Saving for retirement is hard. For starters, humans aren't very good at delaying gratification. And saving is basically choosing not to spend today so you can spend, hopefully even more, in the future. But there's another problem with saving for retirement: it is hard to set a goal. There's one popular retirement rule that can help with that. Here it is.
When you think about money, the gut reaction is to compare yourself to other people. That's understandable, but it can lead you into troubling waters. For example, the average 65 to 74-year-old has a net worth of nearly $1.8 million. So, you could argue that by 67 you should have that much money saved up. But that figure mashes together the very rich with people who aren't as fortunate. The median net worth, with half of all people above and half below, is roughly $410,000, which is a lot lower. Which one is the better target?
Missed AI's "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our ***** ysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
That doesn't even consider the fact that net worth includes ***** ets like a home, which isn't something you can easily tap for cash. Sure, you could sell your home and move into a small residence, but you still need to live somewhere. And you aren't average or median. You are you, and your earnings and savings numbers are unique.
That's where a simple savings rule comes in, based on your salary. Essentially, you are creating a personalized saving goal for retirement. To cut to the end of the story, the rule is that you should have 10x your salary saved by age 67. But that's just the final step in the process, because the rule provides benchmarks all along the way to keep you on track.
#spend
When you think about money, the gut reaction is to compare yourself to other people. That's understandable, but it can lead you into troubling waters. For example, the average 65 to 74-year-old has a net worth of nearly $1.8 million. So, you could argue that by 67 you should have that much money saved up. But that figure mashes together the very rich with people who aren't as fortunate. The median net worth, with half of all people above and half below, is roughly $410,000, which is a lot lower. Which one is the better target?
Missed AI's "Act 1"? Act 2 Could Be 15x Bigger. Most investors think they missed the AI boat because they didn't buy Nvidia in 2005. But according to our ***** ysts, we're only at the end of "Act 1"—the R&D phase. "Act 2" is the global rollout. Continue »
That doesn't even consider the fact that net worth includes ***** ets like a home, which isn't something you can easily tap for cash. Sure, you could sell your home and move into a small residence, but you still need to live somewhere. And you aren't average or median. You are you, and your earnings and savings numbers are unique.
That's where a simple savings rule comes in, based on your salary. Essentially, you are creating a personalized saving goal for retirement. To cut to the end of the story, the rule is that you should have 10x your salary saved by age 67. But that's just the final step in the process, because the rule provides benchmarks all along the way to keep you on track.
#spend
2 months ago
