I woke this morning to an article describing the “magic retirement savings number.” It was enough to make me jump out of bed and review our household balance sheet.
Eight. Eight is the magic number. When you’re done working, if you want to retire, you may want to have about eight times your final annual salary in savings or retirement, in order to maintain the lifestyle to which you’ve become accustomed.
The number, established by Fidelity Investments, can be broken down into age-specific milestones: “By age 35, your goal is to save an amount equal to your annual pay. By 45, you will want to have saved about three times your salary, rising to five times your salary by 55.” (It’s important to note that Social Security benefits will go down over time, as the article suggests, and private or public pension funds could help, but those contracts can be changed or eliminated if history or new developments are any guide.)
My husband is 40, and I’m 42. So I’ll estimate that at this point in time, we need to have in savings about twice our household income. Good to know.
Then, I read the comments section of the article. It was… illuminating. Highly sophisticated readers with a significant command of numbers, their own financial numbers in particular, weighed in on the discussion. Not surprisingly, political philosophies came into play. Many people who have worked very hard and saved their money do not want their money taken from them in taxes. There’s a chance that some (many?) of these same people may not like the idea of supporting, through their tax dollars, others who have not saved.
The median income in the United States is $50,054, according to 2011 U.S. Census Bureau data.
Let’s consider those that are making twice the median income — about $100,000. Seems wealthy. Is it? According to Fidelity Investments, at 40, you should want $200,000 saved. At 45, about $300,000. And at 50, about $400,000.
Perhaps like me, you have some friends out there in those age groups, making around that number.
How many families–earning around $100,000, between the ages of 40 and 50–have done and are doing what they can, individually, to save responsibly for their future economic independence?
I’m trying to figure out that number. I’m trying to figure out how that number relates to the same number of voters who are likely to vote for one candidate over another. I’m hoping that the number is no more than equal to the number of likely Romney voters. That would mean voters are voting in favor their own economic interest–in that their economic interests will be safe from the likely effects of Romney’s domestic policy.
But I have a feeling that the numbers are not equal. I have a feeling that among higher earners (say between $100,000 and $200,000 in household income), likely Romney voters outnumber those are both low-spenders and big savers.
It’s disquieting. And it’s why political discussions are so complicated. I mean, it’s not like I can ask the guy down the street who wants to keep all his money and hates being taxed to the point of blind rage, “Exactly how much do you have, that you can imagine never being in need?”