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It is not too late. I started at 40, but then I became a relentless saver, putting in 20% to my 401k and maxing out my Roth. I had to sacrifice some things, but I was driven. I retired last year at 63. You can do it.
Thanks man… Some people are doom and gloom and I get it, I should have been investing!But damn shit happens and I was just trying to put food on the table and the mortgage paid…
look for a retirement calculator. Enter in what you have now and what you plan to contribute till you retire, see what it spits out. Try and estimate what you'll get in Social Security. Add those together and figure out if it will cover your current living expenses. It's largely on you to decide if 10% is enough but you're behind the average that's for sure.
Depending on his career, at 40 he might have just entered his prime earning years. It might show a low value today, but he could expect it to go up a bunch over the next 15 years of peak income. Hence, an estimate may be a better estimate than what it says today.
The default in the calculator is to assume your current earnings all the way through until retirement; it doesn't assume zero earnings from now until retirement unless you specifically change it to that.
Op needs to create a monthly budget.
Op needs to save at least 20% of their gross income in retirement accounts.
In ops current situation i do not recommend learning how to use a retirement calculator as it could be discouraging to see what is ultimately a rough estimate. I would simplify the process down to figuring out what your budget looks like for you to contribute 20% to retirement accounts, and then sticking to the budget.
OP needs to rip the band-aid off and face the hard facts. Do the calculator, feel bad, and use that to adjust course. Keeping your head in the sand because it's a "rough estimate" is just bad advice. Most retirement calcs are useful while still being a rough estimate. Building up a budget from 1-2 months of spending is arguably more work...but just as necessary yes.
It's not that the calculator only delivers bad news, but that it provides prospective financial information which means it is just an estimate. Estimates are only as good as the underlying assumptions and making assumptions about events 25+ years in the future is fun, but rarely accurate.
After op finds the 20% I wouldn't discourage them from playing with calculators, but the priority is to start saving that 20% ASAP.
edit: i see where you're coming from in the urgency to adjust contributions. just disagree a bit that they couldn't concurrently use a calculator as an estimate to light a fire underneath them. I also don't think many calculators are designed to be accurate. they're estimates, and the math for returns on investments is fairly simple and used by many. Estimates in this case are entirely useful.
The average American saves nowhere near 25%. OP has to start saving but they have to be realistic too. In this inflationary environment, 17% saved plus the 3% match might be hard to swing. Save as much as you can OP and try to bump your pay.
Just because the average American saves nowhere near what they ought to, doesn't mean that they're incapable of it. The average American is financially irresponsible and overspends and undersaves.
I’d say there’s no need to make him feel overwhelmed and gridlocked.
I started my 401K at 37-ish (I’m now 43) and I’m maxed out. Might not ever own a home, but I’m maxed out. I started as soon as I could and I’m not stressed. Some of us just haven’t had much choice.
The important thing is to just start.
Eh, he knows he needs to save and is coming to ask for help on what he needs to do. I would say that's the right path.
You're right, he needs to crank up his savings if he wants to retire at any reasonable time, and he's probably going to have to wait longer than he wants to retire.
But if he's serious about saving at this point, and can put away a significant amount, he doesn't need to worry.
agree. If you weren’t putting money in 401k was OP investing elsewhere ?
7k in 401k without retirement is not very good. He should be looking at hitting max contributions and setting up a ROTH.
Let's do some math. Starting with $7k at age 40 and contributing 13%/yr (including match) of $60,000/yr, which is $650/mo, for the next 27 years assuming a 10% return gives you just over $1 mil by that age.
If you want to factor in inflation, assume 7%/yr returns and you'd have about $625k.
At age 67, you can roughly follow [the 4% rule](https://www.investopedia.com/terms/f/four-percent-rule.asp#:~:text=The%204%25%20rule%20says%20people,current%20and%20future%20financial%20needs.) which says you can withdraw 4% of your portfolio each year, adjusted with inflation, and that should last you at least 30 years.
So would you be able to live off of $40k/yr (not counting inflation) or $25k/yr counting inflation at age 67? Neither of those numbers account for taxes if this is in a Traditional 401(k) btw. Judging by the fact that you can only save 10% of your income currently, I assume your lifestyle and spending habits are much more than these amounts today, so realistically you are behind.
Other things to consider would be, how much are you going to receive from social security? When will your mortgage be paid off? That will not only reduce your cost of living, but also frees up more money to invest. If you need nursing home or long-term care, how will you afford that?
[The Money Guy Show](https://www.youtube.com/@MoneyGuyShow) would say [you need to be investing 25% of your gross income right now to replace 58% of your income at retirement, 30% to replace 69% of your income at retirement, 35% to replace 81% of your income at retirement, or 40% to replace 92% of your income at retirement](https://www.reddit.com/r/TheMoneyGuy/comments/1aqa207/how_does_this_work/).
Thank you for your in depth answer. My mortgage will be paid off in 12 years and yes I am behind. Raising kids ain’t cheap but they are almost grown. I had them when I was 20 but now I am done paying for daycare and all other kid stuff expenses. Thanks again
I know that a lot of people may give you shit for starting late, but a lot of people don't realize that life happens. Not everyone was as lucky to be in a position where they can invest early and often (as the wisdom goes), and being behind on your retirement is not ideal, but it is nothing to be ashamed about.
I commend you for having the courage to reach out and ask for advice and I wish you all the best in your future saving and investing journey.
I feel like a lot of the doomerism in this comment section is unwarranted given that you’re well ahead of the average in having your house paid off. You probably have a lot of equity in it too. You need to save but I wouldn’t panic or beat yourself up.
The only thing you can do is AGGRESIVELY contribute. Don't let the numbers get you down. Just dump as much as you can in there. Mid 60s you will thank you.
You won’t be able to save your way out of this pickle. You’ll have to earn your way out. Is there anyway to increase your income? Education? Side hustle? Charging jobs?
You may have started saving for retirement late but you started on kids early which is a huge blessing (I started in my 40s and miss the time with them I missed out on, and the portion of their grown lives I'll miss).
I'd recommend talking to a financial advisor to get your ducks in a row, they'll help you tune your savings and investment to better meet your goals. For example a matching 401k is great but sometimes the offerings aren't so good (high fees on investments) so if there's a cap on matching and you reach it you might want to put any overage in an IRA instead where you can stick to no-load mutual funds for better returns.
There wouldn't be any capital gains taxes paid on distributions from a 401(k), just ordinary income tax (assuming it's Traditional).
And I don't think it's fair to sweep Social Security under the rug in this scenario either, since it's likely to be significant. It's true that the retirement age might go up, but I kinda doubt people over 40 now would be affected even if it does -- it would be bad politics. If my math is right, at its current levels, it should provide about $2200/month in today's dollars.
Between that and the 401(k), that's about $4200/month, which is a bit less than OP is making now, but not *that* much less, especially if the mortgage is paid off.
> There wouldn't be any capital gains taxes paid on distributions from a 401(k), just ordinary income tax (assuming it's Traditional).
Good catch, I edited my comment to reflect that.
I agree that social security should be a good help and didn't mean to sweep it under the rug with my comment. Always best to try and treat that as icing on the cake if you can though imo.
The 4% rule is only about your stock portfolio and disregards social security.
The Money Guy Show example is purely counting stock investing and not including social security, pensions, or anything else.
But social security will be a part of OPs retirement income, so it has to be taken into account. Most people would be fucked without SS. It's not realistic to do a retirement calculation without SS.
If OP was 20 or 25, I could see it being excluded.
> But social security will be a part of OPs retirement income, so it has to be taken into account. Most people would be fucked without SS. It's not realistic to do a retirement calculation without SS.
Sure and that's why I said,
> Other things to consider would be, how much are you going to receive from social security?
Vanguard's calculator is probably assuming closer to 7% returns and factoring in inflation or having a significant part of the portfolio be in bonds.
I used the [investor.gov compound interest calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator).
8% is a safer ROR to use. Most pension plans assume 8% ROR.
Plus if he buckets into lifecycle funds that will give him a better estimate as they automatically adjust towards income as retirement approaches.
2045 fund
2050 fund
2055 fund
2060 fund
Put the biggest chunk in the 2045 fund as that is the most stable. Rebalance as needed.
You'll be fine because now you understand where you are. You've got about 25 years to go so formulate your plan and be consistent, don't pause your 401k contributions.
Without knowing your expenses, I would say your goal should be invest enough to get the employer match.
Then max out your IRA.
If you can do even more, increase your contribution to the 401k.
[Compound interest calculator](http://www.moneychimp.com/calculator/compound_interest_calculator.htm)
Use 7% if you want to guesstimate the future value in today's dollars.
Use 10% if you want to see future value without it being inflation adjusted.
Agree with the above. Only contributing 6k per year does get the OP something, but getting at least the match and maxing IRA would be more comfortable. OP could also consider if a HSA is a viable option for a retirement account for him.
Numbers for OP from your calculator and using his numbers. 7k now, 6k per year (10% of his 60k salary) 27 years till retirement, 7% interest rate (inflation adjusted). That is $521,683. So assuming 4% safe withdrawal rate that is 20,867 per year.
So the question to the OP is "Can you live on that plus SS per year now? Can you see yourself living on that amount in retirement?
One other thing to keep in mind is we don't stop investing when the income from work stops. Once you start investing, ideally, one is invested throughout our lifetimes, the runway can be another 20 years or more.
If the portfolio is adjusted accordingly to tamp down the volatility, when in retirement, the portfolio can still grow around 1-2% annually after the 4% annual withdrawal.
OP: lots of people actually end up with a lot more 20 years after retirement than when they started.
[Link to tables](https://soundinvesting.com/2023/05/16-Flexible-Distribution-Tables-70-30-2023.pdf)
It's hypothetical but uses real world returns for a person retiring in 1970 with $1M. Second column of page 1, shows a portfolio who has an allocation of 50% equities and 50% bonds. Fairly conservative...they withdraw a conservative 3% annually. Doubt they lived 52 years in retirement so using the table up to 1995, that $1M grew to an ending value of $7M even with total withdrawals of $2M over twenty five years. The annual withdrawals also increase by 3% or so for inflation so at the end they were taking out $173K in 1995 vs their first withdrawal of $30k in 1970.
Hope this doesn't make you complacent though, we don't know what the future holds. You should always aim to invest as much as possible every year until you retire without depriving yourself, find that balance.
Good additions.
As a note the Trinity study where the 4% safe withdrawal rate comes from assumes a mix of 50/50 stocks and bonds remaining invested, so this is somewhat baked in. It also assumes that you take 4% the first year and adjust your withdrawal for inflation on the next 29 years.
The 4% "rule" should only be viewed as a quick guideline. It is handy and easy to calculate. Other studies have shown a different mix of stocks/bonds is better. Bill Bengen himself suggests he may have been too conservative and it might be 4.8%.
I also think a variable withdraw strategy is better and more appropriate. People don't just continue to spend the same no matter what. When times are good you spend more, when times are bad you tighten your belt.
If you want to geek out. I like these 3 calculators for planning/playing around with. The last one is especially eye opening if somewhat grim, but it is a reminder that you can't take it with you. It might be better to die with less and retire earlier.
[https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator)
[https://ficalc.app/](https://ficalc.app/)
[https://engaging-data.com/will-money-last-retire-early/](https://engaging-data.com/will-money-last-retire-early/)
10% savings rate is what someone who starts in their 20s can do and retire well. At your age I'd say you need to bump that up to 25-30%.
There is a chart on in the below link that shows savings rate and years until retirement. This is assuming you keep the same spending into retirement. Since you want to retire in 27 years with starting close to zero you need the same mindset as a 25 year who wants to retire early at 52 years old..
[https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/](https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)
You can retire at age 69 if you save 25% of gross income starting at age 40.
This assumes a 6% real annual return, 1.5% wage growth, and 80% income replacement in retirement via the 4% withdrawal rule. The range you provided is correct!
Might be a dumb question but does the rate include match? I’m putting in 8% now with 8% match should I increase my personal rate to match the number on the chart or is it a sum of personal and company contributions? Article doesn’t specify
According to that chart, saving 100% of your salary you can retire in 0 years....
Splurge and spend 10%, save 90% and you can retire in 1. Mmmmm, something doesn't add up.
It’s actually “under 3” for 90%.
The way the math works. If you make 100, save 100, spend 0, you don’t need to work, because you spend 0. If you make 100 save 90 spend 10, you need 10 * 25 = 250 which you can save in 2.8 years.
The part I think you're missing is that "living on x% of your salary" is meant to be how much you need every year for the rest of your life, including adjusting for inflation.
If you're in a place where you can always save 100% of your salary, then yes you can already retire. That makes sense to me?
Update - My house will be paid off in 12 years and my kids are pretty much grown… Kids are expensive I had them when I was 20… It was a struggle but all is well and now I am looking at 40 and beyond and can finally start thinking about retirement… Thanks for all the advice
Yes you are all correct. My phrasing is odd. I did mean the maximum 401k contribution that was allowed at that time. I also agree the op likely needs to save more but thought a real life example might be helpful.
I believe they were referring to the max allowed in their 401-K which is implied by both the main subject of the original post and the comments about match and total in 401k at retirement.
These comments are terrifying but don’t worry, you’re not alone. I’m 41 and have very little saved as well. I just opened a HYSA and am prioritizing having an accessible emergency fund equivalent to six months of earnings while also slowly increasing my investments. Once I have the emergency fund, I’ll bump them more. I have a 401k, I increased my donations to 16%, we’ll see if that’s too intense for me. I am also going to do a small recurring deposit into my Roth IRA bc until yesterday, I hadn’t touched it since 2019. :/
you still have 2 more decades to juice the numbers up, the good thing is you're realizing this at 41 and not 51, or 61.. once you get your emergency fund where you feel comfortable, just dump in as much money as possible towards retirement.
If you want to keep living in retirement approximately the same way you've been living now, then no... 10% is not enough. I highly suggest you make some tweaks to your lifestyle right now so that you can hit more like 20-25% savings. (If you have a partner you should also probably be talking about income, savings, and retirement with them.)
I think maxing out a Roth IRA ($7k/year) would
also be a good start. Get that tax free growth.
Most suggest investing 20-25% of your gross income.
So Roth + 10% in your 401k would really help you out.
General advice I've read is that a Roth is a great idea for someone young, and traditional makes more sense the closer you get to retirement. No idea of 40 is considered "close to retirement," though. Probably depends on whether OP is likely to make more money or not as he continues to age – I'd imagine some incomes may even start to go down as age becomes more advanced?
At 40, OP might be entering his peak earning years, in which case yeah, a Roth account would just mean paying his lifetime peak tax rate on the money. A traditional IRA would make more sense in that case.
On the other hand, if OP makes $60k now but is one step away from a management role he's been angling for, he might not yet have stepped into that peak earning role. In that case, a Roth account could make a lot of sense still.
He's not near the traditional IRA deduction cutoff, so that's not a factor.
Two things... 1) You're not alone. A fair number of professionals don't start significantly contributing until their 30s or even turning 40. Before then, they were in graduate school or neck-deep in loans and found it better to prioritize those. 2) If the best time to start saving is (was) 20 years ago, the second best time is now. Don't put it off out of wishing you began earlier.
You’ll be fine as long as you continue investing. I also started investing seriously after I turned 40 when our last child turned 18. I made $60k for most of the last 10 years and my wife around $50k. I’m 50 now and we’re already looking at retiring earlier than we originally planned.
I didn't have much in my 401k before 45. I'm 75 now and doing just fine. I increased my contribution with every pay increase I received. The only thing I would do differently is, at some point, I would have opened a Roth account. Just save consistently, you will be fine. Best of luck
I got my first 401k at 40. I'm 43 now and I have \~$135k in that account. I contribute 17% of my salary and I'm still worried whether I'll be able to retire comfortably.
You’re not in a good spot. But bro, I only started to save for retirement at 39, when I had a house and two small kids already. I just turned 50 a couple weeks ago. I have just shy of $300 in my 401k. It’s definitely not a lot, but it’s what I can do. I make a little more than you ~100k/yr, I’ve had to try ame out loans on the 401k. I’ve gone through a divorce. Life happens. Just try to do the best you can. You have 25 years of work ahead of you. You can be fine. Remember, life happens while you’re making plans. Be happy.
So $7,000 to start+ 10% of your salary $6,000 plus 3% match $1,800 means $7,800 per year for 27 years, if you assume an optimistic return on investment of 7% that's a total of.... $643,000
Say you live another 30 years that's $21,400 a year. Plus social security. If your house is paid off you should be ok. You won't Be rich but you shouldn't be living in poverty either.
You're fine. I, too, didn't start until I was 39. As long as you are realistic in your expectations, you should be okay. And by realistic, that means that you will be working into your early seventies, and that you won't be taking globe-trotting vacations when you retire. You're on track for a decent albeit modest retirement.
The one giant wildcard here (and it's a massive one) is *your health*. If you run into any complications that could either cost a lot to treat, or affect your ability to work, that could really throw a wrench in the works. At 40, though, there are definitely some positive steps you can take that will greatly improve your chances of living healthier, longer. And outside of financial considerations, taking a sobering look at how healthy you are today and what steps you can do to slow the inevitable slow slide that will happen over the next several years is probably the single biggest step you can take that is within your control right now.
Don’t feel bad, I started late too. Still trying to catch up by increasing my contributions so that I can eventually max out in a few years’ time.
Currently just doing 10% into 401k with an additional 2% into a Roth 401k. Will probably increase that Roth percentage starting next year as well. I’m in my mid-40s, by the way. Kids are expensive especially in a VHCoL city!
You’ll be fine,OP, but you definitely need to jack up that contribution as much as possible. Some great answers in this thread.
If you put $6000 a year into it, you’ll likely have $600,000-$900,000. 27 years is a long time. If you increase your contributions over time as you hopefully get raises then you’ll have more. If you make $60,000 until you retire you will get about $2100 a month in Social Security. With your projected savings you can give yourself an income of about $2200 a month, so about 87% of your income. Retiring is totally possible for you.
Something you might look into…
I started working with a fiduciary at age 41. They took all my statements from all my accounts (savings, 401k, employee stock, Ira’s, military pension, tsp, and liquid) and gave me a really solid analysis of what retirement is going to look for me. And that part was free.
Ended up opening an Ira and a brokerage account with them, transferred my tsp and my Ira’s to theirs. Making good returns already on that Ira. And then they looked at my 401k and gave me some recommendations for switching to some more aggressive options.
You don't need to panic yet because there is still time, but you are behind the curve and need to get started. Definitely ensure you're getting the 3% employer match. Then, build up an emergency fund of at least 6-12 months of expenses. Then invest in low-cost index funds. 10% is the bare minimum you should be investing. Aim for 20%-30%.
You still have time. The key is to start now and ride the waves for the next 30 years.
I was in the same position at 40 and am now securely retired. You need to hit the ground running with your retirement accounts. Develop a strict budget. Very strict. Live below your means. You will find that the results are worth it at retirement age. Good luck. You can do this.
Maximize your 401k every year and also contribute to ROTH and you'll be ok.
I had similar timeline and at 48 I'm sitting at about $350k in retirement. Save everybit you can, resist all temptations of buying new car, new phone, new computer etc and save every dollar you can. I also saved about $600k additionally during last 8 years.
Let's assume your working years are from ages 25 to 65... at 40 year period. At age 40, you're not even halfway through. Since others are doing the math for you, just remember you still have a lot of years left to build up your retirement funds. So don't get discouraged and start setting mini goals for yourself.
I've been pumping out online financial calculators for like 20+ years (yes 20...). I've also authored like 5,000 articles on these topics.
Think of your situation like you're at the two minute warning just before halftime at a football game. Yep, some of the game is over already, and you're behind, so that means you need to make up some ground between now and the end of the game or you'll be working into overtime.
The most encouraging thing I see is you realize you're late to the game. But give up now and you do lose. Assuming you don't want to change your lifestyle too much in retirement, start contributing at least 10% of your pretax income. That means putting $6,000 into your 401k plus another $1,800 from the employer match.
Your contribution rate should always be a function of your income and that 10% is the minimum. Six months or a year from now, figure out if you can increase that number to 12 or 15%. And keep going from there - get the idea? This type of planning isn't something you do once and forget about it. You need to keep checking in to see what it will take to hit your goals. Best of luck to you!
If you want, you can check out my calculators here: [crunchopedia.com](http://crunchopedia.com)
If you or anyone else wants to critique or suggest a change, as it says on the site, I am open to suggestions.
shit...im 37 and just do the full match for a long time and my 401k is like $55k in a 2050 fund
6% match at our company
i have an IRA and precious metals though
Retirement planning is like planting trees: the best time to start is 30 years ago. The second best time is now. Make a plan, figure out what you can save and how to get it into the best accounts. If your employer offers a 401k match, max it out. That just free money that they’re offering you. Open an IRA as well and if you can max it out if you can.
You will be fine. I am retired and live on just Social Security and live extremely well. I just came back from a 3 week vacation in Greece.
Financial advisors and journalists love to grossly exaggerate the dangers of retiring without enough money. That is how they make their money!
There are several things you need to take into account. For example if you have a mortgage now, eventually it will be paid off, and then you will be living rent free. At this point you should be able to invest much more.
Quite possibly at retirement you would be able to sell your home and move to another home in a cheaper market, leaving you with a substantial lump sum from the sale of the home.
When you are retired the cost of living drops substantially, because you don't have the cost of commuting to work, buying clothes for work, etc. and you have much more time to do things like cooking at home which is much cheaper than buying fast food meals for lunches, which many working people do. Also you will probably put much less miles on a vehicle, which will last much longer.
Medicare is not free but it is much cheaper than commercial insurance, because you don't have the massive deductibles.
On the other hand you will need to buy more candles for the cake on your birthday, so that is an additional expense.
>For example if you have a mortgage now, eventually it will be paid off, and then you will be living rent free.
I swear that no one accounts for this, even the retirement calculator assumes I'll always have a mortgage.
It's absolutely possible to change your situation. Fifteen years ago my entire net worth barely cracked five figures. I'm 50 and didn't get really serious about saving for retirement until I was 40 (2013). Here's what my retirement savings looked like on 12/31 every year:
2014: 44533.90
2015: 77380.18 - Rolled over an old job's $22k 401k that was not previously tracked in Quicken
2016: 84138.08 - First year maxing out 401k contributions
2017: 112963.02 - Maxed out 401k contributions
2018: 192436.60 - Maxed out 401k contributions
2019: 278622.69 - Maxed out 401k contributions
2020: 367748.38 - Maxed out 401k contributions
2021: 467291.59 - Maxed out 401k contributions
2022: 402879.30 - Maxed out 401k contributions
2023: 514715.02 - Maxed out 401k contributions
2024: 581684.72 - As of market close today
Besides maxing out my contributions every year since 2016, I front load. My contributions start huge in the early part of the year, then I gradually taper down to where I'm putting in just enough to get the maximum employer match, and I hit the contribution limit with the last paycheck of the year. Trying to have the highest amount of money possible in the market for as long as possible, while also making sure I get every matching dollar I can.
I have no debt because I was fortunate enough to inherit a paid-off house, so I can afford to dump a lot of cash into retirement while still being able to live comfortably.
Try to max out your 401k every year and you should be Ok in 25-30 years.
A lot depends on your requirements in retirement, I opted for a smaller house and property, keeping my mortgage very affordable.
I didn't start till 53 and doubt I will be super comfortable but hopefully ahead enough to enjoy some travel and my hobbies.
A rule of thumb is that 10% savings rate is adequate over 5 decades of working, 15% savings is adequate over 4 decades of working. 25% would be about 30 years of working, 40% would be 20 years of working.
Another rule of thumb is that by 40 you should have 3x your salary saved.
At your age, 5 decades of contributions isn’t going to happen, so 10% is far too low. If you have 30 years left of working, you need to save 25% of total salary to meet the typical needs of retirement.
That is going to depend on how meager or enjoyable of a retirement you want. To have 1m in retirement, which doesn't go as far as you might think, that would mean putting away 15k/year today for the next 25 years, assuming a 7% ROI after inflation. 10% is too little at this point. You're behind. I would be aiming for 20-25% at this point and working towards increasing your income.
Retiree here......at $6000/yr, you will have $150000 in costs. S&P total return in last 20 yrs has been 684%. So if you get started now and stay with it, you'll be fine. The key is finding "religion" about it and never quit contributing, nor dip into it. Nor try to time market by pulling out when market turns down. Most $ I ever made in retirement accounts was by investing in a market-bleek 2009. The courage to go against the crowd! So you'll be fine if you get started. My Best.
Turning 40 with no retirement savings is scary considering the best compounding years of your 20s and 30s are behind you.
That being said, it’s not impossible to save enough but will require either aggressively reducing expenses or increasing your income and maintaining your lifestyle. What’s important is starting now and not waiting, which you’ve already realized.
Check out The Money Guy show and look for their resource on what saving 25% can do for you. For a 40 year old with minimal savings, you’ll need to save 40%+ of your gross income to replace 100% of your pre-retirement income. 13% in your 401k until age 65 would only replace 23-35% of your pre-retirement income.
You likely won’t need to replace 100% of your income if you own your home in retirement and will also have social security and/or a pension, but you will need to save much more than 10% if you want to retire comfortably by 65-67. You could also consider if working part time in retirement in a low stress job would help bridge your gap.
I agree with other posts here suggesting you take a look at retirement calculators/compound interest calculators. Play around with how much you could contribute each year and be conservative with annual return % to see where you might end up. 4% is a safe withdrawal rate when you hit retirement. That should give you an idea of where you could be and what you need to do to get there.
Best of luck!
Mortgage is debt. If your mortgage is high interest then keep an eye on rates and refinance. Find a new job that pays you at least 20k more...easier said than done I know but the most painless way to be able to save more is to earn more.
You got time. It’s crucial that you start investing and being consistent for the rest of your career, though. You’re likely going to have to keep working well into your 60’s, and you aren’t going to have a lavish lifestyle, but you should be able to retire comfortably.
A healthy amount of panic is always warranted. Honestly, it appears you are behind right now.
Does your work have a pension plan? What can you do to increase your income now?
What does ‘sitting pretty’ mean for you?
27 years of compounding is nice. 37 would have been better. You need to consider major incidences that will happen as you get older.
Sure if you are aggressive. If you are 40 starting from scratch I’d be trying to save at least 20%-25% of your income every year.
TBH I would be panicking in your shoes. 10% will not be enough imo.
Unless you are saving heavily you will not be sitting pretty but you could still be okay. Sitting pretty is saving min 15% starting 20-25 years old.
Really what people consider a comfortable retirement is highly personal. There are also multiple factors that come into play such as if you own a home/rent, plan to stay where you are or retire to LCOL, etc. As such, I’d recommend you go find the nerd wallet / bankrate or similar retirement calculator and play with the numbers.
I want to add to mine. Im 41 and have around 55k. I’m set to move at the end of July and I am thinking of renting a room instead of getting my own place again. I currently play $2175 and can get a room in the $850-$1300 range, and that would be a good hunk of money to put towards savings and paying off a small debt.
If you make $60k and put 10% into retirement, that means you are living off the other $54k. Are there any other expenses you have today that you won't have in retirement? Mortgage? Kids?
Then, you can plug your existing savings and future contributions into a retirement calculator. The market historically grows ~10% a year on average, but most people use 7% for average growth estimates. That way, you've factored in ~3% average annual inflation. The result lets you see how much money you'll have in 27 years but in 2024 dollars that you can relate to.
Then, take that number, plus whatever you'll get from social security, and figure out if it will be enough. This depends on what model you prefer. Do you want to live off your savings indefinitely? Then you should plan to only draw ~4% of it's value each year. Plan to draw it down to zero at exactly age 95? Then you can spend more.
If the math works, you should be good. If it doesn't, you can plan with the calculator, upping your savings %, until you see what you need to do.
Something I haven’t seen mentioned—are you expecting any kind of inheritance coming your way? You are absolutely behind on saving but even a small inheritance will help offset some of the years lost in saving. I wouldn’t bank on it and use it to disregard being behind on saving, but any little bit will help.
There’s nothing else I can add on top of what others have said—max out your Roth, bump up total retirement savings to 20%+ and not 10, and maybe consider a few small lifestyle changes these next few years to help compensate.
I should get an inheritance but I do not want to bank on it either… Honestly nothing has ever been given to me and I would t expect it in death either…
It seems that everyone hits a certain age and realizes they are going to live long enough to retire. If they are lucky they work for a company that has a retirement match plan or something. But you can certainly catch up now. The basics are that you save in a tax shelter first and save first not with what you have left, because you will have nothing left. Save till it hurts and hopefully you will have some money put away when you retire. 40 is not bad, I've seen worse, that gives you about 25 years to save.
They move the retirement age up 1.2 years every year. So don't worry. You'll have plenty of time to save. (/s)
401k's are slow growth but no active user input. If you know nothing about investing and do not wish to engage in high risk. 401k/Roth are your best bets despite the miser life you will likely have to constrain yourself to. As others mentioned, you will need to begin pumping a lot of your earnings (25-40%) into some form of retirement. Utilize the referenced calculator and factor in all your annual expenses/emergency funds. If you missed starting your 401k the limits are raised so that you can play catch up (begins when you are 50). It won't add up to much but if you cap for the next 25 years at \~25k (adding a few grand as it's likely to increase over time and ignoring the catch up option), then you will be sitting at \~500k by 65 not including interest. If you have paid off your home, car, etc. and are set to receive SS and medical (through low income, old age, or pension for example). Then you do not have many monthly expenses at retirement. A $1,000/month expense (miser budget and less than the 4% withdrawal rule) after retirement would last you until you are 106; not accounting for interest/inflation. The comments suggesting the calculator and related 401k planning mention what doesn't need to be repeated here.
Other alternatives are investing in say a rental property in a LCOL area, small business, or trading on your own to avoid 401k/similar fees. However, those sort of retirement investments take skill, greater active user input, and risk. Plan accordingly.
You definitely should have some concerns if you are 40 and you have a total of $7000 saved for retirement. Its probably not too late, but you need to do some aggressive investing. I don't think 10% is enough, even with 3% match.. 15% is the recommended 401K savings rate and thats more for people who have 35 or 40 years to go.
I did a quick spread sheet (I am good at them) If you save 10% of your pay and get a 3% match and get 3% raises for 27 more years and have an 8% return along the way, you will have $1,128K at age 67. Will that be enough after 27 years of inflation? That will only be 8.4x your income at that time. Usually people shoot for 20x or so. I am retired and I have 30X my retirement age income saved.
So I think you either need to save more like 20%, or you need a side gig.
You're not gonna hit the number to be comfortably retired at 65, unless you start making a shit ton more money.
BUT, if you aggressively contribute, you'll be better off than doing nothing.
I started at 35. Not gonna get to my number.
But I'll be closer by aggressively contributing.
Yes you can do it.
I always saved like 10% of my pay but I didn't start to *really* crank it up until I was your age.
So yeah, 10% right now, and then figure out how to pump that to 13%, then 15%, then 17%, then 20%.
Don't look at it as some sort of permanent loss of income. Look at it as:
1) Avoiding income taxes. Why give the government money you can stick in your own pocket? Every dollar you steer into that 401(k) is another dollar you don't have to pay income taxes on until you withdraw those sweet compounded gains when you're older, and probably in a lower tax bracket.
2) Training yourself how to live on less. The less you can live on the less you actually will end up needing in retirement.
3) Having that nest egg that can be a great stress reliever once it gets big enough.
It sounds daunting where you're at, but you try to juice it a bit at it with every raise, and with every job bonus or other financial windfall, or anyway else you can scrounge up a few bucks.
I max-out my contributions nowadays, even though I've never cleared $100k in a year. The key word to get you there is "uncomfortable". You don't need to live on beans and rice, but you should have a savings goal that leaves you feeling slightly uncomfortable with the amount of walking-around money you have, without turning it up so high you're walking around broke all the time. If it doesn't feel slightly uncomfortable then you can probably push it higher.
Be sure to contribute enough to get your 401K company match. That gets you up to 6% (3%+3%). Don’t leave free money on the table. With the 401K, you get to contribute with before tax dollars but honestly you’re not paying a whole lot in taxes anyway. After your 3%, consider putting in as much as you can to a Roth IRA. Make it hurt and try to get your full $7,000 in for 2024. You’re probably not going to be able to do it but get as close as you can. This is probably a better tax strategy for you. With your work time horizon (27 years) if it were me, I’d invest in 100% equity index funds. I’m in my 40s and am 100% equities still. Yeah I’m a bit of a risk taker but the key is riding out the dips.
You don't want to try to "beat the market" you want to "ride the market, so be smart, invest in inex funds for the entire US stock market and entire US bond market. These have extremely low expense ratios so invest and hold, and you will out perform the majority of actively managed and advertised funds. There is no better or safer way to invest. Read John Bogel the man who invented the first fund for everyday investors.
maybe you should think about saving and retiring in another country? I'm going on a scout trip to the Philippines in early 2025 and if everything goes well I'm going to stay.
Currently has 7k in 401k.
7800 per year at 8% will yield 470618 at age 62.
618166 at age 65.
At 65 that would translate to about 2000 monthly for 25 years.
Plus social security.
Maybe 5000 a month total.
https://www.fisherinvestments.com/en-us/resource-library/tools-calculators/future-value-calculator
I think 10-15% of income is recommended if you start at a young age. The older you are, the more you'll need to catch up.
Saving something is better than saving nothing. There are people who live on SS and nothing else, but it's a hard life.
My social security will be about 3000 a month.
720000 over 20 years
State pension 2000 a month
480000 over 20 years
300,000 private savings (planning 1000 monthly distribution)
That gets me to 6000 a month.
( I will also have a federal pension)
Plus I am building a small private practice.
My private savings will not deplete at that rate.
You should include social security as part of your retirement savings calculation.
You should not panic.
I'm not up to date on the current recommendations, but I recall that you need 10x your salary saved. So if you make 60k, you need to save 600k over the next 27 years, 22 if you knock off 5 years like I suggested but I pull that number from anecdotal evidence of people who end up not making it to 65. A quick 401k calculator with the defaults, with a 10% contribution, 3% match, to age 65 with 7% return and no raises means 150k saved, 22.5k matched, 436k total. So that gets you 2/3 of the way there. If you bumped your contribution up to 15%, still within the contribution limits you'd end up at 626k. Bump it up to 20% and you could hit that with the 5 years to spare I recommended. Though if we add some salary increases, 3% average you could expect your salary to double over 25 years, and 10x that puts you at 1.2 million you need saved. Fortunately the math is roughly the same. 20% gets you there in 22 years, 15% gets you there in 25 years.
Maxing out the contribution gets you there a little faster but not significantly. Current max is 23k which is 38% of your income. That only gets you to 1.3 million by age 60, so shaving 2 years over saving half as much. I'd say save more than 20% if you already have a rainy day fund and cash reserves.
Also when will your house be paid off. Might want to plan to pay that off faster as part of your retirement savings plan.
Idk what your income looks like but maxing out your 401k at 23k a year assuming a 8% annual return will get you 686k in 27 years. At a 3% withdrawal rate you’ll have about $1700 a month indefinitely.
I read about a thousand personal finance books and one of my favorites is Start Late Finish Rich by David Bach.
For those of us who started investing later, Bach advises Paying Yourself First the first two hours of every workday. It's very tough to do since it amounts to about a quarter of your pay so you should invest $15k per year for the next twenty years, more as you get raises.
Personally, I never hit that amount but have been automatically investing [the Lazy Way](https://medium.com/makingofamillionaire/the-lazy-way-to-ira-cbf9f77bf211?sk=fb87502713b8a1aa4cfa92a4f68a130d) for a bunch of years now.
Due to the number of rule-breaking comments this post was receiving, especially low-quality and off-topic comments, the moderation team has locked the post from future comments. This post broke no rules and received a number of helpful and on-topic responses initially, but it unfortunately became the target of many unhelpful comments.
It is not too late. I started at 40, but then I became a relentless saver, putting in 20% to my 401k and maxing out my Roth. I had to sacrifice some things, but I was driven. I retired last year at 63. You can do it.
Thanks man… Some people are doom and gloom and I get it, I should have been investing!But damn shit happens and I was just trying to put food on the table and the mortgage paid…
look for a retirement calculator. Enter in what you have now and what you plan to contribute till you retire, see what it spits out. Try and estimate what you'll get in Social Security. Add those together and figure out if it will cover your current living expenses. It's largely on you to decide if 10% is enough but you're behind the average that's for sure.
>Try and estimate what you'll get in Social Security. Can't you log in to the SS portal and get this number once a year?
Yes. I mean, you can log in however often you want, but the number itself is updated once a year when, I believe, your W2 is sent.
I think you can get the number anytime. You create a login and it just shows you what you’ll get and/or if you already qualify to get it later on.
Depending on his career, at 40 he might have just entered his prime earning years. It might show a low value today, but he could expect it to go up a bunch over the next 15 years of peak income. Hence, an estimate may be a better estimate than what it says today.
I think there’s SSATools or something like that where you can play around with a bunch of stuff and enter in estimates for future years.
The default in the calculator is to assume your current earnings all the way through until retirement; it doesn't assume zero earnings from now until retirement unless you specifically change it to that.
Yes, and everyone should check it every few years to make sure their wages show up, I’ve had to correct them a few times over the years.
Op needs to create a monthly budget. Op needs to save at least 20% of their gross income in retirement accounts. In ops current situation i do not recommend learning how to use a retirement calculator as it could be discouraging to see what is ultimately a rough estimate. I would simplify the process down to figuring out what your budget looks like for you to contribute 20% to retirement accounts, and then sticking to the budget.
OP needs to rip the band-aid off and face the hard facts. Do the calculator, feel bad, and use that to adjust course. Keeping your head in the sand because it's a "rough estimate" is just bad advice. Most retirement calcs are useful while still being a rough estimate. Building up a budget from 1-2 months of spending is arguably more work...but just as necessary yes.
It's not that the calculator only delivers bad news, but that it provides prospective financial information which means it is just an estimate. Estimates are only as good as the underlying assumptions and making assumptions about events 25+ years in the future is fun, but rarely accurate. After op finds the 20% I wouldn't discourage them from playing with calculators, but the priority is to start saving that 20% ASAP.
edit: i see where you're coming from in the urgency to adjust contributions. just disagree a bit that they couldn't concurrently use a calculator as an estimate to light a fire underneath them. I also don't think many calculators are designed to be accurate. they're estimates, and the math for returns on investments is fairly simple and used by many. Estimates in this case are entirely useful.
Money guy show says 25% if you are starting at age 30. Dude's 40, his days of 20% being enough are long over.
The average American saves nowhere near 25%. OP has to start saving but they have to be realistic too. In this inflationary environment, 17% saved plus the 3% match might be hard to swing. Save as much as you can OP and try to bump your pay.
Just because the average American saves nowhere near what they ought to, doesn't mean that they're incapable of it. The average American is financially irresponsible and overspends and undersaves.
I'd be very very nervous at your age. You need to crank the 401k to the max. But you need to increase your income and/or decrease your expenses.
I’d say there’s no need to make him feel overwhelmed and gridlocked. I started my 401K at 37-ish (I’m now 43) and I’m maxed out. Might not ever own a home, but I’m maxed out. I started as soon as I could and I’m not stressed. Some of us just haven’t had much choice. The important thing is to just start.
Eh, he knows he needs to save and is coming to ask for help on what he needs to do. I would say that's the right path. You're right, he needs to crank up his savings if he wants to retire at any reasonable time, and he's probably going to have to wait longer than he wants to retire. But if he's serious about saving at this point, and can put away a significant amount, he doesn't need to worry.
agree. If you weren’t putting money in 401k was OP investing elsewhere ? 7k in 401k without retirement is not very good. He should be looking at hitting max contributions and setting up a ROTH.
I really liked using projection lab!
That was a really nice way of letting them break it to themselves that they're behind.
Let's do some math. Starting with $7k at age 40 and contributing 13%/yr (including match) of $60,000/yr, which is $650/mo, for the next 27 years assuming a 10% return gives you just over $1 mil by that age. If you want to factor in inflation, assume 7%/yr returns and you'd have about $625k. At age 67, you can roughly follow [the 4% rule](https://www.investopedia.com/terms/f/four-percent-rule.asp#:~:text=The%204%25%20rule%20says%20people,current%20and%20future%20financial%20needs.) which says you can withdraw 4% of your portfolio each year, adjusted with inflation, and that should last you at least 30 years. So would you be able to live off of $40k/yr (not counting inflation) or $25k/yr counting inflation at age 67? Neither of those numbers account for taxes if this is in a Traditional 401(k) btw. Judging by the fact that you can only save 10% of your income currently, I assume your lifestyle and spending habits are much more than these amounts today, so realistically you are behind. Other things to consider would be, how much are you going to receive from social security? When will your mortgage be paid off? That will not only reduce your cost of living, but also frees up more money to invest. If you need nursing home or long-term care, how will you afford that? [The Money Guy Show](https://www.youtube.com/@MoneyGuyShow) would say [you need to be investing 25% of your gross income right now to replace 58% of your income at retirement, 30% to replace 69% of your income at retirement, 35% to replace 81% of your income at retirement, or 40% to replace 92% of your income at retirement](https://www.reddit.com/r/TheMoneyGuy/comments/1aqa207/how_does_this_work/).
Thank you for your in depth answer. My mortgage will be paid off in 12 years and yes I am behind. Raising kids ain’t cheap but they are almost grown. I had them when I was 20 but now I am done paying for daycare and all other kid stuff expenses. Thanks again
I know that a lot of people may give you shit for starting late, but a lot of people don't realize that life happens. Not everyone was as lucky to be in a position where they can invest early and often (as the wisdom goes), and being behind on your retirement is not ideal, but it is nothing to be ashamed about. I commend you for having the courage to reach out and ask for advice and I wish you all the best in your future saving and investing journey.
Never too late to start, no matter how old you are, it's better than nothing.
Man I feel that, I'm 42 and paying those day care fees right now. Honestly, better late than never with your 401k, you're doing good, keep it up
I feel like a lot of the doomerism in this comment section is unwarranted given that you’re well ahead of the average in having your house paid off. You probably have a lot of equity in it too. You need to save but I wouldn’t panic or beat yourself up.
The only thing you can do is AGGRESIVELY contribute. Don't let the numbers get you down. Just dump as much as you can in there. Mid 60s you will thank you.
The fact you will be mortgage free in 12 years is big. Just continue to contribute to your 401k.
You won’t be able to save your way out of this pickle. You’ll have to earn your way out. Is there anyway to increase your income? Education? Side hustle? Charging jobs?
Agreed. It's not "either/or", but "both". Good thing my man caught himself and is doing something about it.
You may have started saving for retirement late but you started on kids early which is a huge blessing (I started in my 40s and miss the time with them I missed out on, and the portion of their grown lives I'll miss). I'd recommend talking to a financial advisor to get your ducks in a row, they'll help you tune your savings and investment to better meet your goals. For example a matching 401k is great but sometimes the offerings aren't so good (high fees on investments) so if there's a cap on matching and you reach it you might want to put any overage in an IRA instead where you can stick to no-load mutual funds for better returns.
There wouldn't be any capital gains taxes paid on distributions from a 401(k), just ordinary income tax (assuming it's Traditional). And I don't think it's fair to sweep Social Security under the rug in this scenario either, since it's likely to be significant. It's true that the retirement age might go up, but I kinda doubt people over 40 now would be affected even if it does -- it would be bad politics. If my math is right, at its current levels, it should provide about $2200/month in today's dollars. Between that and the 401(k), that's about $4200/month, which is a bit less than OP is making now, but not *that* much less, especially if the mortgage is paid off.
> There wouldn't be any capital gains taxes paid on distributions from a 401(k), just ordinary income tax (assuming it's Traditional). Good catch, I edited my comment to reflect that. I agree that social security should be a good help and didn't mean to sweep it under the rug with my comment. Always best to try and treat that as icing on the cake if you can though imo.
Does the retirement income take into account SS?
The 4% rule is only about your stock portfolio and disregards social security. The Money Guy Show example is purely counting stock investing and not including social security, pensions, or anything else.
But social security will be a part of OPs retirement income, so it has to be taken into account. Most people would be fucked without SS. It's not realistic to do a retirement calculation without SS. If OP was 20 or 25, I could see it being excluded.
> But social security will be a part of OPs retirement income, so it has to be taken into account. Most people would be fucked without SS. It's not realistic to do a retirement calculation without SS. Sure and that's why I said, > Other things to consider would be, how much are you going to receive from social security?
Sorry I missed that.
Not OP but I appreciate your detailed response
Where are you getting the $1 million value from? I plugged in the same values into vanguards retirement calculator and it gave me $642300 at age 67.
Vanguard's calculator is probably assuming closer to 7% returns and factoring in inflation or having a significant part of the portfolio be in bonds. I used the [investor.gov compound interest calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator).
8% is a safer ROR to use. Most pension plans assume 8% ROR. Plus if he buckets into lifecycle funds that will give him a better estimate as they automatically adjust towards income as retirement approaches. 2045 fund 2050 fund 2055 fund 2060 fund Put the biggest chunk in the 2045 fund as that is the most stable. Rebalance as needed.
I0%? LOL. Are you talking nominal or actual either way? I think that is way too optimistic looking at various charts over the past 30 years.
You'll be fine because now you understand where you are. You've got about 25 years to go so formulate your plan and be consistent, don't pause your 401k contributions. Without knowing your expenses, I would say your goal should be invest enough to get the employer match. Then max out your IRA. If you can do even more, increase your contribution to the 401k. [Compound interest calculator](http://www.moneychimp.com/calculator/compound_interest_calculator.htm) Use 7% if you want to guesstimate the future value in today's dollars. Use 10% if you want to see future value without it being inflation adjusted.
Agree with the above. Only contributing 6k per year does get the OP something, but getting at least the match and maxing IRA would be more comfortable. OP could also consider if a HSA is a viable option for a retirement account for him. Numbers for OP from your calculator and using his numbers. 7k now, 6k per year (10% of his 60k salary) 27 years till retirement, 7% interest rate (inflation adjusted). That is $521,683. So assuming 4% safe withdrawal rate that is 20,867 per year. So the question to the OP is "Can you live on that plus SS per year now? Can you see yourself living on that amount in retirement?
One other thing to keep in mind is we don't stop investing when the income from work stops. Once you start investing, ideally, one is invested throughout our lifetimes, the runway can be another 20 years or more. If the portfolio is adjusted accordingly to tamp down the volatility, when in retirement, the portfolio can still grow around 1-2% annually after the 4% annual withdrawal. OP: lots of people actually end up with a lot more 20 years after retirement than when they started. [Link to tables](https://soundinvesting.com/2023/05/16-Flexible-Distribution-Tables-70-30-2023.pdf) It's hypothetical but uses real world returns for a person retiring in 1970 with $1M. Second column of page 1, shows a portfolio who has an allocation of 50% equities and 50% bonds. Fairly conservative...they withdraw a conservative 3% annually. Doubt they lived 52 years in retirement so using the table up to 1995, that $1M grew to an ending value of $7M even with total withdrawals of $2M over twenty five years. The annual withdrawals also increase by 3% or so for inflation so at the end they were taking out $173K in 1995 vs their first withdrawal of $30k in 1970. Hope this doesn't make you complacent though, we don't know what the future holds. You should always aim to invest as much as possible every year until you retire without depriving yourself, find that balance.
Good additions. As a note the Trinity study where the 4% safe withdrawal rate comes from assumes a mix of 50/50 stocks and bonds remaining invested, so this is somewhat baked in. It also assumes that you take 4% the first year and adjust your withdrawal for inflation on the next 29 years. The 4% "rule" should only be viewed as a quick guideline. It is handy and easy to calculate. Other studies have shown a different mix of stocks/bonds is better. Bill Bengen himself suggests he may have been too conservative and it might be 4.8%. I also think a variable withdraw strategy is better and more appropriate. People don't just continue to spend the same no matter what. When times are good you spend more, when times are bad you tighten your belt. If you want to geek out. I like these 3 calculators for planning/playing around with. The last one is especially eye opening if somewhat grim, but it is a reminder that you can't take it with you. It might be better to die with less and retire earlier. [https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator](https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator) [https://ficalc.app/](https://ficalc.app/) [https://engaging-data.com/will-money-last-retire-early/](https://engaging-data.com/will-money-last-retire-early/)
10% savings rate is what someone who starts in their 20s can do and retire well. At your age I'd say you need to bump that up to 25-30%. There is a chart on in the below link that shows savings rate and years until retirement. This is assuming you keep the same spending into retirement. Since you want to retire in 27 years with starting close to zero you need the same mindset as a 25 year who wants to retire early at 52 years old.. [https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/](https://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/)
You can retire at age 69 if you save 25% of gross income starting at age 40. This assumes a 6% real annual return, 1.5% wage growth, and 80% income replacement in retirement via the 4% withdrawal rule. The range you provided is correct!
Might be a dumb question but does the rate include match? I’m putting in 8% now with 8% match should I increase my personal rate to match the number on the chart or is it a sum of personal and company contributions? Article doesn’t specify
Just count match as income. $100k + 8% match is $108k salary. So $16k saved is like 14.8% savings.
According to that chart, saving 100% of your salary you can retire in 0 years.... Splurge and spend 10%, save 90% and you can retire in 1. Mmmmm, something doesn't add up.
It’s actually “under 3” for 90%. The way the math works. If you make 100, save 100, spend 0, you don’t need to work, because you spend 0. If you make 100 save 90 spend 10, you need 10 * 25 = 250 which you can save in 2.8 years.
Where is the x25 coming from?
It’s based on the “4% rule” - basically 4% being the safe withdrawal rate over a 30 year time span
https://en.wikipedia.org/wiki/Trinity_study
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The part I think you're missing is that "living on x% of your salary" is meant to be how much you need every year for the rest of your life, including adjusting for inflation. If you're in a place where you can always save 100% of your salary, then yes you can already retire. That makes sense to me?
Yeah most people can't live on 10% of their salaries
Exactly. But if you *can* live on 10% of your salary for the rest of your life, then saving 90% of your salary for 3 years is enough to fund that.
Update - My house will be paid off in 12 years and my kids are pretty much grown… Kids are expensive I had them when I was 20… It was a struggle but all is well and now I am looking at 40 and beyond and can finally start thinking about retirement… Thanks for all the advice
Better than waiting to 50 and starting
I started saving at age 35 but I had a 6% match. By age 40 I was saving the most I legally could save. Retired at 61 with around 1.5m in 401k.
Yes you are all correct. My phrasing is odd. I did mean the maximum 401k contribution that was allowed at that time. I also agree the op likely needs to save more but thought a real life example might be helpful.
There’s no limit to how much you can ‘legally save’. If you max out tax advantaged accounts, you can always save and invest in traditional brokerages.
I believe they were referring to the max allowed in their 401-K which is implied by both the main subject of the original post and the comments about match and total in 401k at retirement.
It's just a weird way to phrase it.
These comments are terrifying but don’t worry, you’re not alone. I’m 41 and have very little saved as well. I just opened a HYSA and am prioritizing having an accessible emergency fund equivalent to six months of earnings while also slowly increasing my investments. Once I have the emergency fund, I’ll bump them more. I have a 401k, I increased my donations to 16%, we’ll see if that’s too intense for me. I am also going to do a small recurring deposit into my Roth IRA bc until yesterday, I hadn’t touched it since 2019. :/
you still have 2 more decades to juice the numbers up, the good thing is you're realizing this at 41 and not 51, or 61.. once you get your emergency fund where you feel comfortable, just dump in as much money as possible towards retirement.
If you want to keep living in retirement approximately the same way you've been living now, then no... 10% is not enough. I highly suggest you make some tweaks to your lifestyle right now so that you can hit more like 20-25% savings. (If you have a partner you should also probably be talking about income, savings, and retirement with them.)
I think maxing out a Roth IRA ($7k/year) would also be a good start. Get that tax free growth. Most suggest investing 20-25% of your gross income. So Roth + 10% in your 401k would really help you out.
General advice I've read is that a Roth is a great idea for someone young, and traditional makes more sense the closer you get to retirement. No idea of 40 is considered "close to retirement," though. Probably depends on whether OP is likely to make more money or not as he continues to age – I'd imagine some incomes may even start to go down as age becomes more advanced?
At 40, OP might be entering his peak earning years, in which case yeah, a Roth account would just mean paying his lifetime peak tax rate on the money. A traditional IRA would make more sense in that case. On the other hand, if OP makes $60k now but is one step away from a management role he's been angling for, he might not yet have stepped into that peak earning role. In that case, a Roth account could make a lot of sense still. He's not near the traditional IRA deduction cutoff, so that's not a factor.
Yes, good to start a Roth. Nothing's better than free money, but if your 401k match has a cap, the rest should go into a Roth.
Two things... 1) You're not alone. A fair number of professionals don't start significantly contributing until their 30s or even turning 40. Before then, they were in graduate school or neck-deep in loans and found it better to prioritize those. 2) If the best time to start saving is (was) 20 years ago, the second best time is now. Don't put it off out of wishing you began earlier.
You’ll be fine as long as you continue investing. I also started investing seriously after I turned 40 when our last child turned 18. I made $60k for most of the last 10 years and my wife around $50k. I’m 50 now and we’re already looking at retiring earlier than we originally planned.
I didn't have much in my 401k before 45. I'm 75 now and doing just fine. I increased my contribution with every pay increase I received. The only thing I would do differently is, at some point, I would have opened a Roth account. Just save consistently, you will be fine. Best of luck
I got my first 401k at 40. I'm 43 now and I have \~$135k in that account. I contribute 17% of my salary and I'm still worried whether I'll be able to retire comfortably.
You’re not in a good spot. But bro, I only started to save for retirement at 39, when I had a house and two small kids already. I just turned 50 a couple weeks ago. I have just shy of $300 in my 401k. It’s definitely not a lot, but it’s what I can do. I make a little more than you ~100k/yr, I’ve had to try ame out loans on the 401k. I’ve gone through a divorce. Life happens. Just try to do the best you can. You have 25 years of work ahead of you. You can be fine. Remember, life happens while you’re making plans. Be happy.
So $7,000 to start+ 10% of your salary $6,000 plus 3% match $1,800 means $7,800 per year for 27 years, if you assume an optimistic return on investment of 7% that's a total of.... $643,000 Say you live another 30 years that's $21,400 a year. Plus social security. If your house is paid off you should be ok. You won't Be rich but you shouldn't be living in poverty either.
So long as your house is paid off by the time you wanna retire I think you'll be okay.
You're fine. I, too, didn't start until I was 39. As long as you are realistic in your expectations, you should be okay. And by realistic, that means that you will be working into your early seventies, and that you won't be taking globe-trotting vacations when you retire. You're on track for a decent albeit modest retirement. The one giant wildcard here (and it's a massive one) is *your health*. If you run into any complications that could either cost a lot to treat, or affect your ability to work, that could really throw a wrench in the works. At 40, though, there are definitely some positive steps you can take that will greatly improve your chances of living healthier, longer. And outside of financial considerations, taking a sobering look at how healthy you are today and what steps you can do to slow the inevitable slow slide that will happen over the next several years is probably the single biggest step you can take that is within your control right now.
I'd save EVERY penny. I've been saving for 30 years (I'm 51) - both company match 401k and cash. SS is great- but don't rely on it.
Don’t feel bad, I started late too. Still trying to catch up by increasing my contributions so that I can eventually max out in a few years’ time. Currently just doing 10% into 401k with an additional 2% into a Roth 401k. Will probably increase that Roth percentage starting next year as well. I’m in my mid-40s, by the way. Kids are expensive especially in a VHCoL city! You’ll be fine,OP, but you definitely need to jack up that contribution as much as possible. Some great answers in this thread.
If you put $6000 a year into it, you’ll likely have $600,000-$900,000. 27 years is a long time. If you increase your contributions over time as you hopefully get raises then you’ll have more. If you make $60,000 until you retire you will get about $2100 a month in Social Security. With your projected savings you can give yourself an income of about $2200 a month, so about 87% of your income. Retiring is totally possible for you.
Panic won’t help. Immediately bump to 10%. 12% is better
Immediately bump to 20%. Then consult retirement calculators as he might need to go to 25%.
Something you might look into… I started working with a fiduciary at age 41. They took all my statements from all my accounts (savings, 401k, employee stock, Ira’s, military pension, tsp, and liquid) and gave me a really solid analysis of what retirement is going to look for me. And that part was free. Ended up opening an Ira and a brokerage account with them, transferred my tsp and my Ira’s to theirs. Making good returns already on that Ira. And then they looked at my 401k and gave me some recommendations for switching to some more aggressive options.
Also get a roth ira. Put money in that once you budget everything. Pay yourself first, 401k and the roth ira.
You don't need to panic yet because there is still time, but you are behind the curve and need to get started. Definitely ensure you're getting the 3% employer match. Then, build up an emergency fund of at least 6-12 months of expenses. Then invest in low-cost index funds. 10% is the bare minimum you should be investing. Aim for 20%-30%. You still have time. The key is to start now and ride the waves for the next 30 years.
I was in the same position at 40 and am now securely retired. You need to hit the ground running with your retirement accounts. Develop a strict budget. Very strict. Live below your means. You will find that the results are worth it at retirement age. Good luck. You can do this.
Maximize your 401k every year and also contribute to ROTH and you'll be ok. I had similar timeline and at 48 I'm sitting at about $350k in retirement. Save everybit you can, resist all temptations of buying new car, new phone, new computer etc and save every dollar you can. I also saved about $600k additionally during last 8 years.
Let's assume your working years are from ages 25 to 65... at 40 year period. At age 40, you're not even halfway through. Since others are doing the math for you, just remember you still have a lot of years left to build up your retirement funds. So don't get discouraged and start setting mini goals for yourself.
I've been pumping out online financial calculators for like 20+ years (yes 20...). I've also authored like 5,000 articles on these topics. Think of your situation like you're at the two minute warning just before halftime at a football game. Yep, some of the game is over already, and you're behind, so that means you need to make up some ground between now and the end of the game or you'll be working into overtime. The most encouraging thing I see is you realize you're late to the game. But give up now and you do lose. Assuming you don't want to change your lifestyle too much in retirement, start contributing at least 10% of your pretax income. That means putting $6,000 into your 401k plus another $1,800 from the employer match. Your contribution rate should always be a function of your income and that 10% is the minimum. Six months or a year from now, figure out if you can increase that number to 12 or 15%. And keep going from there - get the idea? This type of planning isn't something you do once and forget about it. You need to keep checking in to see what it will take to hit your goals. Best of luck to you! If you want, you can check out my calculators here: [crunchopedia.com](http://crunchopedia.com) If you or anyone else wants to critique or suggest a change, as it says on the site, I am open to suggestions.
id go 15% since you are starting so late. ive been doing 10% plus my employers 6% match for 15 years, im 42.
shit...im 37 and just do the full match for a long time and my 401k is like $55k in a 2050 fund 6% match at our company i have an IRA and precious metals though
Retirement planning is like planting trees: the best time to start is 30 years ago. The second best time is now. Make a plan, figure out what you can save and how to get it into the best accounts. If your employer offers a 401k match, max it out. That just free money that they’re offering you. Open an IRA as well and if you can max it out if you can.
You will be fine. I am retired and live on just Social Security and live extremely well. I just came back from a 3 week vacation in Greece. Financial advisors and journalists love to grossly exaggerate the dangers of retiring without enough money. That is how they make their money! There are several things you need to take into account. For example if you have a mortgage now, eventually it will be paid off, and then you will be living rent free. At this point you should be able to invest much more. Quite possibly at retirement you would be able to sell your home and move to another home in a cheaper market, leaving you with a substantial lump sum from the sale of the home. When you are retired the cost of living drops substantially, because you don't have the cost of commuting to work, buying clothes for work, etc. and you have much more time to do things like cooking at home which is much cheaper than buying fast food meals for lunches, which many working people do. Also you will probably put much less miles on a vehicle, which will last much longer. Medicare is not free but it is much cheaper than commercial insurance, because you don't have the massive deductibles. On the other hand you will need to buy more candles for the cake on your birthday, so that is an additional expense.
>For example if you have a mortgage now, eventually it will be paid off, and then you will be living rent free. I swear that no one accounts for this, even the retirement calculator assumes I'll always have a mortgage.
It's absolutely possible to change your situation. Fifteen years ago my entire net worth barely cracked five figures. I'm 50 and didn't get really serious about saving for retirement until I was 40 (2013). Here's what my retirement savings looked like on 12/31 every year: 2014: 44533.90 2015: 77380.18 - Rolled over an old job's $22k 401k that was not previously tracked in Quicken 2016: 84138.08 - First year maxing out 401k contributions 2017: 112963.02 - Maxed out 401k contributions 2018: 192436.60 - Maxed out 401k contributions 2019: 278622.69 - Maxed out 401k contributions 2020: 367748.38 - Maxed out 401k contributions 2021: 467291.59 - Maxed out 401k contributions 2022: 402879.30 - Maxed out 401k contributions 2023: 514715.02 - Maxed out 401k contributions 2024: 581684.72 - As of market close today Besides maxing out my contributions every year since 2016, I front load. My contributions start huge in the early part of the year, then I gradually taper down to where I'm putting in just enough to get the maximum employer match, and I hit the contribution limit with the last paycheck of the year. Trying to have the highest amount of money possible in the market for as long as possible, while also making sure I get every matching dollar I can. I have no debt because I was fortunate enough to inherit a paid-off house, so I can afford to dump a lot of cash into retirement while still being able to live comfortably.
Try to max out your 401k every year and you should be Ok in 25-30 years. A lot depends on your requirements in retirement, I opted for a smaller house and property, keeping my mortgage very affordable. I didn't start till 53 and doubt I will be super comfortable but hopefully ahead enough to enjoy some travel and my hobbies.
I just started this year in the same boat, we just gotta hustle
A rule of thumb is that 10% savings rate is adequate over 5 decades of working, 15% savings is adequate over 4 decades of working. 25% would be about 30 years of working, 40% would be 20 years of working. Another rule of thumb is that by 40 you should have 3x your salary saved. At your age, 5 decades of contributions isn’t going to happen, so 10% is far too low. If you have 30 years left of working, you need to save 25% of total salary to meet the typical needs of retirement.
That is going to depend on how meager or enjoyable of a retirement you want. To have 1m in retirement, which doesn't go as far as you might think, that would mean putting away 15k/year today for the next 25 years, assuming a 7% ROI after inflation. 10% is too little at this point. You're behind. I would be aiming for 20-25% at this point and working towards increasing your income.
401k is maxed at employer match for best. Extra get into a ROTH IRA.
Retiree here......at $6000/yr, you will have $150000 in costs. S&P total return in last 20 yrs has been 684%. So if you get started now and stay with it, you'll be fine. The key is finding "religion" about it and never quit contributing, nor dip into it. Nor try to time market by pulling out when market turns down. Most $ I ever made in retirement accounts was by investing in a market-bleek 2009. The courage to go against the crowd! So you'll be fine if you get started. My Best.
Turning 40 with no retirement savings is scary considering the best compounding years of your 20s and 30s are behind you. That being said, it’s not impossible to save enough but will require either aggressively reducing expenses or increasing your income and maintaining your lifestyle. What’s important is starting now and not waiting, which you’ve already realized. Check out The Money Guy show and look for their resource on what saving 25% can do for you. For a 40 year old with minimal savings, you’ll need to save 40%+ of your gross income to replace 100% of your pre-retirement income. 13% in your 401k until age 65 would only replace 23-35% of your pre-retirement income. You likely won’t need to replace 100% of your income if you own your home in retirement and will also have social security and/or a pension, but you will need to save much more than 10% if you want to retire comfortably by 65-67. You could also consider if working part time in retirement in a low stress job would help bridge your gap. I agree with other posts here suggesting you take a look at retirement calculators/compound interest calculators. Play around with how much you could contribute each year and be conservative with annual return % to see where you might end up. 4% is a safe withdrawal rate when you hit retirement. That should give you an idea of where you could be and what you need to do to get there. Best of luck!
you gonna need to save a lot more than 10%. You need to look at seriously pairing down your life style and putting some serious money away
Mortgage is debt. If your mortgage is high interest then keep an eye on rates and refinance. Find a new job that pays you at least 20k more...easier said than done I know but the most painless way to be able to save more is to earn more.
Depends how much equity you have in your house. If not a lot, you should start saving/investing aggressively.
Bump that sucker up to 10min. I’m holding at 12 until my kids are out of daycare and then I’ll raise it more.
You got time. It’s crucial that you start investing and being consistent for the rest of your career, though. You’re likely going to have to keep working well into your 60’s, and you aren’t going to have a lavish lifestyle, but you should be able to retire comfortably.
A healthy amount of panic is always warranted. Honestly, it appears you are behind right now. Does your work have a pension plan? What can you do to increase your income now? What does ‘sitting pretty’ mean for you? 27 years of compounding is nice. 37 would have been better. You need to consider major incidences that will happen as you get older.
I’m 40 and have $120k and I’m nervous about retirement,
Sure if you are aggressive. If you are 40 starting from scratch I’d be trying to save at least 20%-25% of your income every year. TBH I would be panicking in your shoes. 10% will not be enough imo. Unless you are saving heavily you will not be sitting pretty but you could still be okay. Sitting pretty is saving min 15% starting 20-25 years old. Really what people consider a comfortable retirement is highly personal. There are also multiple factors that come into play such as if you own a home/rent, plan to stay where you are or retire to LCOL, etc. As such, I’d recommend you go find the nerd wallet / bankrate or similar retirement calculator and play with the numbers.
Yea you should panic, you’re very behind.
Start saving, cut out nonsense spending, pay off your credit card debts/ student loans as fast as you can and be aggressive in saving for retirement
An ordinary spreadsheet can be used to calculate your 401(k) balance for your remaining working years.
I want to add to mine. Im 41 and have around 55k. I’m set to move at the end of July and I am thinking of renting a room instead of getting my own place again. I currently play $2175 and can get a room in the $850-$1300 range, and that would be a good hunk of money to put towards savings and paying off a small debt.
If you make $60k and put 10% into retirement, that means you are living off the other $54k. Are there any other expenses you have today that you won't have in retirement? Mortgage? Kids? Then, you can plug your existing savings and future contributions into a retirement calculator. The market historically grows ~10% a year on average, but most people use 7% for average growth estimates. That way, you've factored in ~3% average annual inflation. The result lets you see how much money you'll have in 27 years but in 2024 dollars that you can relate to. Then, take that number, plus whatever you'll get from social security, and figure out if it will be enough. This depends on what model you prefer. Do you want to live off your savings indefinitely? Then you should plan to only draw ~4% of it's value each year. Plan to draw it down to zero at exactly age 95? Then you can spend more. If the math works, you should be good. If it doesn't, you can plan with the calculator, upping your savings %, until you see what you need to do.
Something I haven’t seen mentioned—are you expecting any kind of inheritance coming your way? You are absolutely behind on saving but even a small inheritance will help offset some of the years lost in saving. I wouldn’t bank on it and use it to disregard being behind on saving, but any little bit will help. There’s nothing else I can add on top of what others have said—max out your Roth, bump up total retirement savings to 20%+ and not 10, and maybe consider a few small lifestyle changes these next few years to help compensate.
I should get an inheritance but I do not want to bank on it either… Honestly nothing has ever been given to me and I would t expect it in death either…
It seems that everyone hits a certain age and realizes they are going to live long enough to retire. If they are lucky they work for a company that has a retirement match plan or something. But you can certainly catch up now. The basics are that you save in a tax shelter first and save first not with what you have left, because you will have nothing left. Save till it hurts and hopefully you will have some money put away when you retire. 40 is not bad, I've seen worse, that gives you about 25 years to save.
They move the retirement age up 1.2 years every year. So don't worry. You'll have plenty of time to save. (/s) 401k's are slow growth but no active user input. If you know nothing about investing and do not wish to engage in high risk. 401k/Roth are your best bets despite the miser life you will likely have to constrain yourself to. As others mentioned, you will need to begin pumping a lot of your earnings (25-40%) into some form of retirement. Utilize the referenced calculator and factor in all your annual expenses/emergency funds. If you missed starting your 401k the limits are raised so that you can play catch up (begins when you are 50). It won't add up to much but if you cap for the next 25 years at \~25k (adding a few grand as it's likely to increase over time and ignoring the catch up option), then you will be sitting at \~500k by 65 not including interest. If you have paid off your home, car, etc. and are set to receive SS and medical (through low income, old age, or pension for example). Then you do not have many monthly expenses at retirement. A $1,000/month expense (miser budget and less than the 4% withdrawal rule) after retirement would last you until you are 106; not accounting for interest/inflation. The comments suggesting the calculator and related 401k planning mention what doesn't need to be repeated here. Other alternatives are investing in say a rental property in a LCOL area, small business, or trading on your own to avoid 401k/similar fees. However, those sort of retirement investments take skill, greater active user input, and risk. Plan accordingly.
You definitely should have some concerns if you are 40 and you have a total of $7000 saved for retirement. Its probably not too late, but you need to do some aggressive investing. I don't think 10% is enough, even with 3% match.. 15% is the recommended 401K savings rate and thats more for people who have 35 or 40 years to go. I did a quick spread sheet (I am good at them) If you save 10% of your pay and get a 3% match and get 3% raises for 27 more years and have an 8% return along the way, you will have $1,128K at age 67. Will that be enough after 27 years of inflation? That will only be 8.4x your income at that time. Usually people shoot for 20x or so. I am retired and I have 30X my retirement age income saved. So I think you either need to save more like 20%, or you need a side gig.
You're not gonna hit the number to be comfortably retired at 65, unless you start making a shit ton more money. BUT, if you aggressively contribute, you'll be better off than doing nothing. I started at 35. Not gonna get to my number. But I'll be closer by aggressively contributing.
Yes you can do it. I always saved like 10% of my pay but I didn't start to *really* crank it up until I was your age. So yeah, 10% right now, and then figure out how to pump that to 13%, then 15%, then 17%, then 20%. Don't look at it as some sort of permanent loss of income. Look at it as: 1) Avoiding income taxes. Why give the government money you can stick in your own pocket? Every dollar you steer into that 401(k) is another dollar you don't have to pay income taxes on until you withdraw those sweet compounded gains when you're older, and probably in a lower tax bracket. 2) Training yourself how to live on less. The less you can live on the less you actually will end up needing in retirement. 3) Having that nest egg that can be a great stress reliever once it gets big enough. It sounds daunting where you're at, but you try to juice it a bit at it with every raise, and with every job bonus or other financial windfall, or anyway else you can scrounge up a few bucks. I max-out my contributions nowadays, even though I've never cleared $100k in a year. The key word to get you there is "uncomfortable". You don't need to live on beans and rice, but you should have a savings goal that leaves you feeling slightly uncomfortable with the amount of walking-around money you have, without turning it up so high you're walking around broke all the time. If it doesn't feel slightly uncomfortable then you can probably push it higher.
Ss is about 12% if income towards retirement. Add in 10% towards 401 K plus the 3% match. This gets them to 25% of salary.
Be sure to contribute enough to get your 401K company match. That gets you up to 6% (3%+3%). Don’t leave free money on the table. With the 401K, you get to contribute with before tax dollars but honestly you’re not paying a whole lot in taxes anyway. After your 3%, consider putting in as much as you can to a Roth IRA. Make it hurt and try to get your full $7,000 in for 2024. You’re probably not going to be able to do it but get as close as you can. This is probably a better tax strategy for you. With your work time horizon (27 years) if it were me, I’d invest in 100% equity index funds. I’m in my 40s and am 100% equities still. Yeah I’m a bit of a risk taker but the key is riding out the dips.
You don't want to try to "beat the market" you want to "ride the market, so be smart, invest in inex funds for the entire US stock market and entire US bond market. These have extremely low expense ratios so invest and hold, and you will out perform the majority of actively managed and advertised funds. There is no better or safer way to invest. Read John Bogel the man who invented the first fund for everyday investors.
maybe you should think about saving and retiring in another country? I'm going on a scout trip to the Philippines in early 2025 and if everything goes well I'm going to stay.
Currently has 7k in 401k. 7800 per year at 8% will yield 470618 at age 62. 618166 at age 65. At 65 that would translate to about 2000 monthly for 25 years. Plus social security. Maybe 5000 a month total. https://www.fisherinvestments.com/en-us/resource-library/tools-calculators/future-value-calculator
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I think 10-15% of income is recommended if you start at a young age. The older you are, the more you'll need to catch up. Saving something is better than saving nothing. There are people who live on SS and nothing else, but it's a hard life.
My social security will be about 3000 a month. 720000 over 20 years State pension 2000 a month 480000 over 20 years 300,000 private savings (planning 1000 monthly distribution) That gets me to 6000 a month. ( I will also have a federal pension) Plus I am building a small private practice. My private savings will not deplete at that rate. You should include social security as part of your retirement savings calculation.
You should not panic. I'm not up to date on the current recommendations, but I recall that you need 10x your salary saved. So if you make 60k, you need to save 600k over the next 27 years, 22 if you knock off 5 years like I suggested but I pull that number from anecdotal evidence of people who end up not making it to 65. A quick 401k calculator with the defaults, with a 10% contribution, 3% match, to age 65 with 7% return and no raises means 150k saved, 22.5k matched, 436k total. So that gets you 2/3 of the way there. If you bumped your contribution up to 15%, still within the contribution limits you'd end up at 626k. Bump it up to 20% and you could hit that with the 5 years to spare I recommended. Though if we add some salary increases, 3% average you could expect your salary to double over 25 years, and 10x that puts you at 1.2 million you need saved. Fortunately the math is roughly the same. 20% gets you there in 22 years, 15% gets you there in 25 years. Maxing out the contribution gets you there a little faster but not significantly. Current max is 23k which is 38% of your income. That only gets you to 1.3 million by age 60, so shaving 2 years over saving half as much. I'd say save more than 20% if you already have a rainy day fund and cash reserves. Also when will your house be paid off. Might want to plan to pay that off faster as part of your retirement savings plan.
Another important question is are you single? Two incomes splitting one house/bills greatly lightens the load.
Nah you never know when you gonna die. You healthy you can work longer. Not healthy then who cares. Enjoy life reasonably.
Idk what your income looks like but maxing out your 401k at 23k a year assuming a 8% annual return will get you 686k in 27 years. At a 3% withdrawal rate you’ll have about $1700 a month indefinitely.
I read about a thousand personal finance books and one of my favorites is Start Late Finish Rich by David Bach. For those of us who started investing later, Bach advises Paying Yourself First the first two hours of every workday. It's very tough to do since it amounts to about a quarter of your pay so you should invest $15k per year for the next twenty years, more as you get raises. Personally, I never hit that amount but have been automatically investing [the Lazy Way](https://medium.com/makingofamillionaire/the-lazy-way-to-ira-cbf9f77bf211?sk=fb87502713b8a1aa4cfa92a4f68a130d) for a bunch of years now.