The Chronic Failure of Accumulation vs. The Riches Generation
2019-2020 Federal Reserve SCF data also shows us the average retirement savings by age in the U.S.:
- Ages 18-24: $4,745.25
- Ages 25-29: $9,408.51
- Ages 30-34: $21,731.92
- Ages 35-39: $48,710.27
- Ages 40-44: $101,899.22
- Ages 45-49: $148,950.14
- Ages 50-54: $146,068.38
- Ages 55-59: $223,493.56
- Ages 60-64: $221,451.67
- Ages 65-69: $206,819.35
Average salaries in the U.S. compared to savings
The median salary in the U.S. is $40,000/year
The median household income is $68,000/year
Rough estimates would assume that the average person makes by 65: 1.6 million dollars and that the average household has made 2.7 million dollars by 65 (Based on working 40 years).
With only $206,819 to show for it, 87% of the money is gone.
Here’s Where We Get It Wrong
It’s clearly difficult to impossible to accumulate enough money based on how much most people spend, general living expenses, and how the money is managed. You have to generate money to have money.
YES – we spend too much. Consumption is out of control now with tech, subscriptions, Amazon, credit cards, and Starbucks we blow way too much of our money. The average family could finance an inner city gentrification process or help a small country recover based on extinguished cash lost in 2020 consumerism. Yet, that’s not the biggest problem.
HOWEVER, it’s not just spending that is the problem. The real issue is that while we collect the paycheck, we don’t deploy it into businesses, investments, and other value-sustaining assets so that the 1.6 – 2.7 million you make in a lifetime becomes more or is at least preserved.
What Is the Recommended Retirement Savings by Age?
The above savings amounts may seem impressive, but consider this “rule of thumb” given by some financial experts on how much individuals should have saved in their retirement accounts for a goal of retiring by age 67:
- Americans in their 30s: 1–2 times their annual salary
- Americans in their 40s: 3–4 times their annual salary
- Americans in their 50s: 6–7 times their annual salary
- Americans in their 60s: 8–10 times their annual salary
That means, for example, that a 35-year-old making $45,000 a year should have up to $90,000 in their retirement accounts—twice the median average of what most Americans have saved.
FYI- According to a 2017 Study by the Center for Retirement Research, this is what is invested in the average retirement account:
- Ages 35-44: $37,000
- Ages 45-54: $80,000
- Ages 55-64: $104,000
4 Of The Most Common Reasons Uncommonly Recognized For Lacking Wealth
1. A Good Defense Is Not The Best Offense
While an effort to minimize consumerism (Limit spending) can be helpful, you don’t save your way to wealth. We all need to find a multitude of allocations; places where we invest so money can multiply.
2. Economic Apathy
This one is a killer! For the untold masses, if the bills are being paid and there’s some money left over, life is in check. This apathy or lack of fiduciary responsibility is clearly taking an enormous economic toll on the people. By getting clients un-apathetic and getting focused through a home budget, work budget, setting up their money machine, and counseling through investments we can take the EXACT same income and build financial security and financially healthy future.
3. Forty-hour-work-week Psychology
Your job makes $X, but in today’s world you need to determine how you also
Make $Y & Z – your additional streams of income.
Multiply X, Y, & Z through intelligent investing (Not just accumulating, but generating)
4. Paycheck v. Payoff
The paycheck is not the payoff. The paycheck is the seed money to go out and really do something with your life and your finances. You’ll never accumulate enough paychecks unless you got a great NBA contract.
