What 1 Popular Retirement Rule Says You Should Have Saved by Age 67
Key PointsThe average net worth of a 65 to 74-year-old is roughly $1.8 million, but the median is just $410,000.
Saving for retirement is a challenging endeavor. Humans struggle with delaying gratification and saving requires sacrifice of present spending for potential future gains. However, setting a retirement goal can be difficult due to the subjective nature of financial comparisons with others.
One widely accepted guideline suggests that by the age of 67, individuals should have saved a specific amount. This rule proposes that you should have a net worth equivalent to your age in multiples of your annual salary. For instance, if your annual income is $100,000, you should aim to have $100,000 for every year of your working life saved by age 67.
While this rule provides a starting point, it has its limitations. Comparing oneself to the average 65 to 74-year-old, whose net worth stands at nearly $1.8 million, can lead to unrealistic expectations. Such a figure amalgamates the ultra-wealthy with those of lesser financial standing. The median net worth, which accurately represents the typical individual, is around $410,000. This is considerably lower than the suggested target and reflects the income and wealth disparity among older adults.
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