars in
twenty twenty one, which is fourteen thousand dollars less than
(07:32):
the average spending of the general population. So sick about
sixty seven thousand dollars is what the average population spent.
I found that so interesting that in retirement people are
spending a little bit less than kind of what the
general population is doing, which I think we often assume, like, oh, yeah, well,
I won't need as much. But I always get nervous
(07:53):
about that, like you might need more though than what
you needed throughout the majority of your life. But it
does look like even the spending kind of slows down,
hits the slower pace.
Speaker 1 (08:03):
Well, I mean, at this point, all of your kids
are out of the house and out of college, so
they should be financially stable and on their own. You're
not going as many places, like, you're not taking as
many family vacations, and when you do take vacations, they
are a fraction of the price because you're usually not
(08:25):
bringing everyone every single time. So yeah, like I can
really see, like so obviously it's you know, twenty twenty
one spending is very different from twenty twenty four. But
the article suggests that you're spending in retirement will be
about eighty percent of your annual pre retirement It says income,
(08:45):
but I would say, like, what is eighty percent of
your pre retirement spending? Probably, so you can take if
you're looking at your budget, looking at your ninety day
transaction inventory, a very good baseline is to average out
your monthly spend and then go eighty percent of that.
So that's going to be like a really you know
(09:07):
that's that's going to be a bare minimum for you
to start with.
Speaker 4 (09:11):
But then they give this infographic of the typical spending
in retirement and at that kind of fifty five thousand
dollars mark was the average retirement income and average retirement
expenses was fifty two thousand dollars. So this is really
painting a paycheck to paycheck kind of picture that only
leaves three thousand dollars annually leftover on average. That's not
(09:34):
a lot of cushion month to month with this, so
what's coming in is.
Speaker 3 (09:39):
Kind of going out.
Speaker 4 (09:40):
And then they break it down into well, where is
the money going? And this was most intriguing to me
that even in retirement, for on average these retirees, thirty
percent of their retirement expenses was housing costs. And idiot
thought was, I thought in retirement you'd have your house
(10:03):
paid off And they said that, yeah, right, sometimes they don't.
But they were like, even with those people who had
their houses paid off, there still they still broke it
down into all the different types of expenses, so from
housing supplies, household operations, that did seem like they added
(10:25):
in other types of lodging. So I don't know if
that means they're they're adding in like lodging on vacation
or different types of things.
Speaker 3 (10:33):
Yeah, not one dred percent, but.
Speaker 4 (10:36):
Your taxes are increasing, You're still paying all of your
utilities on your housing, so it still represented thirty percent
of their income.
Speaker 5 (10:48):
Yeah, it is interesting.
Speaker 1 (10:49):
I don't know if I agree one hundred percent with
all of the things they included in quote unquote housing costs.
But for a lot of people, the house that you
buy is not the house you stay in for thirty years.
So a lot of people will buy two to three
houses in their lifetime and you live in each one
(11:10):
for five years. So it's very likely that when you're
sixty five you're still going to have a house payment
if you bought one when you were you know, forty
or forty five, hopefully not too long into retirement. But
and then yeah, you definitely have your taxes, your insurance,
all of that stuff, so you're still going to have
(11:31):
home expenses, but they tend to drop off. And yeah,
whether they're thirty percent or not. Again, eighty percent of
your current spending is just a bare minimum. And if
you want to shoot for one hundred percent equivalent, if
you're in your thirties.
Speaker 3 (11:49):
I know.
Speaker 1 (11:50):
We I mean, we just got I don't remember if
it was an email or what from somebody who said
I'm thirty five and I feel like I'm so far behind.
And I was like, girl, you are a year older
than me. Like it's not I mean, yeah, I guess
we've been doing this stuff for a while, but it's
(12:10):
you're in your thirties.
Speaker 5 (12:11):
You are not far behind.
Speaker 1 (12:12):
You are at a good place to start, right The
people in their forties and fifties are hearing that right
now and be like, no, girl, you start now. You're
in the perfect place.
Speaker 4 (12:23):
So yeah, if you're in your sixties and you want
to retire in the next few years, it is pedal
to the metal time. But I just I found this
interesting something to keep an eye on. I think we
can assume once I own my home, that's the reason
for home ownership, so that I can rest easy and
retirement and retirees are currently telling us housing is still
(12:48):
a major expense for us, so factor that in. Yeah,
we can be bummed about it, cry about it in
the corner for a second, but then also realign your
expectations that housing will still cost you money.
Speaker 1 (13:00):
And I don't rest of your life. And if you
have a mortgage in retirement, I don't think that's a
bad thing. If you spent your working years prioritizing investing
that has a higher rate of return typically than what
your mortgage is costing you, you still made a good
financial decision. You're still going to come out on top
(13:21):
if you were investing instead of prioritizing your mortgage payoffs.
So the next couple are healthcare, and this is one
that I honestly think there should be a little bit
more so. They say it's about eight percent of retirement expenses,
(13:41):
and I don't know at what part of retirement, but
they said overall or on average, retirees reported that five
percent of their monthly spending went toward out of pocket
medical costs and eight percent went toward medical and health insurance.
So I guess it is more than eight, you know,
eight plus five. So twenty percent of adults sixty five
(14:03):
and older reported out of pocket medical expenses of more
than two thousand dollars in twenty twenty one, which I
think is super conservative. We have heard from people like
financial advisors that say that is the medical costs are
the main expense in retirement, and so that's I think
one of the reasons to if you can shoot for
(14:27):
one hundred percent of your spending, and that's why we
prioritize making sure our spending is in control and we're
only spending on the things that we love and not
mindlessly consuming into impulse spending. Because once you know that
you're spending, you feel good about your spending. That I mean,
(14:49):
one hundred percent of that is far less than one
hundred percent of spending on like all kinds of impulse things. Right,
So that's why we say, get control of it now
so that you feel better overall about saving for retirement.
Speaker 3 (15:03):
Yeah.
Speaker 4 (15:04):
The next one on here is transportation expenses being about
twelve percent, which that's a little shocking to me too
that it would be more than what you'd spend on medical,
But they did give this stat In twenty twenty, there
were about thirty one million licensed drivers ages seventy and older.
(15:25):
So people are still driving in retirement. So we still
have the cost of car ownership or if you've got
a car payment and maintenance and all of these things,
and then especially if you don't have your license anymore,
you maybe don't have a vehicle. You might need to
(15:45):
then be paying people to take you places if public
transportation is not an option, So still need to be
factoring in how are we getting around?
Speaker 1 (15:56):
Yes, and my favorite cost of food twenty five percent.
So the thing that changes really between your working years
and your your retirement is that slightly less on transportation
and we bump food up to number two. Now, if
food is already your number two, like, that's you're already
(16:18):
living the dream you are retired. Congratulations you have achieved.
But for most people with a car payment, who are
you know transporting kids have a commute? Stuff like that,
transportation is usually number two and food will go to
up to twenty five percent of your spending in retirement.
(16:39):
They said food was the most common fastest growing expense
reported by seniors in twenty twenty one. Sorry to seniors
in twenty twenty four. Nobody, nobody could anticipate. I mean
everybody could anticipate, but nobody could. Seventy three percent of
the average food budget for people sixty five and older
was spent on food home. Where's about thirty percent was
(17:02):
spent on eating out. So that's one hundred and three
percent of your eating budget.
Speaker 3 (17:09):
Yeah, so.
Speaker 4 (17:11):
Food and housing is always going to cost you, always
in forever. I mean, what the Big three that we
always talk about, they're.
Speaker 3 (17:19):
Not going away.
Speaker 1 (17:20):
They are always going to be there.
Speaker 4 (17:23):
The last thing I want to mention about this article
is they talk about just debt, the crushing debt that
retirees were reporting. So ninety six percent of retirees reported
having debt in twenty twenty two. Ninety six percent. That's
nearly all of them now much'all. Forty three percent of
(17:47):
those ninety six described the debt as easily manageable, whereas
eleven percent reported it as crushing, unmanageable. But this was
a huge takeaway for me as far as where we
have choice agency in what retirement looks like, that we
can again learn from those who have gone before. And
if this is something we don't want to see in retirement,
(18:09):
then we practice that now. Not having debt. Getting rid
of debt now will only benefit us when we head
into retirement. We don't have to be a generation that
has ninety six percent. Ninety six percent of us are
in debt in our later years.
Speaker 1 (18:29):
Yeah, and if we are, there's nothing like to be
shamed about in that. But we want to do what
we can to lighten that load on ourselves. We want
to be able to enjoy those years and we don't
want to leave our loved ones with, you know, with
debts that don't go away when we die too. So
(18:50):
there's a lot of things to think about. And if
your plan at the end of your life is to
just rack up a crap ton of credit card debt,
like leave it for the last year of your life. Okay,
let's make sure we're prepared for for all the.
Speaker 5 (19:04):
Times up to there.
Speaker 3 (19:06):
You don't know exactly how long you'll live.
Speaker 1 (19:08):
Right, so, like leave that as your last, last last
resort and let's just try to plan as well as
we can.
Speaker 4 (19:16):
This next article comes from Trust and Will, so it's
describing a guide to retirement savings by age twenties, thirties, forties, fifties,
and sixties. So, like Jen said, we're not gonna apparently
tell you.
Speaker 1 (19:33):
We will say the numbers. I will admit that they
are helpful. They are not helpful when people are you know,
shoving it down your throat, being like, if you don't
have two times your salary saved, you better get on it.
Do some different with your life. It's a mindset problem
that I don't like that, but.
Speaker 5 (19:52):
I've just been here for too long.
Speaker 4 (19:56):
Yeah, So they start off by talking about the rule
of twenty five. So this isn't necessarily something that we
think you have to take on as this is the
exact prescription for what I need to do.
Speaker 1 (20:10):
But I do like this better than the two extra salary,
three extra salary. Yeah, I say go with the rule
of twenty five before you go with any other number.
Speaker 4 (20:20):
And I think it's a helpful Again, just baseline, what
should I even be aiming for? What do I even
need to be trying to do here? So they're describing
that to calculate your retirement savings target, first you need
to create an estimate of your monthly expenses. So let's
say they give these numbers. Let's say you can comfortably
(20:40):
live off of three thousand dollars a month. Multiply that
by twelve to get your annual withdrawal amount. This would
be what do you think you can live off of
per year? In this case, it would be thirty six
thousand dollars. I don't think these numbers are anywhere close
to what we need to be considering, but for the
sake of giving an example, Let's say it's thirty six
(21:03):
thousand dollars a year that you want to be pulling
out annually in retirement. Then you want to take your
withdrawal amount and multiply it by twenty five. I assume
they're thinking you're going to be in retirement for twenty
five years.
Speaker 1 (21:16):
No, I mean, so this will just make sure that
you have that you are If you withdraw at four percent,
then you're never touching the nest egg. You're only ever
withdrawing the growth. It ensures that there's at least at
a at about a seven to ten percent growth rate,
(21:36):
that the all thirty six thousand every year that you
withdraw is always going to be annual growth. It's never
going to be giving that nast egg RK.
Speaker 4 (21:46):
So that would be a savings target of nine hundred
thousand dollars with this example. And I think that they
did this example because they wanted to highlight that not
everybody needs to save one million dollars. That has been
kind of this, especially within the fire movement financial independence
retire early. It's always been save one hundred million. So
then you can withdraw that one.
Speaker 1 (22:07):
Hundred million, sorry one million.
Speaker 4 (22:10):
You can withdraw that four percent, and really, this is
not a realistic number. It's not thirty six thousand dollars
a years is not a realistic number. Now, I can't
imagine it's going to be a realistic number. If you
are planning to retire in a few decades from now, it's.
Speaker 3 (22:25):
Going to need to be more. I do think we
need to adjust for inflation.
Speaker 1 (22:28):
Yeah, we So some of this takes the seven percent
growth rate does take into account inflation, because the stock
market has in the past traditionally grown ten percent like
over its entirety. But we use a seven percent calculation
to account for a three percent inflation. But I mean,
if you've been alive for the past couple of years,
(22:49):
you know inflation has been far faster than that. But
we had a really good decade where it was very slow,
like light inflation.
Speaker 4 (22:57):
So you're saying there could be years where you take
more than four percent and you'd still not be touching
the nest egg, correct.
Speaker 1 (23:07):
Right, But you always have you know, those bear markets.
You will have a bear market at some time or
a correction at some time in your retirement, and you
want to be able to have enough to still take
out the thirty six thousand without touching the next nest egg.
And that's why on those good years you don't take
out more so that it compensates for the slower years.
Speaker 4 (23:30):
And I do want to say, just vernacular, we are
using the word savings and investing kind of interchangeably, which
is unfortunate. We're not just talking put nine hundred thousand
dollars under your mattress. We're talking invest for retirement and
have this amount in your investment accounts by the time
(23:51):
you reach retirement.
Speaker 1 (23:53):
So another calculation with the rule of twenty five would be, say,
maybe five thousand per month is what you spend, and
you want to start with that conservative like I'm going
to spend eighty percent of that in retirement, So eighty
percent of five thousand is four thousand. We multiply that
by twelve, and we're getting forty eight thousand in a year.
(24:17):
That's I think that's far better to think. So, and
then you multiply that by twenty five and you get
one point two million, So I think that's a far
better goal. I think one point two million is a
reasonable goal. May not sound reasonable to you right now,
(24:40):
but we'll talk a little bit about how to get
to that goal.
Speaker 4 (24:42):
Well, and this is probably talking per person though too.
So if you are you know, in a if you're
married and you've got annual household income that's higher than yeah,
then yes, take that into consideration.
Speaker 3 (24:58):
So let's get into ages.
Speaker 1 (24:59):
Yes, so let's start with twenties. We don't have a
ton of people in their twenties who listen to the show,
but shout out to you if you're starting young, and
you can still relate to us because we're cool. So
on average, Americans in their twenties have saved around ten
five hundred toward retirement.
Speaker 4 (25:19):
I was shocked at that. I did not think that'd
be the case. I think we have four oh one
ks to thank for that.
Speaker 1 (25:24):
Yes, absolutely, the mandatory four o one K or the
opt out four oh one K not mandatory, but it
automatically enrolls you and you have to opt out. Is fantastic.
If you are someone who that happened to and maybe
you left that job, highly highly require you to roll
over your old four oh one K into an IRA
(25:45):
that you control, and you can usually actually use capitalized
to do that. For Free Frugal Friends podcast dot com
slash capitalize if you can type all of that in.
But so, yeah, in your twenties is just getting over
the barrier to start saving. Anything that you can save
in your twenties will grow. You have like over four
(26:08):
decades to grow stuff. So, but first you want to
shore up your emergency fund. You want to get over
that barrier to entry. So start in your company's for
owin k plan, open a roth IRA. These are going
to be like your to do Listen. Fidelity recommends contributing
about fifteen percent of your pre tax income into retirement accounts.
Speaker 4 (26:32):
Yeah, if you can, I mean when you're in your twenties,
I I'm going to move into the thirties.
Speaker 1 (26:39):
Well okay, let's let's talk about like how much you
would need to contribute.
Speaker 4 (26:45):
Okay, yeah, so yeah, because that this is what can
frustrate me about these types of articles is they can
give this sense as if money is ever flowing, like, well,
just max out your wrath IRA and just take this
percentage of your pre tax income. Well, we don't get
to take home pre tax income, so that's like more
(27:09):
than fifteen percent of our actual income because of what
we actually get to take home. And for many of us,
that's just it's not reasonable. Many of us do not
have fifteen to thirty percent additional beyond our expenses. Yeah,
to just like throw at this thing. So I just
want to I get that all these numbers are on
(27:29):
paper and telling us the right thing to do. But
please know you're not alone if you're like, this just
isn't possible for me. So here's a here's a baseline,
something that you could be considering, but also know something
is better than nothing.
Speaker 1 (27:43):
Yeah, So if you want to get to that one
point two million, then and you have a forty year
time price, and so this would essentially be starting at
twenty five years old and investing monthly. Again, we're using
a seven percent return rate compounding quarterly. That's going to
be about four hundred and sixty two dollars a month.
(28:06):
Your total contributions over forty years will be just over
two hundred and twenty so like two hundred and twenty
two thousand dollars around there, And the total interest that
you will have but you didn't put in is over
(28:26):
nine hundred and seventy eight thousand.
Speaker 3 (28:28):
Yeah, so I did not have that money in my twenties.
One did not. That's that's a relatively expensive car payment.
Speaker 1 (28:38):
Yeah, yeah, no, it's definitely. So if we wanted to
move that number to just a million, then that takes
us down to saving three hundred and eighty five dollars
a month. Again, pretty steep, especially if you have student loans.
Speaker 3 (28:56):
Yeah.
Speaker 1 (28:57):
So not everyone's going to be able to start this
in their twenties.
Speaker 4 (29:01):
Yeah, well, but start though, Like, I think that's the
piece that kind of kept me in some ways from it,
although there were months I didn't even.
Speaker 3 (29:11):
Have twenty bucks to throw at it.
Speaker 4 (29:13):
But if you're doing better than I did in my
twenties and you've got twenty bucks, then another month you
got one hundred, another month you got two hundred. Oh
we're back down to thirty. Like, just put put it in,
let it start growing. Don't let this kind of hack
you out at the legs to begin with, because you
(29:34):
still will be better off beginning in your twenties with
whatever you.
Speaker 3 (29:37):
Got to get.
Speaker 1 (29:38):
Yeah. I think two hundred is a really good number
if you can swing it in your twenties, because that
money will just like compound and compound and compound. It's
going to be difficult, there's going to be friction, you're
gonna have to be very intentional, but two hundred dollars
(29:58):
per month, it's a do whoople number. Yeah, it's not easy,
but it's doable.
Speaker 4 (30:03):
Yeah yeah, Okay, So moving on into your thirties, I
felt this one in a real way. We're in our
thirties and actually whooping back to the person who emailed us, like,
I'm thirty five and I feel like I'm so far behind.
I get that I feel that way too, and I
do appreciate that this article calls it out, because your
thirties are a time of they're calling it immense growth.
(30:25):
You might have found some career stability, maybe some raises
and role changes at work, but this is the time
when you are entering into romantic partnerships, getting married, having kids,
buying a home, still likely paying off student loan debt,
maybe starting to care for parents. Even at this age,
(30:46):
you might beginning caregiver types of roles. There are so
many demands on our money at every stage of life,
but particularly here when we're still just kind of getting
our foot and so I think this is one of
the reasons that it can feel like I'm so far
behind because I don't have endless money to hemorrhage towards
(31:08):
all of the goals, like buying a home is a
very valuable goal. Also you can rent. That is fine too,
because as we saw, when you're retired and your own home,
you still spend a ton of money on housing. But
if this is something that you do want to be
putting a bigger emphasis on, this is a very good
(31:29):
time to do it. On average, Americans in their thirties
have saved about thirty eight thousand dollars towards retirement. That
number is a little bit lower than what we would
want to see by the time we enter into our forties.
So they're recommending one of their baseline recommendations is that
you've saved the equivalent of your annual salary by your thirties.
(31:53):
So this, i would say annual household income, not just
your salary, but if you're planning on retiring with the
person you're currently living with now, if you're just starting
in your thirties, then the percentage of our pretext income
that we want to be putting into our retirement investment
accounts does ramp up. So in our twenties it was
(32:15):
fifteen percent. Now in our thirties, if we're just starting,
we want to increase that to somewhere between eighteen to
twenty three percent of our pretext income. So quite a spike,
but not nearly as much of a spike in percentage
as it would be if we were just starting in
our forties, and of course if we're just starting in
(32:35):
our fifties, so it still does behoove us, get started,
gets started, Get started.
Speaker 5 (32:40):
Yeah.
Speaker 1 (32:41):
So if we're looking at like, if you did the
most in your twenty five and I'm going to start,
I'm honestly going to start these decades in the middle,
I like like twenty five to thirty five, thirty five
to forty five. It just makes it easier. So if
you did the most, so you did your four hundred
and sixty three a month in your twenties, then starting
(33:03):
at twenty five, by thirty five, you'd have eighty thousand
dollars and you only put in fifty five just over
fifty five thousand of it, Okay, So that's doing that's
doing the most. Though, if you just did two hundred,
then you would have thirty about thirty five thousand saved, okay,
(33:27):
and so and you would have put in about twenty
four thousand of that. So if we look at that,
let's say you started, you know, with the two hundred
dollars a month, you've got thirty five thousand dollars saved,
and we're going to put this into our calculator. We're
still going to use this first calculation to do the
(33:50):
one point two million. So if you're starting thirty five
with thirty five thousand dollars saved, then and you want
to get to one point two million, it would jump
super up to you then need to save seven hundred
and fifty nine dollars a month to get to that
one point two million, which if you're a dual income
(34:11):
household starting at thirty five, it's not impossible.
Speaker 4 (34:16):
Yeah, yeah, I mean that's less than a duel income
maxing out both of your four or one k's. Yeah,
I'm sorry, roth Iris, sorry to confuse you.
Speaker 3 (34:24):
Yeah.
Speaker 1 (34:24):
So it is a lot higher though, which is why
starting your twenties is so great, and if you're not
your twenties, you should encourage people in their twenties to
start investing. That goes down. If you want to just
do one million, then that's just under six hundred bucks
a month, So it's total, it's very feasible if maybe
you just have thirty five thousand saved and this is
(34:46):
after this is the thirty year time horizon, it shortening
it to thirty years. If you have about thirty five
thousand dollars saved and you want to get to a million,
still really doable. Still, that's three hundred dollars from each
of you, and it's it is a friction, but.
Speaker 3 (35:03):
Doable, not impossible.
Speaker 1 (35:05):
We start when we get to these later, when we
have fewer years to compound, fewer decades to compound, like
twenty and ten, is when it starts to become harder.
Speaker 3 (35:16):
Yeah, so what happens in the forties, Jen, So in.
Speaker 1 (35:20):
Your forties you should and I'll just touch on THEE
one X your salary, I would say, by honestly, like by.
Speaker 5 (35:31):
The end of the decade.
Speaker 3 (35:33):
I think that makes sense.
Speaker 1 (35:34):
Yeah, you don't have to have it by the time
you turn thirty, but before you turn forty. So in
your forties, a person often gets to begin experience the
rewards of their hard work and diligence when they.
Speaker 5 (35:48):
Reach their forties.
Speaker 3 (35:49):
I sure hope so.
Speaker 1 (35:50):
And this would be I would say forty five, not
at forty. The forties decade for our episode is starting
at forty five. Say, on average, americans in their forties
have about ninety three thousand, four hundred saved toward retirement.
And so they say, at age forty you should have
three times your annual salary already saved. And that sounds difficult,
(36:15):
especially if you're starting in your thirties. It's but your
money at compound interests pretty much. It's like a rule
of thumb. Compound interest will double your money every ten years.
So if you put ten thousand dollars in the stock
market in a total stock market, you know ETF for
index fund, in ten years, that money, if you don't
(36:38):
touch it, will probably look like twenty thousand, and in
ten more years that twenty thousand will look like forty thousand.
And so that's why this article is assuming you start
in your twenties and then buy your forties. Yes, of
course your money has tripled. So it's you know, it
makes sense, but it's harder the later you start.
Speaker 4 (37:01):
Okay, so we're getting into our fifties, and this is
where the article says it's time to put your retirement
preparation on full steam ahead. Most Americans are far behind
and meeting their savings targets. It is understandable cost of living,
still supporting children through college usually in your fifties, paying
for home repairs, increased medical cost definitely in caregiver roles
(37:26):
in your fifties, that kind of sandwich generation of you're
still kind of there for your kids as well as
your parents. So a lot of pressures happening here. But
if you do plan to retire this when we talk
about prioritization, this should be at the top of the list.
On average, Americans in their fifties have saved about one
(37:47):
hundred and sixty thousand dollars towards retirement. Again, we would
want to see that number be a little bit higher
when you're just less than ten years away from retirement age.
So this is where an aim can be having six
times your annual salary saved, and this is where we
(38:08):
can really be maxing out catch up contributions whenever possible,
putting any additional money that you might have fine.
Speaker 1 (38:17):
Well at at fifty five I can't remember, it's fifty
five and a half or I'm sorry, I'm not consult
your investing experts, but you do get an extra thousand
dollars in your IRA extra a certain number in your
four h one K, and so you can at fifty
five contribute more to these tax advantaged accounts than somebody
(38:40):
who's fifty four or younger, and you should take advantage
of that. If you have obviously less than especially less
than three times your income, it becomes almost almost impossible
to reach a million dollars if you only have one
hundred and sixty thousand dollars saved at fifty five. But
I mean if you want to have you know, if
(39:04):
you have one hundred and sixty thousand dollars save and
you want in your targets maybe six hundred thousand over
ten years, If you are investing sixteen hundred dollars a month,
which with kids out of the house a lot more
disposable income, you're still working, that becomes again difficult friction,
but not impossible. In those years, you can still get
(39:25):
to six hundred thousand. So that's you know, one hundred
and ninety four thousand you're putting in, but two hundred
and forty two hundred and forty five thousand of interest
that you did not put in. So again, sixteen hundred
dollars is no joke. But there are still ways to
make that last ten years really work for you.
Speaker 4 (39:48):
Yeah, what about our friends in their sixties. We got
some friends in their sixties listening to us.
Speaker 1 (39:53):
Yeah, my mom's in her sixties. She's very excited to
get to the point where she can get you know,
between working and getting social Security for her Ami dad,
she's actually going to be getting a raise. Whoa so,
I so, And this is in like three months she
does this. So she's going to take us out to
(40:15):
dinner with her new rais.
Speaker 3 (40:18):
Ow to caravas, to caravas.
Speaker 1 (40:21):
Yeah, I mean this is I mean, we do have
some people in their sixties listening to this. So the
article says it's no longer appropriate to sugarcoat things. This
should be a time in your life where you can
sit back and relax. Unfortunately, most Americans are nowhere near
the recommended savings target. I think a lot of our
(40:43):
listeners are outside of that majority. But Americans in their
sixties typically have one hundred and eighty two thousand saves
towards retirement. And that's nothing to laugh. I mean, there's
nothing to like, turn your nose up at like one
hundred and eighty two that can get you a long
way if you're also coupling that with part time income
(41:06):
and you know you're.
Speaker 5 (41:10):
Medicaid all that stuff.
Speaker 4 (41:12):
Yeah, supplementing your medical expenses absolutely.
Speaker 1 (41:15):
Yeah, So definitely what you have is what you have,
and so at that point you need to evaluate your
non retirement assets. See what you can monetize, see what
you can sell. Don't forget to take advantage of those
Social Security benefits when you turn sixty two. If you
still love your job or enjoy what you're doing, you
can delay those benefits and then that will get you
(41:38):
more money later on, Like my mom has delayed her
benefits as long as you know possible. So you can
also consider investing your Social Security money in non retirement
accounts if you feel comfortable doing so. This is the time, though,
where we get really conservative with our bond funds, So
I don't know that would be something to talk to
(42:00):
your financial advisor about. This would be the time to
get a financial advisor. I think the five years before
you retire is a good time to be working with
someone and then be sure to factor in the cost
of medical care. Again, just like fine tuning your retirement
income to make sure you are not that you can
(42:21):
be as little of a burden to the people you
love as possible.
Speaker 4 (42:24):
Start now, we recognize there's not any one singular goal
for our money. There's so many different things that we
can be putting it towards, and the closer and closer
we get to retirement, the more and more this needs
to be prioritized. But definitely recognize if you're in your
twenties and thirties, you have to take all these other
things into consideration. Definitely do something, but know that if
(42:45):
you can't do all of the things.
Speaker 3 (42:47):
It's okay. You will be okay. Yeah, So just.
Speaker 1 (42:50):
To reiterate, general recommendations for your thirties, is one x
your salary, but by the time you turn fifty, it's
three x your salary, and then by the time you
turn sixty it's six x. And if you're not there,
don't be discouraged because what you're you could earn more
(43:12):
than what you'll spend in retirement, and that's hopefully what
we're helping you do here. But again, just starting with
that two hundred dollars a month, I think just starting
with something and then reevaluating and always be upping it.
Speaker 4 (43:29):
And if you're really pinched and you can't meet any
of these goals. Then then reevaluating the jobs that we're
in and our income streams and our skill sets. So
finding these different inroads, but start somewhere. Do you know
what also is encouraging? And I don't want a delay.
Speaker 1 (43:47):
Yeah, I want it one hundred.
Speaker 3 (43:49):
X by the time we turned thirty five.
Speaker 5 (43:52):
By the time I turned thirty five.
Speaker 2 (43:55):
The bill of.
Speaker 6 (43:55):
The week, that's right, it's time for the best minute
of your entire week. Maybe a baby was born and
his name is Williams. Maybe you've paid off your mortgage,
(44:16):
maybe your car died and you're happy to not have
to pay that bill anymore. Best bills, Buffalo bills, Bill clion,
This is the bill of the week.
Speaker 7 (44:27):
Hi, fregal friends. This is the habit my husband and
I have implemented that have helped us save on multiple bills,
multiple expenses, things like that. So what we do is
every week, typically on Saturday mornings, we'll make mimosas and
it will spend like fifteen to thirty minutes talking about
past expenses of that previous week. So for example, we'll
go through what we spent on groceries, how much we
(44:48):
have left in the grocery budget. We'll go to the
next category. Oh, this is our miscellaneous shopping budget. This
is what we spent, This is how much we have
left for this budget, Utilities, things like that, and then
it kind of gives us like a good bird's eye
view of that past week and a good bird'sye.
Speaker 1 (45:02):
View of what we have left for the month.
Speaker 7 (45:05):
We also talk about like maybe unexpected expenses thanks coming
up that we were like invited to and we have
to like bring a dish for so that might be
more towards the grocery category. Things like that for example.
It's really fun and just having that little pocket of
time to be transparent about budget finances spending habits each
week has really helped us long term because we have
(45:25):
that built in time to talk about it instead of like,
I don't know, just like a random Tuesday when we're
kind of like unprepared. We have that time to really
connect and remember our goals, and it helps having that
weekly reminder so it's always fresh in our brains. And
who doesn't love them? A mosas so you can even
do this at night after kids go to bed, get
like margs or a glass of wine. Things like that,
(45:47):
but just having that habit of it being a weekly
fifteen to thirty minute pocket of time has helped tremendously.
So just wanted to share if you wanted to try.
Speaker 1 (45:56):
You know what, Jill, I might budget more if Travis
would drink mimosa with me. Maybe that's why I don't
like it, because I mean, I've never tried drinking and budgeting.
Speaker 3 (46:11):
He would drink the orange juice.
Speaker 1 (46:13):
He absolutely wouldn't. I can get tiny I could get
tiny champagnes for me.
Speaker 4 (46:17):
Yes, yeah, you're inspiring us a weekly meeting over mimosas
about money.
Speaker 3 (46:24):
It's alliteration and it's beautiful.
Speaker 1 (46:28):
I just wish we had time on Monday so it
could be a Monday morning mimosa meeting.
Speaker 4 (46:35):
Actually we should probably those for us, your friends Monday meeting.
Speaker 1 (46:41):
This is not the direction you thought this bill was going,
and it's here.
Speaker 4 (46:46):
What a good tip because you are implementing a routine
and a habit that can potentially follow you throughout life.
But it's not a huge time commitment, and you've made
it fun. You've broken down some of these barriers to
communicating about money. It's all so beautiful with a beautiful
(47:07):
bill of the week. If you all listening, have a
bill about Mimosa's meetings, mondays.
Speaker 3 (47:16):
Money or your name is Bill.
Speaker 4 (47:20):
For over podcast dot com slash Bill. Leave us your
bill and now it's time for being around.
Speaker 1 (47:30):
Me. Oh okay, So how much longer do you have
until you hope to retire and what do you need
to shift in order to be prepared?
Speaker 5 (47:43):
Jill?
Speaker 4 (47:43):
Okay, So I did Wow, I know I want to
be retired today. Actually, actually I did try this. This
is a side note for your vulnerability around Jen. I
went to this wedding Mexico a few months ago where
I didn't really know many people at the wedding and
(48:06):
I did not feel like talking about myself.
Speaker 3 (48:12):
I know that you.
Speaker 4 (48:12):
Don't like this very much because you're like, do you
need to tell them about our podcast? And it's just
like not my m o. So I tried on for size,
just telling people I was retired. Oh my god, Like
when they asked me what do you do and I
literally said I was retired, there were zero follow up questions.
(48:33):
Attention went off of me onto other things. We were
able to talk about all the cool things they were doing.
Speaker 3 (48:39):
I love it.
Speaker 1 (48:41):
I actually I do hate telling people.
Speaker 5 (48:44):
I have a podcast.
Speaker 4 (48:47):
This is true, though, it just feels so complicated, and
I was tired and I didn't want to talk about it,
so I said I was retired.
Speaker 1 (48:57):
Nobody would believe me. If I said I was retired,
would think, oh, you're stay at home mom.
Speaker 5 (49:01):
Cool.
Speaker 4 (49:04):
We were in a group of people who, I think
all of them were relatively independently wealthy, so no one
really bad than I, and that, you know, that was
the benefit of being around a ton of wealthy people
is it doesn't really matter.
Speaker 3 (49:18):
You could kind of just be yourself.
Speaker 1 (49:20):
Anyhow, or be not yourself because you're not retired to it,
you'd be somebody different me.
Speaker 4 (49:26):
Apart from my work though, just me showing up with
nothing to prove. So I did write twenty two years
in all reality because I thought that, like fifty six
might be a decent retirement age.
Speaker 3 (49:41):
But I don't think that's a classic retirement.
Speaker 5 (49:44):
It's it's not.
Speaker 1 (49:46):
So The statistics actually are most people plan to retire
at sixty five, and the average retirement age is around
sixty two. And that's not by choice, not because people
get so wealthy they get surprised and retire early. But
a lot of people are forced out of the workplace
because of illness, physical disability, caretaking, a relative pushed out
(50:11):
just because of you know, their industry is going toward AI.
I don't know, but yeah, that's that's a lot of
the reason.
Speaker 4 (50:20):
Yeah, and I would want to plan more for that.
I would hate to be surprised like, oh no, I
really needed to hold out for another four years and
I can't. I'd rather be prepared for sooner whether yeah,
I mean hopefully by choice, but if I am forced sooner,
I want to prepare for that.
Speaker 3 (50:40):
So fifty six is my goal? No, all right, so
I got twenty eight years. If it is sixty two, wow, okay,
I don't want to work for that long.
Speaker 4 (50:52):
But but what this is telling me is I'm I'm
with that thirty five year old woman who emailed us
like I got I got to increase this thing.
Speaker 5 (51:01):
Why do you hate your job so much?
Speaker 4 (51:04):
I don't hate my job, that's not it. I'm just tired,
just and it's not this. This is actually what's very
life giving to me. It's my like decade and a
half working in social work that exhausted me, and I'm
still recovering. I think this is helping me to recover
because I do still have to work even though I'm
(51:25):
burn out.
Speaker 1 (51:29):
But she's a woman and the people.
Speaker 3 (51:31):
Yeah, it will, it will shift.
Speaker 4 (51:33):
I know that things will be restored to me and
my inner being. But at this moment, working for another
twenty eight years does sound exhausting. But I'm encouraged to know,
like we can find life giving work.
Speaker 3 (51:49):
We can do.
Speaker 4 (51:50):
Work that's entirely different, that exercises a different part of
who we are. That can like, we can work even
when burnt out. If it's in a different way area,
then maybe the field that burnt us out and we
may return to that field in the future.
Speaker 3 (52:06):
Yeah.
Speaker 5 (52:07):
Yeah, that's great perspective.
Speaker 3 (52:08):
Thanks. Yeah, okay, what about you?
Speaker 1 (52:11):
So, as I look at my retirement planner on Empower,
it's saying that I can comfortably retire at sixty and
that is my goal. My actual true goal is to
retire when my first child has my first grandchild.
Speaker 3 (52:29):
That is when I want to retire.
Speaker 4 (52:31):
Yeah.
Speaker 1 (52:31):
Nice, So I would like to be prepared by for that.
Speaker 2 (52:34):
Bye.
Speaker 1 (52:35):
So I had Kai at thirty, So if he has
a child at thirty, then that would put.
Speaker 5 (52:44):
Me at sixty.
Speaker 3 (52:45):
Nice.
Speaker 1 (52:45):
But he could have a child earlier.
Speaker 3 (52:47):
You have always predicted that.
Speaker 1 (52:49):
Yeah, so I though it may be Atlas at this
point he is a renegade, so it could be fifty five.
I don't know, but I would like to prepare somewhere
between fifty five and sixty. It really will be that
grand baby that determines it.
Speaker 4 (53:07):
Okay, and is there anything you need to shift to
be prepared?
Speaker 1 (53:12):
No, ePower says, I am in good shape. They forecast
I have a ninety four percent chance that my portfolio
will support my goals.
Speaker 4 (53:21):
Yeah, so you just stay the course. The amount of
money you're currently investing can stay the same.
Speaker 1 (53:29):
It changes, and well, it has decreased over the years.
The amount I have invested has decreased. We put We
went really hard in our twenties, Like we went super
hard before we had kids. There was a year, one
year we maxed out iras, two iras and one four
A one k, right, so we went super hard so
(53:52):
that we could ease.
Speaker 5 (53:53):
Off when we had kids.
Speaker 1 (53:55):
Well done, So I mean if you yeah, I mean
it's great. It has really worked out for us, and
we still do. We prioritize our iras over our kids
five twenty nights, so as you should yeah, I mean
we Yeah, we still in back.
Speaker 3 (54:14):
Gift to them that they won't have to care for
you financially.
Speaker 1 (54:17):
We even have let off the gas a little bit
more during this renovation and Travis's job shift, and you
know we're still in track. It does put that fifty five.
It has moved that fifty five to sixty, but we
can always catch up later because we have the foundation
we built.
Speaker 3 (54:36):
I love that. Well, Jen's crushing it. I've got work
to do. I thanks for listening.
Speaker 1 (54:43):
I put in the work when I had the capacity,
so that now when I do not have the capacity,
I don't feel so bad about it.
Speaker 3 (54:53):
Yep.
Speaker 1 (54:53):
And so maybe you're maybe you didn't and you feel bad,
but know that in the future there will be additional
hard times. Right, So maybe right now is a hard time,
so when you get out of it, you can go
hard and prepare for the next time when you're capacity. Yeah,
we ken swindled.
Speaker 4 (55:14):
Ever go back, but collecting information now and informing ourselves
now is still better than later. I mean, imagine not
getting this information until ten years from now. So do
what you can with what you've got. We're all on
different journeys, yep. Thanks for listening. Many of you know
(55:35):
that we do have a newsletter. It's called the friend Letter.
We talk about it all the time. It goes out
three times a week. We send out freebie savings tips,
life hacks to help you save money. And when you
email us back, when we send you an email and
then you email us back, we get it. This one
comes from Alex, who just said thank you for all
(55:57):
the valuable materials.
Speaker 3 (55:59):
God bless us the team richly. Thank you.
Speaker 5 (56:02):
Alex.
Speaker 3 (56:06):
I was like, wait, what.
Speaker 4 (56:08):
Is this last sentence saying that's amazing? What a lovely response.
Thanks for getting the friend Letter. If you're not getting
the friend Letter, you totally should.
Speaker 1 (56:19):
Frugal Friends podcast dot com.
Speaker 4 (56:22):
Thanks for listening everybody, Thanks for signing up for the
friend Letter. Thanks for being here. Go invest in your future.
Speaker 5 (56:29):
Go We love you.
Speaker 3 (56:31):
Bye.
Speaker 1 (56:33):
Frugal Friends is produced by Eric Sirianni Jill tell everyone
real quick about your.
Speaker 5 (56:51):
White glove service.
Speaker 1 (56:53):
Arilogies for that sound.
Speaker 4 (56:57):
Eric and I on a Friday night to this night
market where this produce stand was set up. It wasn't
a typical produce stand where you could just buy from them.
They were advertising their service. So they are a company
who buys fresh produce for local restaurants in Saint Pete,
(57:18):
and they end up with so much additional produce that
they've started a side business where they deliver their leftovers
to residences in Saint Pete. So you could sign up
for a weekly or bi weekly produce box from them.
So they go and they shop. There's apparently a farmer's
(57:41):
market somewhere in Tampa that operates seven days a week,
so they send people to go shop for the restaurants
every single day to this market, and then they're leftovers
they send out to people who want to buy the subscription.
So forty five dollars for one duffed box of an
(58:02):
incredible variety of fresh produce. I was like, I'm signing up.
I got a discount code to sign up for the
subscription and I signed up. They ended up delivering me
a box the day I signed up. I was expecting
to get it two weeks later, but that hour showed
up two hours later with a box to my door, delivered.
Speaker 3 (58:21):
From an electric vehicle. This is their whole thing.
Speaker 4 (58:24):
Like, the reason we can get it too cheap is
because we're already buying it for the restaurants we're delivering
it to local restaurants. We're already in the area. We
drive a car that doesn't cost us gas, and sure,
we'll get it to your door for forty five bucks.
So I get this box and I'm like, well, well,
we'll just see, we'll see if it's all it's cracked
up to be. Holy smokes, Jen, it was so much stuff.
(58:50):
It took up when I took it out of the box.
It took up my entire island. And I had to
price compare. I just had to. I couldn't move on
with my life. I couldn't do other work until I
did this.
Speaker 3 (59:01):
I love it.
Speaker 4 (59:02):
So I went onto Walmart, which is typically where I
kept my produce. Now it's where I shop and price compared. Now,
I don't know if all the things that I got
in the box are organic, but they're at least very fresh,
and most of it locally grown by local farmers. But
even compared to non organic things, So if I had
(59:24):
bought all those things from Walmart, it would have been
forty four dollars and two cents versus the box being
forty five dollars, although I had a discount code, so
it was actually thirty eight, So I definitely made out
on this one. But four of the things that I
got in the box were not available at Walmart. So
I was able to see what would Walmart charge for this,
but they didn't have it. Rude a baga, pineapple, poblano peppers, grapefruit,
(59:50):
I would not have even been able to get, but
I got it in this box. And so it was
a combination of citrus berries, squash, kale, root, vegetables, like
so many different things that is now gonna kind of
fuel the flame a bit for me. And what do
(01:00:11):
I even make this week? Because I do get in
a little bit of a rut even though I love
I'm learning to cook at home and repurpose ingredients. I've
now got all these ingredients I wouldn't typically have purchased,
and I'm finding new recipes.
Speaker 3 (01:00:23):
To try with my love.
Speaker 4 (01:00:24):
Those that was delivered to my door for forty five dollars.
And I'm so sorry for all of you listeners that
you all don't live in Saint Pete No.
Speaker 1 (01:00:33):
But so many places have these secret like co ops
that you don't know about. Yeah, and it's just the
co op goes to like a like a church or
a civic center. And usually you can like pick up
a box every week or every other week yours special
and that it was delivered to.
Speaker 3 (01:00:53):
You, delivered to me.
Speaker 1 (01:00:55):
But in these these are in a ton of cities. Yeah,
and it does even if it if it like gives
you the same price, right, you're not saving if you
can freeze stuff, if you can if meal planning is hard.
It gives you a guide on like what to look for.
(01:01:17):
So it definitely is for you know, a season, no
pun intended trying one of these out.
Speaker 4 (01:01:24):
I like the variety of Yeah, it's not going to
necessarily work for every person, but for me, it's exciting.
And I was even reading their reviews on their website
and a couple of people said, like me and my
kids get excited to see what's in the box. And
then she was describing how she found buy in with
her kids in trying new things and making new dishes
because they were kind of along the journey like what
(01:01:45):
did we get this week? So that's also kind of
an a bonus point for getting your kids to eat
vegetables and try new things.
Speaker 3 (01:01:54):
If it feels like this fun.
Speaker 1 (01:01:56):
Surprise, Yes, highly highly recommend.
Speaker 3 (01:02:00):
Cool. That's my white glove service, love it
Episode three ninety three, how much to have saved for
retirement at thirty, forty and fifty.
Speaker 2 (00:09):
Welcome to the Frugal Friends podcast, where you'll learn to
save money, embrace simplicity, and de liver your life. Here
your hosts Jen and Jill.
Speaker 1 (00:27):
Welcome to the Frugal Friends podcast. My name is Jen,
my name is Jill, and today we are talking about
how much you should theoretically have saved at retirement for
retirement at certain ages. We are not going to throw
random numbers like you should have two extra salary, three
(00:47):
extra salary. I don't care what your salary is. I
care what you care about and what you want to
do with your life.
Speaker 3 (00:54):
Okay, yeow, come at the game.
Speaker 1 (00:59):
You got to You got to make them understand. It's
not an arbitrary number. It's not an arbitrary calculation. Like
there are things that you can think about. You don't
have to know exactly what you want to do in retirement,
but if you start thinking about who you are now
and start thinking about what those things cost to be
(01:21):
who you are, you can start to think about it.
Speaker 4 (01:24):
I still like to have a bit of a metric
to kind of know, because this is something people don't
totally talk about because it is a little fluid, but
still getting some version of a baseline, and I do
think that we will help you to define what that
is in this episode. I'm super excited about it. I'm
excited about these articles. And we also pulled you all
(01:48):
in the friend letter before we get into those articles.
So for those of you getting the friend letter, you know,
at the bottom of it, we always are asking some
version of a lightning round question. You can answer and
some and even respond to us give us more information.
It's a really fun way of engaging. Now we're incorporating
it into our episodes. So we asked you all how
(02:10):
much do you have saved for retirement? And the majority
of you are right in this middle portion of the answers.
Somewhere between eleven thousand to two hundred and fifty thousand
is where the majority of you fall. That's a big,
big span.
Speaker 3 (02:29):
Yeah, most money and numbers.
Speaker 1 (02:30):
Most people are in the eleven you know, eleven thousand
to fifty thousand, because if you're single, that's going to
make more sense if your dual income. Our second highest
answer was one hundred, like one hundred and one to
two hundred and fifty thousand, so that makes more sense
if you're a dual income household, so that it does
make a lot of sense. And but we just want
(02:52):
to normalize. Also, whatever you have saved is good, and
the only bad thing is if you have if you
want to have a Rolls Royce in retirement and maybe
you only have ten thousand saved to forty, that might
be bad. But the only bad thing about it is
that you may want to shift away from a Rolls
Royce and start enjoying toyotas, like that's that's the thing.
(03:15):
Whatever you have saved is good. Like we got some
responses feeling like like I feel like I'm so far behind,
I'm getting closer to pay off my debt and maybe
investing is not number one on your list right now,
that's okay as long as you're doing something to improve
your finances. Don't feel like you're behind, don't feel like
(03:36):
you don't know enough to catch up or to be
where you want to be. All this we want to
normalize and encourage you to do what you can with
what you have.
Speaker 4 (03:48):
Yeah, this episode is for you. If you're finding yourself
feeling as though I don't know, am I behind, but
based on what So let's define it for our different
life stages.
Speaker 1 (03:59):
But first, if you need more of this outside of
the front, outside of the Frugal Friends podcast, get the
friend letter Frugal friendspodcast dot com. We are talking about
investing stuff. We mostly talk about freebies, savings tips, smart
buying practices, so like not deals, but how you can
(04:21):
get really good quality stuff without paying the overage of
you know, hypie brands and social media viral nonsense.
Speaker 4 (04:31):
Which those things are going to help you save both
now and in the future. And those are practices and
habit formation that will carry with you into retirements. Yeah,
there's benefit across the board and friend.
Speaker 1 (04:44):
Letter absolutely Frugal Friends podcast dot com. And if you
are looking for more information about saving for retirement, we
just did a couple really good episodes about your roth Ira.
We're doing this roth Ira challenge and this is kind
of the wrap up of that roth Ira challenge. We
(05:05):
want you to feel confident in saving so that you
can take advantage of this relatively low maximum threshold investment
like tax advantage opportunity, so you do not get twenty
twenty three backs. So few things in life have a
grace period. Your IRA is one of them, and so
we want you to take advantage of it in the
(05:27):
capacity that you have. So we have those and then
we also have episodes like two ninety one what to
Do if you have nothing saved for retirement and episode
two seventy five Understanding your Workplace Retirement Accounts with Delian Barrows.
Speaker 4 (05:43):
So this first article, I'm so stoked on it. I
found it fascinating. It's from retire Guide and it's called
average Retirement Spending in twenty twenty three Typical Expenses and
Budgeting Tips. The whole point with this article was to
help us understand average spending habits of current retirees so
(06:03):
that we can inform our own retirement savings plan avoid
accumulating debt. I think for many of us, retirement can
feel so far off. We don't really know who we're
going to be, what we're going to need, what the
economy is going to look like, and so that can
be hard to make a plan to save because what
(06:26):
will I even need, what will inflation look like by then?
How much money is going to be a worthwhile amount?
And while a lot of that is still shielded from
our understanding, it is helpful to learn from those who
have gone before us, those who are there right now.
And it may not be an exact description of what
(06:47):
it's going to look like for us, but it is
again one of those launching points of well, what are
they doing? It's probably not going to look too much
different for me, and or I can make my own
decisions to make it look a little bit different for me.
But not that the exact amounts of money are going
to work for us. But to be able to talk
(07:08):
in some of these percentages and where is the majority
of money going, how is time being spent? Is really helpful.
So they gave this first little statistic that, according to
the Bureau of Labor Statistics, on average, people ages sixty
five and older spent about fifty two thousand dollars in
twenty twenty one, which is fourteen thousand dollars less than
(07:32):
the average spending of the general population. So sick about
sixty seven thousand dollars is what the average population spent.
I found that so interesting that in retirement people are
spending a little bit less than kind of what the
general population is doing, which I think we often assume, like, oh, yeah, well,
I won't need as much. But I always get nervous
(07:53):
about that, like you might need more though than what
you needed throughout the majority of your life. But it
does look like even the spending kind of slows down,
hits the slower pace.
Speaker 1 (08:03):
Well, I mean, at this point, all of your kids
are out of the house and out of college, so
they should be financially stable and on their own. You're
not going as many places, like, you're not taking as
many family vacations, and when you do take vacations, they
are a fraction of the price because you're usually not
(08:25):
bringing everyone every single time. So yeah, like I can
really see, like so obviously it's you know, twenty twenty
one spending is very different from twenty twenty four. But
the article suggests that you're spending in retirement will be
about eighty percent of your annual pre retirement It says income,
(08:45):
but I would say, like, what is eighty percent of
your pre retirement spending? Probably, so you can take if
you're looking at your budget, looking at your ninety day
transaction inventory, a very good baseline is to average out
your monthly spend and then go eighty percent of that.
So that's going to be like a really you know
(09:07):
that's that's going to be a bare minimum for you
to start with.
Speaker 4 (09:11):
But then they give this infographic of the typical spending
in retirement and at that kind of fifty five thousand
dollars mark was the average retirement income and average retirement
expenses was fifty two thousand dollars. So this is really
painting a paycheck to paycheck kind of picture that only
leaves three thousand dollars annually leftover on average. That's not
(09:34):
a lot of cushion month to month with this, so
what's coming in is.
Speaker 3 (09:39):
Kind of going out.
Speaker 4 (09:40):
And then they break it down into well, where is
the money going? And this was most intriguing to me
that even in retirement, for on average these retirees, thirty
percent of their retirement expenses was housing costs. And idiot
thought was, I thought in retirement you'd have your house
(10:03):
paid off And they said that, yeah, right, sometimes they don't.
But they were like, even with those people who had
their houses paid off, there still they still broke it
down into all the different types of expenses, so from
housing supplies, household operations, that did seem like they added
(10:25):
in other types of lodging. So I don't know if
that means they're they're adding in like lodging on vacation
or different types of things.
Speaker 3 (10:33):
Yeah, not one dred percent, but.
Speaker 4 (10:36):
Your taxes are increasing, You're still paying all of your
utilities on your housing, so it still represented thirty percent
of their income.
Speaker 5 (10:48):
Yeah, it is interesting.
Speaker 1 (10:49):
I don't know if I agree one hundred percent with
all of the things they included in quote unquote housing costs.
But for a lot of people, the house that you
buy is not the house you stay in for thirty years.
So a lot of people will buy two to three
houses in their lifetime and you live in each one
(11:10):
for five years. So it's very likely that when you're
sixty five you're still going to have a house payment
if you bought one when you were you know, forty
or forty five, hopefully not too long into retirement. But
and then yeah, you definitely have your taxes, your insurance,
all of that stuff, so you're still going to have
(11:31):
home expenses, but they tend to drop off. And yeah,
whether they're thirty percent or not. Again, eighty percent of
your current spending is just a bare minimum. And if
you want to shoot for one hundred percent equivalent, if
you're in your thirties.
Speaker 3 (11:49):
I know.
Speaker 1 (11:50):
We I mean, we just got I don't remember if
it was an email or what from somebody who said
I'm thirty five and I feel like I'm so far behind.
And I was like, girl, you are a year older
than me. Like it's not I mean, yeah, I guess
we've been doing this stuff for a while, but it's
(12:10):
you're in your thirties.
Speaker 5 (12:11):
You are not far behind.
Speaker 1 (12:12):
You are at a good place to start, right The
people in their forties and fifties are hearing that right
now and be like, no, girl, you start now. You're
in the perfect place.
Speaker 4 (12:23):
So yeah, if you're in your sixties and you want
to retire in the next few years, it is pedal
to the metal time. But I just I found this
interesting something to keep an eye on. I think we
can assume once I own my home, that's the reason
for home ownership, so that I can rest easy and
retirement and retirees are currently telling us housing is still
(12:48):
a major expense for us, so factor that in. Yeah,
we can be bummed about it, cry about it in
the corner for a second, but then also realign your
expectations that housing will still cost you money.
Speaker 1 (13:00):
And I don't rest of your life. And if you
have a mortgage in retirement, I don't think that's a
bad thing. If you spent your working years prioritizing investing
that has a higher rate of return typically than what
your mortgage is costing you, you still made a good
financial decision. You're still going to come out on top
(13:21):
if you were investing instead of prioritizing your mortgage payoffs.
So the next couple are healthcare, and this is one
that I honestly think there should be a little bit
more so. They say it's about eight percent of retirement expenses,
(13:41):
and I don't know at what part of retirement, but
they said overall or on average, retirees reported that five
percent of their monthly spending went toward out of pocket
medical costs and eight percent went toward medical and health insurance.
So I guess it is more than eight, you know,
eight plus five. So twenty percent of adults sixty five
(14:03):
and older reported out of pocket medical expenses of more
than two thousand dollars in twenty twenty one, which I
think is super conservative. We have heard from people like
financial advisors that say that is the medical costs are
the main expense in retirement, and so that's I think
one of the reasons to if you can shoot for
(14:27):
one hundred percent of your spending, and that's why we
prioritize making sure our spending is in control and we're
only spending on the things that we love and not
mindlessly consuming into impulse spending. Because once you know that
you're spending, you feel good about your spending. That I mean,
(14:49):
one hundred percent of that is far less than one
hundred percent of spending on like all kinds of impulse things. Right,
So that's why we say, get control of it now
so that you feel better overall about saving for retirement.
Speaker 3 (15:03):
Yeah.
Speaker 4 (15:04):
The next one on here is transportation expenses being about
twelve percent, which that's a little shocking to me too
that it would be more than what you'd spend on medical,
But they did give this stat In twenty twenty, there
were about thirty one million licensed drivers ages seventy and older.
(15:25):
So people are still driving in retirement. So we still
have the cost of car ownership or if you've got
a car payment and maintenance and all of these things,
and then especially if you don't have your license anymore,
you maybe don't have a vehicle. You might need to
(15:45):
then be paying people to take you places if public
transportation is not an option, So still need to be
factoring in how are we getting around?
Speaker 1 (15:56):
Yes, and my favorite cost of food twenty five percent.
So the thing that changes really between your working years
and your your retirement is that slightly less on transportation
and we bump food up to number two. Now, if
food is already your number two, like, that's you're already
(16:18):
living the dream you are retired. Congratulations you have achieved.
But for most people with a car payment, who are
you know transporting kids have a commute? Stuff like that,
transportation is usually number two and food will go to
up to twenty five percent of your spending in retirement.
(16:39):
They said food was the most common fastest growing expense
reported by seniors in twenty twenty one. Sorry to seniors
in twenty twenty four. Nobody, nobody could anticipate. I mean
everybody could anticipate, but nobody could. Seventy three percent of
the average food budget for people sixty five and older
was spent on food home. Where's about thirty percent was
(17:02):
spent on eating out. So that's one hundred and three
percent of your eating budget.
Speaker 3 (17:09):
Yeah, so.
Speaker 4 (17:11):
Food and housing is always going to cost you, always
in forever. I mean, what the Big three that we
always talk about, they're.
Speaker 3 (17:19):
Not going away.
Speaker 1 (17:20):
They are always going to be there.
Speaker 4 (17:23):
The last thing I want to mention about this article
is they talk about just debt, the crushing debt that
retirees were reporting. So ninety six percent of retirees reported
having debt in twenty twenty two. Ninety six percent. That's
nearly all of them now much'all. Forty three percent of
(17:47):
those ninety six described the debt as easily manageable, whereas
eleven percent reported it as crushing, unmanageable. But this was
a huge takeaway for me as far as where we
have choice agency in what retirement looks like, that we
can again learn from those who have gone before. And
if this is something we don't want to see in retirement,
(18:09):
then we practice that now. Not having debt. Getting rid
of debt now will only benefit us when we head
into retirement. We don't have to be a generation that
has ninety six percent. Ninety six percent of us are
in debt in our later years.
Speaker 1 (18:29):
Yeah, and if we are, there's nothing like to be
shamed about in that. But we want to do what
we can to lighten that load on ourselves. We want
to be able to enjoy those years and we don't
want to leave our loved ones with, you know, with
debts that don't go away when we die too. So
(18:50):
there's a lot of things to think about. And if
your plan at the end of your life is to
just rack up a crap ton of credit card debt,
like leave it for the last year of your life. Okay,
let's make sure we're prepared for for all the.
Speaker 5 (19:04):
Times up to there.
Speaker 3 (19:06):
You don't know exactly how long you'll live.
Speaker 1 (19:08):
Right, so, like leave that as your last, last last
resort and let's just try to plan as well as
we can.
Speaker 4 (19:16):
This next article comes from Trust and Will, so it's
describing a guide to retirement savings by age twenties, thirties, forties, fifties,
and sixties. So, like Jen said, we're not gonna apparently
tell you.
Speaker 1 (19:33):
We will say the numbers. I will admit that they
are helpful. They are not helpful when people are you know,
shoving it down your throat, being like, if you don't
have two times your salary saved, you better get on it.
Do some different with your life. It's a mindset problem
that I don't like that, but.
Speaker 5 (19:52):
I've just been here for too long.
Speaker 4 (19:56):
Yeah, So they start off by talking about the rule
of twenty five. So this isn't necessarily something that we
think you have to take on as this is the
exact prescription for what I need to do.
Speaker 1 (20:10):
But I do like this better than the two extra salary,
three extra salary. Yeah, I say go with the rule
of twenty five before you go with any other number.
Speaker 4 (20:20):
And I think it's a helpful Again, just baseline, what
should I even be aiming for? What do I even
need to be trying to do here? So they're describing
that to calculate your retirement savings target, first you need
to create an estimate of your monthly expenses. So let's
say they give these numbers. Let's say you can comfortably
(20:40):
live off of three thousand dollars a month. Multiply that
by twelve to get your annual withdrawal amount. This would
be what do you think you can live off of
per year? In this case, it would be thirty six
thousand dollars. I don't think these numbers are anywhere close
to what we need to be considering, but for the
sake of giving an example, Let's say it's thirty six
(21:03):
thousand dollars a year that you want to be pulling
out annually in retirement. Then you want to take your
withdrawal amount and multiply it by twenty five. I assume
they're thinking you're going to be in retirement for twenty
five years.
Speaker 1 (21:16):
No, I mean, so this will just make sure that
you have that you are If you withdraw at four percent,
then you're never touching the nest egg. You're only ever
withdrawing the growth. It ensures that there's at least at
a at about a seven to ten percent growth rate,
(21:36):
that the all thirty six thousand every year that you
withdraw is always going to be annual growth. It's never
going to be giving that nast egg RK.
Speaker 4 (21:46):
So that would be a savings target of nine hundred
thousand dollars with this example. And I think that they
did this example because they wanted to highlight that not
everybody needs to save one million dollars. That has been
kind of this, especially within the fire movement financial independence
retire early. It's always been save one hundred million. So
then you can withdraw that one.
Speaker 1 (22:07):
Hundred million, sorry one million.
Speaker 4 (22:10):
You can withdraw that four percent, and really, this is
not a realistic number. It's not thirty six thousand dollars
a years is not a realistic number. Now, I can't
imagine it's going to be a realistic number. If you
are planning to retire in a few decades from now, it's.
Speaker 3 (22:25):
Going to need to be more. I do think we
need to adjust for inflation.
Speaker 1 (22:28):
Yeah, we So some of this takes the seven percent
growth rate does take into account inflation, because the stock
market has in the past traditionally grown ten percent like
over its entirety. But we use a seven percent calculation
to account for a three percent inflation. But I mean,
if you've been alive for the past couple of years,
(22:49):
you know inflation has been far faster than that. But
we had a really good decade where it was very slow,
like light inflation.
Speaker 4 (22:57):
So you're saying there could be years where you take
more than four percent and you'd still not be touching
the nest egg, correct.
Speaker 1 (23:07):
Right, But you always have you know, those bear markets.
You will have a bear market at some time or
a correction at some time in your retirement, and you
want to be able to have enough to still take
out the thirty six thousand without touching the next nest egg.
And that's why on those good years you don't take
out more so that it compensates for the slower years.
Speaker 4 (23:30):
And I do want to say, just vernacular, we are
using the word savings and investing kind of interchangeably, which
is unfortunate. We're not just talking put nine hundred thousand
dollars under your mattress. We're talking invest for retirement and
have this amount in your investment accounts by the time
(23:51):
you reach retirement.
Speaker 1 (23:53):
So another calculation with the rule of twenty five would be, say,
maybe five thousand per month is what you spend, and
you want to start with that conservative like I'm going
to spend eighty percent of that in retirement, So eighty
percent of five thousand is four thousand. We multiply that
by twelve, and we're getting forty eight thousand in a year.
(24:17):
That's I think that's far better to think. So, and
then you multiply that by twenty five and you get
one point two million, So I think that's a far
better goal. I think one point two million is a
reasonable goal. May not sound reasonable to you right now,
(24:40):
but we'll talk a little bit about how to get
to that goal.
Speaker 4 (24:42):
Well, and this is probably talking per person though too.
So if you are you know, in a if you're
married and you've got annual household income that's higher than yeah,
then yes, take that into consideration.
Speaker 3 (24:58):
So let's get into ages.
Speaker 1 (24:59):
Yes, so let's start with twenties. We don't have a
ton of people in their twenties who listen to the show,
but shout out to you if you're starting young, and
you can still relate to us because we're cool. So
on average, Americans in their twenties have saved around ten
five hundred toward retirement.
Speaker 4 (25:19):
I was shocked at that. I did not think that'd
be the case. I think we have four oh one
ks to thank for that.
Speaker 1 (25:24):
Yes, absolutely, the mandatory four o one K or the
opt out four oh one K not mandatory, but it
automatically enrolls you and you have to opt out. Is fantastic.
If you are someone who that happened to and maybe
you left that job, highly highly require you to roll
over your old four oh one K into an IRA
(25:45):
that you control, and you can usually actually use capitalized
to do that. For Free Frugal Friends podcast dot com
slash capitalize if you can type all of that in.
But so, yeah, in your twenties is just getting over
the barrier to start saving. Anything that you can save
in your twenties will grow. You have like over four
(26:08):
decades to grow stuff. So, but first you want to
shore up your emergency fund. You want to get over
that barrier to entry. So start in your company's for
owin k plan, open a roth IRA. These are going
to be like your to do Listen. Fidelity recommends contributing
about fifteen percent of your pre tax income into retirement accounts.
Speaker 4 (26:32):
Yeah, if you can, I mean when you're in your twenties,
I I'm going to move into the thirties.
Speaker 1 (26:39):
Well okay, let's let's talk about like how much you
would need to contribute.
Speaker 4 (26:45):
Okay, yeah, so yeah, because that this is what can
frustrate me about these types of articles is they can
give this sense as if money is ever flowing, like, well,
just max out your wrath IRA and just take this
percentage of your pre tax income. Well, we don't get
to take home pre tax income, so that's like more
(27:09):
than fifteen percent of our actual income because of what
we actually get to take home. And for many of us,
that's just it's not reasonable. Many of us do not
have fifteen to thirty percent additional beyond our expenses. Yeah,
to just like throw at this thing. So I just
want to I get that all these numbers are on
(27:29):
paper and telling us the right thing to do. But
please know you're not alone if you're like, this just
isn't possible for me. So here's a here's a baseline,
something that you could be considering, but also know something
is better than nothing.
Speaker 1 (27:43):
Yeah, So if you want to get to that one
point two million, then and you have a forty year
time price, and so this would essentially be starting at
twenty five years old and investing monthly. Again, we're using
a seven percent return rate compounding quarterly. That's going to
be about four hundred and sixty two dollars a month.
(28:06):
Your total contributions over forty years will be just over
two hundred and twenty so like two hundred and twenty
two thousand dollars around there, And the total interest that
you will have but you didn't put in is over
(28:26):
nine hundred and seventy eight thousand.
Speaker 3 (28:28):
Yeah, so I did not have that money in my twenties.
One did not. That's that's a relatively expensive car payment.
Speaker 1 (28:38):
Yeah, yeah, no, it's definitely. So if we wanted to
move that number to just a million, then that takes
us down to saving three hundred and eighty five dollars
a month. Again, pretty steep, especially if you have student loans.
Speaker 3 (28:56):
Yeah.
Speaker 1 (28:57):
So not everyone's going to be able to start this
in their twenties.
Speaker 4 (29:01):
Yeah, well, but start though, Like, I think that's the
piece that kind of kept me in some ways from it,
although there were months I didn't even.
Speaker 3 (29:11):
Have twenty bucks to throw at it.
Speaker 4 (29:13):
But if you're doing better than I did in my
twenties and you've got twenty bucks, then another month you
got one hundred, another month you got two hundred. Oh
we're back down to thirty. Like, just put put it in,
let it start growing. Don't let this kind of hack
you out at the legs to begin with, because you
(29:34):
still will be better off beginning in your twenties with
whatever you.
Speaker 3 (29:37):
Got to get.
Speaker 1 (29:38):
Yeah. I think two hundred is a really good number
if you can swing it in your twenties, because that
money will just like compound and compound and compound. It's
going to be difficult, there's going to be friction, you're
gonna have to be very intentional, but two hundred dollars
(29:58):
per month, it's a do whoople number. Yeah, it's not easy,
but it's doable.
Speaker 4 (30:03):
Yeah yeah, Okay, So moving on into your thirties, I
felt this one in a real way. We're in our
thirties and actually whooping back to the person who emailed us, like,
I'm thirty five and I feel like I'm so far behind.
I get that I feel that way too, and I
do appreciate that this article calls it out, because your
thirties are a time of they're calling it immense growth.
(30:25):
You might have found some career stability, maybe some raises
and role changes at work, but this is the time
when you are entering into romantic partnerships, getting married, having kids,
buying a home, still likely paying off student loan debt,
maybe starting to care for parents. Even at this age,
(30:46):
you might beginning caregiver types of roles. There are so
many demands on our money at every stage of life,
but particularly here when we're still just kind of getting
our foot and so I think this is one of
the reasons that it can feel like I'm so far
behind because I don't have endless money to hemorrhage towards
(31:08):
all of the goals, like buying a home is a
very valuable goal. Also you can rent. That is fine too,
because as we saw, when you're retired and your own home,
you still spend a ton of money on housing. But
if this is something that you do want to be
putting a bigger emphasis on, this is a very good
(31:29):
time to do it. On average, Americans in their thirties
have saved about thirty eight thousand dollars towards retirement. That
number is a little bit lower than what we would
want to see by the time we enter into our forties.
So they're recommending one of their baseline recommendations is that
you've saved the equivalent of your annual salary by your thirties.
(31:53):
So this, i would say annual household income, not just
your salary, but if you're planning on retiring with the
person you're currently living with now, if you're just starting
in your thirties, then the percentage of our pretext income
that we want to be putting into our retirement investment
accounts does ramp up. So in our twenties it was
(32:15):
fifteen percent. Now in our thirties, if we're just starting,
we want to increase that to somewhere between eighteen to
twenty three percent of our pretext income. So quite a spike,
but not nearly as much of a spike in percentage
as it would be if we were just starting in
our forties, and of course if we're just starting in
(32:35):
our fifties, so it still does behoove us, get started,
gets started, Get started.
Speaker 5 (32:40):
Yeah.
Speaker 1 (32:41):
So if we're looking at like, if you did the
most in your twenty five and I'm going to start,
I'm honestly going to start these decades in the middle,
I like like twenty five to thirty five, thirty five
to forty five. It just makes it easier. So if
you did the most, so you did your four hundred
and sixty three a month in your twenties, then starting
(33:03):
at twenty five, by thirty five, you'd have eighty thousand
dollars and you only put in fifty five just over
fifty five thousand of it, Okay, So that's doing that's
doing the most. Though, if you just did two hundred,
then you would have thirty about thirty five thousand saved, okay,
(33:27):
and so and you would have put in about twenty
four thousand of that. So if we look at that,
let's say you started, you know, with the two hundred
dollars a month, you've got thirty five thousand dollars saved,
and we're going to put this into our calculator. We're
still going to use this first calculation to do the
(33:50):
one point two million. So if you're starting thirty five
with thirty five thousand dollars saved, then and you want
to get to one point two million, it would jump
super up to you then need to save seven hundred
and fifty nine dollars a month to get to that
one point two million, which if you're a dual income
(34:11):
household starting at thirty five, it's not impossible.
Speaker 4 (34:16):
Yeah, yeah, I mean that's less than a duel income
maxing out both of your four or one k's. Yeah,
I'm sorry, roth Iris, sorry to confuse you.
Speaker 3 (34:24):
Yeah.
Speaker 1 (34:24):
So it is a lot higher though, which is why
starting your twenties is so great, and if you're not
your twenties, you should encourage people in their twenties to
start investing. That goes down. If you want to just
do one million, then that's just under six hundred bucks
a month, So it's total, it's very feasible if maybe
you just have thirty five thousand saved and this is
(34:46):
after this is the thirty year time horizon, it shortening
it to thirty years. If you have about thirty five
thousand dollars saved and you want to get to a million,
still really doable. Still, that's three hundred dollars from each
of you, and it's it is a friction, but.
Speaker 3 (35:03):
Doable, not impossible.
Speaker 1 (35:05):
We start when we get to these later, when we
have fewer years to compound, fewer decades to compound, like
twenty and ten, is when it starts to become harder.
Speaker 3 (35:16):
Yeah, so what happens in the forties, Jen, So in.
Speaker 1 (35:20):
Your forties you should and I'll just touch on THEE
one X your salary, I would say, by honestly, like by.
Speaker 5 (35:31):
The end of the decade.
Speaker 3 (35:33):
I think that makes sense.
Speaker 1 (35:34):
Yeah, you don't have to have it by the time
you turn thirty, but before you turn forty. So in
your forties, a person often gets to begin experience the
rewards of their hard work and diligence when they.
Speaker 5 (35:48):
Reach their forties.
Speaker 3 (35:49):
I sure hope so.
Speaker 1 (35:50):
And this would be I would say forty five, not
at forty. The forties decade for our episode is starting
at forty five. Say, on average, americans in their forties
have about ninety three thousand, four hundred saved toward retirement.
And so they say, at age forty you should have
three times your annual salary already saved. And that sounds difficult,
(36:15):
especially if you're starting in your thirties. It's but your
money at compound interests pretty much. It's like a rule
of thumb. Compound interest will double your money every ten years.
So if you put ten thousand dollars in the stock
market in a total stock market, you know ETF for
index fund, in ten years, that money, if you don't
(36:38):
touch it, will probably look like twenty thousand, and in
ten more years that twenty thousand will look like forty thousand.
And so that's why this article is assuming you start
in your twenties and then buy your forties. Yes, of
course your money has tripled. So it's you know, it
makes sense, but it's harder the later you start.
Speaker 4 (37:01):
Okay, so we're getting into our fifties, and this is
where the article says it's time to put your retirement
preparation on full steam ahead. Most Americans are far behind
and meeting their savings targets. It is understandable cost of living,
still supporting children through college usually in your fifties, paying
for home repairs, increased medical cost definitely in caregiver roles
(37:26):
in your fifties, that kind of sandwich generation of you're
still kind of there for your kids as well as
your parents. So a lot of pressures happening here. But
if you do plan to retire this when we talk
about prioritization, this should be at the top of the list.
On average, Americans in their fifties have saved about one
(37:47):
hundred and sixty thousand dollars towards retirement. Again, we would
want to see that number be a little bit higher
when you're just less than ten years away from retirement age.
So this is where an aim can be having six
times your annual salary saved, and this is where we
(38:08):
can really be maxing out catch up contributions whenever possible,
putting any additional money that you might have fine.
Speaker 1 (38:17):
Well at at fifty five I can't remember, it's fifty
five and a half or I'm sorry, I'm not consult
your investing experts, but you do get an extra thousand
dollars in your IRA extra a certain number in your
four h one K, and so you can at fifty
five contribute more to these tax advantaged accounts than somebody
(38:40):
who's fifty four or younger, and you should take advantage
of that. If you have obviously less than especially less
than three times your income, it becomes almost almost impossible
to reach a million dollars if you only have one
hundred and sixty thousand dollars saved at fifty five. But
I mean if you want to have you know, if
(39:04):
you have one hundred and sixty thousand dollars save and
you want in your targets maybe six hundred thousand over
ten years, If you are investing sixteen hundred dollars a month,
which with kids out of the house a lot more
disposable income, you're still working, that becomes again difficult friction,
but not impossible. In those years, you can still get
(39:25):
to six hundred thousand. So that's you know, one hundred
and ninety four thousand you're putting in, but two hundred
and forty two hundred and forty five thousand of interest
that you did not put in. So again, sixteen hundred
dollars is no joke. But there are still ways to
make that last ten years really work for you.
Speaker 4 (39:48):
Yeah, what about our friends in their sixties. We got
some friends in their sixties listening to us.
Speaker 1 (39:53):
Yeah, my mom's in her sixties. She's very excited to
get to the point where she can get you know,
between working and getting social Security for her Ami dad,
she's actually going to be getting a raise. Whoa so,
I so, And this is in like three months she
does this. So she's going to take us out to
(40:15):
dinner with her new rais.
Speaker 3 (40:18):
Ow to caravas, to caravas.
Speaker 1 (40:21):
Yeah, I mean this is I mean, we do have
some people in their sixties listening to this. So the
article says it's no longer appropriate to sugarcoat things. This
should be a time in your life where you can
sit back and relax. Unfortunately, most Americans are nowhere near
the recommended savings target. I think a lot of our
(40:43):
listeners are outside of that majority. But Americans in their
sixties typically have one hundred and eighty two thousand saves
towards retirement. And that's nothing to laugh. I mean, there's
nothing to like, turn your nose up at like one
hundred and eighty two that can get you a long
way if you're also coupling that with part time income
(41:06):
and you know you're.
Speaker 5 (41:10):
Medicaid all that stuff.
Speaker 4 (41:12):
Yeah, supplementing your medical expenses absolutely.
Speaker 1 (41:15):
Yeah, So definitely what you have is what you have,
and so at that point you need to evaluate your
non retirement assets. See what you can monetize, see what
you can sell. Don't forget to take advantage of those
Social Security benefits when you turn sixty two. If you
still love your job or enjoy what you're doing, you
can delay those benefits and then that will get you
(41:38):
more money later on, Like my mom has delayed her
benefits as long as you know possible. So you can
also consider investing your Social Security money in non retirement
accounts if you feel comfortable doing so. This is the time, though,
where we get really conservative with our bond funds, So
I don't know that would be something to talk to
(42:00):
your financial advisor about. This would be the time to
get a financial advisor. I think the five years before
you retire is a good time to be working with
someone and then be sure to factor in the cost
of medical care. Again, just like fine tuning your retirement
income to make sure you are not that you can
(42:21):
be as little of a burden to the people you
love as possible.
Speaker 4 (42:24):
Start now, we recognize there's not any one singular goal
for our money. There's so many different things that we
can be putting it towards, and the closer and closer
we get to retirement, the more and more this needs
to be prioritized. But definitely recognize if you're in your
twenties and thirties, you have to take all these other
things into consideration. Definitely do something, but know that if
(42:45):
you can't do all of the things.
Speaker 3 (42:47):
It's okay. You will be okay. Yeah, So just.
Speaker 1 (42:50):
To reiterate, general recommendations for your thirties, is one x
your salary, but by the time you turn fifty, it's
three x your salary, and then by the time you
turn sixty it's six x. And if you're not there,
don't be discouraged because what you're you could earn more
(43:12):
than what you'll spend in retirement, and that's hopefully what
we're helping you do here. But again, just starting with
that two hundred dollars a month, I think just starting
with something and then reevaluating and always be upping it.
Speaker 4 (43:29):
And if you're really pinched and you can't meet any
of these goals. Then then reevaluating the jobs that we're
in and our income streams and our skill sets. So
finding these different inroads, but start somewhere. Do you know
what also is encouraging? And I don't want a delay.
Speaker 1 (43:47):
Yeah, I want it one hundred.
Speaker 3 (43:49):
X by the time we turned thirty five.
Speaker 5 (43:52):
By the time I turned thirty five.
Speaker 2 (43:55):
The bill of.
Speaker 6 (43:55):
The week, that's right, it's time for the best minute
of your entire week. Maybe a baby was born and
his name is Williams. Maybe you've paid off your mortgage,
(44:16):
maybe your car died and you're happy to not have
to pay that bill anymore. Best bills, Buffalo bills, Bill clion,
This is the bill of the week.
Speaker 7 (44:27):
Hi, fregal friends. This is the habit my husband and
I have implemented that have helped us save on multiple bills,
multiple expenses, things like that. So what we do is
every week, typically on Saturday mornings, we'll make mimosas and
it will spend like fifteen to thirty minutes talking about
past expenses of that previous week. So for example, we'll
go through what we spent on groceries, how much we
(44:48):
have left in the grocery budget. We'll go to the
next category. Oh, this is our miscellaneous shopping budget. This
is what we spent, This is how much we have
left for this budget, Utilities, things like that, and then
it kind of gives us like a good bird's eye
view of that past week and a good bird'sye.
Speaker 1 (45:02):
View of what we have left for the month.
Speaker 7 (45:05):
We also talk about like maybe unexpected expenses thanks coming
up that we were like invited to and we have
to like bring a dish for so that might be
more towards the grocery category. Things like that for example.
It's really fun and just having that little pocket of
time to be transparent about budget finances spending habits each
week has really helped us long term because we have
(45:25):
that built in time to talk about it instead of like,
I don't know, just like a random Tuesday when we're
kind of like unprepared. We have that time to really
connect and remember our goals, and it helps having that
weekly reminder so it's always fresh in our brains. And
who doesn't love them? A mosas so you can even
do this at night after kids go to bed, get
like margs or a glass of wine. Things like that,
(45:47):
but just having that habit of it being a weekly
fifteen to thirty minute pocket of time has helped tremendously.
So just wanted to share if you wanted to try.
Speaker 1 (45:56):
You know what, Jill, I might budget more if Travis
would drink mimosa with me. Maybe that's why I don't
like it, because I mean, I've never tried drinking and budgeting.
Speaker 3 (46:11):
He would drink the orange juice.
Speaker 1 (46:13):
He absolutely wouldn't. I can get tiny I could get
tiny champagnes for me.
Speaker 4 (46:17):
Yes, yeah, you're inspiring us a weekly meeting over mimosas
about money.
Speaker 3 (46:24):
It's alliteration and it's beautiful.
Speaker 1 (46:28):
I just wish we had time on Monday so it
could be a Monday morning mimosa meeting.
Speaker 4 (46:35):
Actually we should probably those for us, your friends Monday meeting.
Speaker 1 (46:41):
This is not the direction you thought this bill was going,
and it's here.
Speaker 4 (46:46):
What a good tip because you are implementing a routine
and a habit that can potentially follow you throughout life.
But it's not a huge time commitment, and you've made
it fun. You've broken down some of these barriers to
communicating about money. It's all so beautiful with a beautiful
(47:07):
bill of the week. If you all listening, have a
bill about Mimosa's meetings, mondays.
Speaker 3 (47:16):
Money or your name is Bill.
Speaker 4 (47:20):
For over podcast dot com slash Bill. Leave us your
bill and now it's time for being around.
Speaker 1 (47:30):
Me. Oh okay, So how much longer do you have
until you hope to retire and what do you need
to shift in order to be prepared?
Speaker 5 (47:43):
Jill?
Speaker 4 (47:43):
Okay, So I did Wow, I know I want to
be retired today. Actually, actually I did try this. This
is a side note for your vulnerability around Jen. I
went to this wedding Mexico a few months ago where
I didn't really know many people at the wedding and
(48:06):
I did not feel like talking about myself.
Speaker 3 (48:12):
I know that you.
Speaker 4 (48:12):
Don't like this very much because you're like, do you
need to tell them about our podcast? And it's just
like not my m o. So I tried on for size,
just telling people I was retired. Oh my god, Like
when they asked me what do you do and I
literally said I was retired, there were zero follow up questions.
(48:33):
Attention went off of me onto other things. We were
able to talk about all the cool things they were doing.
Speaker 3 (48:39):
I love it.
Speaker 1 (48:41):
I actually I do hate telling people.
Speaker 5 (48:44):
I have a podcast.
Speaker 4 (48:47):
This is true, though, it just feels so complicated, and
I was tired and I didn't want to talk about it,
so I said I was retired.
Speaker 1 (48:57):
Nobody would believe me. If I said I was retired,
would think, oh, you're stay at home mom.
Speaker 5 (49:01):
Cool.
Speaker 4 (49:04):
We were in a group of people who, I think
all of them were relatively independently wealthy, so no one
really bad than I, and that, you know, that was
the benefit of being around a ton of wealthy people
is it doesn't really matter.
Speaker 3 (49:18):
You could kind of just be yourself.
Speaker 1 (49:20):
Anyhow, or be not yourself because you're not retired to it,
you'd be somebody different me.
Speaker 4 (49:26):
Apart from my work though, just me showing up with
nothing to prove. So I did write twenty two years
in all reality because I thought that, like fifty six
might be a decent retirement age.
Speaker 3 (49:41):
But I don't think that's a classic retirement.
Speaker 5 (49:44):
It's it's not.
Speaker 1 (49:46):
So The statistics actually are most people plan to retire
at sixty five, and the average retirement age is around
sixty two. And that's not by choice, not because people
get so wealthy they get surprised and retire early. But
a lot of people are forced out of the workplace
because of illness, physical disability, caretaking, a relative pushed out
(50:11):
just because of you know, their industry is going toward AI.
I don't know, but yeah, that's that's a lot of
the reason.
Speaker 4 (50:20):
Yeah, and I would want to plan more for that.
I would hate to be surprised like, oh no, I
really needed to hold out for another four years and
I can't. I'd rather be prepared for sooner whether yeah,
I mean hopefully by choice, but if I am forced sooner,
I want to prepare for that.
Speaker 3 (50:40):
So fifty six is my goal? No, all right, so
I got twenty eight years. If it is sixty two, wow, okay,
I don't want to work for that long.
Speaker 4 (50:52):
But but what this is telling me is I'm I'm
with that thirty five year old woman who emailed us
like I got I got to increase this thing.
Speaker 5 (51:01):
Why do you hate your job so much?
Speaker 4 (51:04):
I don't hate my job, that's not it. I'm just tired,
just and it's not this. This is actually what's very
life giving to me. It's my like decade and a
half working in social work that exhausted me, and I'm
still recovering. I think this is helping me to recover
because I do still have to work even though I'm
(51:25):
burn out.
Speaker 1 (51:29):
But she's a woman and the people.
Speaker 3 (51:31):
Yeah, it will, it will shift.
Speaker 4 (51:33):
I know that things will be restored to me and
my inner being. But at this moment, working for another
twenty eight years does sound exhausting. But I'm encouraged to know,
like we can find life giving work.
Speaker 3 (51:49):
We can do.
Speaker 4 (51:50):
Work that's entirely different, that exercises a different part of
who we are. That can like, we can work even
when burnt out. If it's in a different way area,
then maybe the field that burnt us out and we
may return to that field in the future.
Speaker 3 (52:06):
Yeah.
Speaker 5 (52:07):
Yeah, that's great perspective.
Speaker 3 (52:08):
Thanks. Yeah, okay, what about you?
Speaker 1 (52:11):
So, as I look at my retirement planner on Empower,
it's saying that I can comfortably retire at sixty and
that is my goal. My actual true goal is to
retire when my first child has my first grandchild.
Speaker 3 (52:29):
That is when I want to retire.
Speaker 4 (52:31):
Yeah.
Speaker 1 (52:31):
Nice, So I would like to be prepared by for that.
Speaker 2 (52:34):
Bye.
Speaker 1 (52:35):
So I had Kai at thirty, So if he has
a child at thirty, then that would put.
Speaker 5 (52:44):
Me at sixty.
Speaker 3 (52:45):
Nice.
Speaker 1 (52:45):
But he could have a child earlier.
Speaker 3 (52:47):
You have always predicted that.
Speaker 1 (52:49):
Yeah, so I though it may be Atlas at this
point he is a renegade, so it could be fifty five.
I don't know, but I would like to prepare somewhere
between fifty five and sixty. It really will be that
grand baby that determines it.
Speaker 4 (53:07):
Okay, and is there anything you need to shift to
be prepared?
Speaker 1 (53:12):
No, ePower says, I am in good shape. They forecast
I have a ninety four percent chance that my portfolio
will support my goals.
Speaker 4 (53:21):
Yeah, so you just stay the course. The amount of
money you're currently investing can stay the same.
Speaker 1 (53:29):
It changes, and well, it has decreased over the years.
The amount I have invested has decreased. We put We
went really hard in our twenties, Like we went super
hard before we had kids. There was a year, one
year we maxed out iras, two iras and one four
A one k, right, so we went super hard so
(53:52):
that we could ease.
Speaker 5 (53:53):
Off when we had kids.
Speaker 1 (53:55):
Well done, So I mean if you yeah, I mean
it's great. It has really worked out for us, and
we still do. We prioritize our iras over our kids
five twenty nights, so as you should yeah, I mean
we Yeah, we still in back.
Speaker 3 (54:14):
Gift to them that they won't have to care for
you financially.
Speaker 1 (54:17):
We even have let off the gas a little bit
more during this renovation and Travis's job shift, and you
know we're still in track. It does put that fifty five.
It has moved that fifty five to sixty, but we
can always catch up later because we have the foundation
we built.
Speaker 3 (54:36):
I love that. Well, Jen's crushing it. I've got work
to do. I thanks for listening.
Speaker 1 (54:43):
I put in the work when I had the capacity,
so that now when I do not have the capacity,
I don't feel so bad about it.
Speaker 3 (54:53):
Yep.
Speaker 1 (54:53):
And so maybe you're maybe you didn't and you feel bad,
but know that in the future there will be additional
hard times. Right, So maybe right now is a hard time,
so when you get out of it, you can go
hard and prepare for the next time when you're capacity. Yeah,
we ken swindled.
Speaker 4 (55:14):
Ever go back, but collecting information now and informing ourselves
now is still better than later. I mean, imagine not
getting this information until ten years from now. So do
what you can with what you've got. We're all on
different journeys, yep. Thanks for listening. Many of you know
(55:35):
that we do have a newsletter. It's called the friend Letter.
We talk about it all the time. It goes out
three times a week. We send out freebie savings tips,
life hacks to help you save money. And when you
email us back, when we send you an email and
then you email us back, we get it. This one
comes from Alex, who just said thank you for all
(55:57):
the valuable materials.
Speaker 3 (55:59):
God bless us the team richly. Thank you.
Speaker 5 (56:02):
Alex.
Speaker 3 (56:06):
I was like, wait, what.
Speaker 4 (56:08):
Is this last sentence saying that's amazing? What a lovely response.
Thanks for getting the friend Letter. If you're not getting
the friend Letter, you totally should.
Speaker 1 (56:19):
Frugal Friends podcast dot com.
Speaker 4 (56:22):
Thanks for listening everybody, Thanks for signing up for the
friend Letter. Thanks for being here. Go invest in your future.
Speaker 5 (56:29):
Go We love you.
Speaker 3 (56:31):
Bye.
Speaker 1 (56:33):
Frugal Friends is produced by Eric Sirianni Jill tell everyone
real quick about your.
Speaker 5 (56:51):
White glove service.
Speaker 1 (56:53):
Arilogies for that sound.
Speaker 4 (56:57):
Eric and I on a Friday night to this night
market where this produce stand was set up. It wasn't
a typical produce stand where you could just buy from them.
They were advertising their service. So they are a company
who buys fresh produce for local restaurants in Saint Pete,
(57:18):
and they end up with so much additional produce that
they've started a side business where they deliver their leftovers
to residences in Saint Pete. So you could sign up
for a weekly or bi weekly produce box from them.
So they go and they shop. There's apparently a farmer's
(57:41):
market somewhere in Tampa that operates seven days a week,
so they send people to go shop for the restaurants
every single day to this market, and then they're leftovers
they send out to people who want to buy the subscription.
So forty five dollars for one duffed box of an
(58:02):
incredible variety of fresh produce. I was like, I'm signing up.
I got a discount code to sign up for the
subscription and I signed up. They ended up delivering me
a box the day I signed up. I was expecting
to get it two weeks later, but that hour showed
up two hours later with a box to my door, delivered.
Speaker 3 (58:21):
From an electric vehicle. This is their whole thing.
Speaker 4 (58:24):
Like, the reason we can get it too cheap is
because we're already buying it for the restaurants we're delivering
it to local restaurants. We're already in the area. We
drive a car that doesn't cost us gas, and sure,
we'll get it to your door for forty five bucks.
So I get this box and I'm like, well, well,
we'll just see, we'll see if it's all it's cracked
up to be. Holy smokes, Jen, it was so much stuff.
(58:50):
It took up when I took it out of the box.
It took up my entire island. And I had to
price compare. I just had to. I couldn't move on
with my life. I couldn't do other work until I
did this.
Speaker 3 (59:01):
I love it.
Speaker 4 (59:02):
So I went onto Walmart, which is typically where I
kept my produce. Now it's where I shop and price compared. Now,
I don't know if all the things that I got
in the box are organic, but they're at least very fresh,
and most of it locally grown by local farmers. But
even compared to non organic things, So if I had
(59:24):
bought all those things from Walmart, it would have been
forty four dollars and two cents versus the box being
forty five dollars, although I had a discount code, so
it was actually thirty eight, So I definitely made out
on this one. But four of the things that I
got in the box were not available at Walmart. So
I was able to see what would Walmart charge for this,
but they didn't have it. Rude a baga, pineapple, poblano peppers, grapefruit,
(59:50):
I would not have even been able to get, but
I got it in this box. And so it was
a combination of citrus berries, squash, kale, root, vegetables, like
so many different things that is now gonna kind of
fuel the flame a bit for me. And what do
(01:00:11):
I even make this week? Because I do get in
a little bit of a rut even though I love
I'm learning to cook at home and repurpose ingredients. I've
now got all these ingredients I wouldn't typically have purchased,
and I'm finding new recipes.
Speaker 3 (01:00:23):
To try with my love.
Speaker 4 (01:00:24):
Those that was delivered to my door for forty five dollars.
And I'm so sorry for all of you listeners that
you all don't live in Saint Pete No.
Speaker 1 (01:00:33):
But so many places have these secret like co ops
that you don't know about. Yeah, and it's just the
co op goes to like a like a church or
a civic center. And usually you can like pick up
a box every week or every other week yours special
and that it was delivered to.
Speaker 3 (01:00:53):
You, delivered to me.
Speaker 1 (01:00:55):
But in these these are in a ton of cities. Yeah,
and it does even if it if it like gives
you the same price, right, you're not saving if you
can freeze stuff, if you can if meal planning is hard.
It gives you a guide on like what to look for.
(01:01:17):
So it definitely is for you know, a season, no
pun intended trying one of these out.
Speaker 4 (01:01:24):
I like the variety of Yeah, it's not going to
necessarily work for every person, but for me, it's exciting.
And I was even reading their reviews on their website
and a couple of people said, like me and my
kids get excited to see what's in the box. And
then she was describing how she found buy in with
her kids in trying new things and making new dishes
because they were kind of along the journey like what
(01:01:45):
did we get this week? So that's also kind of
an a bonus point for getting your kids to eat
vegetables and try new things.
Speaker 3 (01:01:54):
If it feels like this fun.
Speaker 1 (01:01:56):
Surprise, Yes, highly highly recommend.
Speaker 3 (01:02:00):
Cool. That's my white glove service, love it
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