Are you on track?

I was reading a somewhat current issue of Money Magazine and found a great (or discouraging depending on your point-of-view) table showing how much you should have saved for retirement given your current age.

I'm going to attempt to re-create it here:

Age Income Multiplied by... = Amt You Should Have By Now

30 $_____________ X 2 = $________________________

45 $_____________ X 4.1 = $________________________

50 $_____________ X 6.1 = $________________________

55 $_____________ X 8.5 = $________________________

60 $_____________ X 11.4 = $________________________


Here's an example:
If you are 30, and make $45,000, you should have saved $90,000 by now. Assuming you started saving at age 22, that breaks down into roughly $11,250 per year (or $937.50 per month). Sound high and un-reachable? Most people have a couple of things going for them: an employer match and returns on the funds/investments they are invested in.

So how are you doing?

You should be investing now for several reasons: you can avoid paying taxes (if you contribute on a pre-tax basis) which means fewer of your hard-earned dollars will be supporting a federal budget you may not agree with; the market is at super low prices (how often have you heard someone say, "I wish I bought xyz stock back in the 80's"? The market is priced quite attractively now. Will it go lower? Sure, it could, but that means even better prices - who doesn't love a good sale?)

How am I doing?

Well, I just ran the calculations using my age and salary info and I'm not even close...AND I'm contributing $2,357 every month!!

Glad I replicated this chart here...now I can throw away the magazine. :)