Early Retirement Extreme Forums

Source: https://www.federalreserve.gov/econres/scfindex.htm

Better than I would have anticipated. Average home equity is $275K so a portion of these old fucks have $700K NW.

In the US, Bill Gates walked into a bar and instantly made the average person a billionaire. The respective medians are about four times lower.

Correlate with U.S. personal savings rate, currently hovering at around 5% (with an interesting unintentional bump during COVID-19).

And annual emergency savings per income brackets (plus, 57% can't afford a $1,000 emergency expense).

https://www.fidelity.com/viewpoints/ret ... -to-retire

Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.
Factors that will impact your personal savings goal include the age you plan to retire and the lifestyle you hope to have in retirement.
If you're behind, don't fret. There are ways to catch up. The key is to take action.

Another fun fact, thanks to a very generous 7% match, and very strong participation, and a cool system in place to bump up your withholdings to at least 15% by 1% each year when you receive your annual review/raise, the average Fidelity Investments employee has roughly twice as much saved up than the market average cohort by their respective age group.

PhoneticNachos wrote: ↑

Mon Nov 27, 2023 2:52 pm

Fidelity's guideline: Aim to save at least 1x your salary by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.

I was chatting with friend about retirement and not being in a hurry to find a job. They dropped that they are having a hard time getting motivated to find something, as they have saved "what they are supposed to by the time they are 67". I of course went to "holy shit, so your investments cover your expenses right now!?!". They pulled up a graphic referencing the above. I forget that early retirement calculations are different than mainstream recommendations. Compared to saving 10x your salary and leaning on social security, even a 4% SWR seems conservative. The real crazy thing is that even the former is aspirational for many retirees. Have I said thank you for writing ERE, @jacob? If not, there it is.

Since we often think or speak in savings rates, if we ignore investment returns for simplification (we can say they offset salary increases), the above essentially recommends saving 10% your first decade of working, 30% the next two decades, 20% for the fourth, and back up to about 30% for the last 7 years.

I think the disparity between the good savers vs the average american is probably even larger than we can quantify from a data point like this. Yes, the large savers are skewing the results, but I find the average person that I know has significantly more money in depreciating assets versus real estate or 401k. Even when my NW and income was much lower I still only had a very small % of it tied up in depreciating assets (cars, boats, motorcycles, etc). Most of those also purchased houses much later than I did as well. In addition to that they also didn't get married until much later as well. Having a spouse on the same page as you in terms of savings/spending really boosts your ability to increase your NW/retirement.

grundomatic wrote: ↑

Tue Nov 28, 2023 10:22 am

... I forget that early retirement calculations are different than mainstream recommendations. Compared to saving 10x your salary and leaning on social security, even a 4% SWR seems conservative. The real crazy thing is that even the former is aspirational for many retirees. Have I said thank you for writing ERE, @jacob? If not, there it is.

Since we often think or speak in savings rates, if we ignore investment returns for simplification (we can say they offset salary increases), the above essentially recommends saving 10% your first decade of working, 30% the next two decades, 20% for the fourth, and back up to about 30% for the last 7 years.

lol yeah, that is more of the standard response, the FIRE community is a step above or two or three compared to most people. We can't really talk to people like that.

When I tell friends that I have deeper discussions with about investing stuff to motivate us more, and how I try to save 35-50% of my take home pay each month they look at me like I am some kind of financial wizard. But it leads to many fruitful talks.

It would be hilarious if they would see my investment accounts and how I have grown my holdings including contributions/returns this year by 233% their heads would explode.

Peter Lynch famously held at one point over 1,500 stocks in the Magellan fund:

...Lynch says he owned “at least 1,500” stocks in the Magellan fund. The fund was so huge, he was basically limited to playing industry bets...

And I am well on my way in my Roth now at almost 150 holdings. But about 50 of those are "placeholder" tickers, with values under $5. Those are in the account to look for time/reaction based arbitrage opportunities.

Also, I do weekly screens on Fidelity and FinViz and Koyfin to look for new ideas.

It is an easy habit to build over time if you just START, like working out. Like the old saying goes, even walking you are running circles around the slobs sitting on the couch.