BusinessWeek’s April 19, 2010 edition cover story is titled “THE HOT HAND OBAMANOMICS IS WORKING BETTER THAN YOU THINK.” Newsweek’s April 19, 2010 edition cover story is titled “AMERICA’S BACK! THE REMARKABLE TALE OF OUR ECONOMIC TURNAROUND.”
From the Investment Company Institute web site: The average 401(k) account balance moved up and down with stock market performance, but over the entire five-year time period increased at an average annual growth rate of 7.2 percent, attaining $86,513 at year-end 2008.
Another blog titled Bargaineering provides this data from the Employee Benefit Research Institute’s latest report on Individual Account Retirement Plans by age group (August 2009):
- < 35: $6,306
- 35 – 44: $22,460
- 45 – 54: $43,797
- 55 – 64: $69,127
- 65 – 75: $56,212
- 75+: (sample size insufficient)
Some words of warning after you read this:
- Remember that this data is just data, you can’t draw any conclusions of what’s right or wrong from the statistics alone.
If you’re “below average,” you shouldn’t feel bad about it. Age is not a good indicator of where you are in your life. Some people get a later start and others have a more inflated lifestyle, how much you’ve saved by when should only give you a bar to reach.
If you’re “above average,” you shouldn’t rest on your laurels and think you’re doing great. Much like the words I wrote for those who are below, being above doesn’t mean you’ll have enough for retirement. You have a few years until retirement, a lot can happen then, so keep at it.
Average doesn’t mean someone in their 20s that has more than $6,306 is set in retirement (or that someone with less is screwed). It’s estimated that you should spend about 4% of your nest egg each year. At 4%, your nest egg should last long enough. How does that 4% figure translate to your estimated yearly expenses? Divide how much you think you’ll spend by 0.04 and you have your target (based on that rule of thumb) – $50,000 a year requires a nest egg of $1.25M.
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