According to The Millionaire Next Door you should have age X income /10 in savings or assets. This can mean your actual savings account, cd's, money market accounts, 401k, brokerage accounts, home equity or equity in any other assets. So I take that calculation, to which I then add my debt and subtract my actual assets to learn my negative net worth. I've only done it once but since I no longer have consumer debt, each transfer to my savings account and payment on a student loan brings me closer to having a zero net worth!
As though that isn't enough of a disparity, I have recently learned that a couple retiring at age 65 in 2008 should have $225,000 for health care, despite their eligibility for Medicare. I don't have to worry so much about that since the retirement age is creeping up every year and will probably be about 85 for someone my age.
By these formulae, I'm a long way behind; nevertheless, I'm trying to build up my savings and am a firm believer in putting 10% into a 401K any time it's an available option. If at all possible, it's important to leave it there in times of need.
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2 comments:
I don't do the math anymore ... it's too depressing. I owe Sallie Mae upwards of 150k, and I have no life aside from temp work. Life is just a big bowl of cherries!
There would be roomfulls of suicidal attorneys if we dwelled on it.
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