You’ve got the house and the white picket fence and the family and the job … but you cannot help the nagging suspicion that you are still not really on target for the life that you dream of. True, you are doing okay now, but are you really on track for the life you want in 20 years or 30? Will you be able to retire when you want? Will you be able to retire at all?
If you are nervous about retirement, you are not the only one. One in three Americans has nothing saved for retirement, which puts us on the brink of a looming crisis. This problem is particularly prevalent among Millennials.
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You may be wondering where you stand with respect to others your age—as well as those who are younger and older than you.
Compare Your Net Worth
So what is the average net worth by age? Well, click on the link and you will see it is pretty low. While the graph is pretty easy to understand, you might be a little confused by how the data is presented. Basically, if your income fits within a certain percentile for your age group, that means you are doing better than that percentage of your age group.
So for example, if you are in the age group 35-44 and you have around $35,000, you are in the 50th percentile, and you also are doing better than 50% of your peers. Consider that is the figure for net worth. That includes not just savings and investments, but housing, vehicles, and everything else. It is also a household figure, not an individual figure. Individual savings are of course even lower.
If you look at the numbers for older generations, you will see that nobody is doing that great. Most Americans are way behind on the savings they need to retire comfortably.
So that raises the next question: How much do you need to set aside each year to actually meet your retirement goals? How much should you contribute to your 401(k)? Well, that totally depends on your lifestyle. Some people need a lot more money to retire than others, so you will have to do the math yourself.
But ultimately, the rule is pretty simple: you need to be contributing as much as you possibly can. With lower wagers and higher living expenses (not to mention poor job security), it has become very challenging to “make it” in today’s world. The deck is stacked against you, so you need to be on top of things and pushing as hard as you can to save up money and earn on your investments.
So are you behind on your retirement savings? Probably. If you are one of the few who are actually on track or ahead of the game, count yourself as very lucky. If you are behind, try not to get too down on yourself; your situation is typical, and contrary to popular belief, you do not control every aspect of your destiny. A lot of us will suffer low wages and lost employment through no fault of our own.
Stay focused on what you can actually do to save money, and remember that millions are in the same boat you are. If you are earning even a middle income, chances are good you are already way ahead of most of your peers.