The plight of the average American is about the same. We would have more if we had saved more.
In 2022 the average median retirement savings for American households was $87,000. As of 2024, 25% of all American non-retirees have no retirement savings. (Guardian Life Insurance)
We seldom see the big picture when we are in our early twenties. There is so much to do, such as obtaining a desired degree, marrying, buying a house, starting a family and essentially getting started in life. Very few, if any of us, had a mentor who sat down with us and said, “Here is where you can be if you start now.”
Few 18-year-old high school seniors have anyone writing numbers on the chalkboard for them.
When I say numbers, I’m talking about what you can have in dollars if you start now. No one told me when I was 18 what I could have in 50 years if I could just put $1,000 into the right stock or investment fund during my 18th year. That amount would be about $117,000 at an annual average interest rate of 10%.
One thousand dollars is not easy for most 18-year-old high school seniors to put their hands on, but it would be so worth it to any and all further down the road in life. Let’s say you put $1,000 in a Roth IRA at 18-22 years of age. These are the years that many Americans are spending $100,000 to $200,000 on college.
Year 1, you invest $1,000 with the prospect of its being $117,000 when you are 68. At age 19 you invest $1,000 with the potential of it being 106,000 in 49 years. At age 20 you invest $1,000 with the potential of it being $97,000 in 48 years. At age 21 you invest $1,000 with the potential of it being $88,000. In four years, you have potentially secured your financial future with an anticipated piggy bank loaded with $408,000.
The majority of Americans do not have $400,000 to draw from in their retirement years.
Let’s say you keep up a trend of saving money until you are 68 by continuing to save $100 a month. Your projected nest egg could be about $1,270,000. This is because you started young and stayed with a faithful savings plan. Up your monthly savings to $300 per month and you can anticipate about $3,171,181.28.
Obviously, interest rates will vary, but over the last 50 years the stock market has averaged making 10 percent per year.
Too many people wait until their 30s or even 40s to think about retirement. So much more can be accomplished when the process is started early.
There is more to life than money. We can’t take it with us. We can make the lives of our children and grandchildren a little easier if we can teach them that a little effort started early will bring about a big return down the road.
CNBC reported President Joe Biden had a net worth of $9 million. If he had only invested $1,000 a month from his generous political earnings during his 50-year career he would be sitting on $13,966,902.35. Biden will be fine but it goes to show you that all of us could do better.
Dr. Glenn Mollette is a graduate of numerous schools, including Georgetown College, Southern and Lexington Seminaries in Kentucky. He is the author of 13 books and his column is published in all 50 states. Visit Dr. Glenn Mollette online at glennmollette.com. Find his books on amazon.com and stream his music on all streaming platforms.