YOUR MONEY Retirement Reality Check
Here’s what the average American has saved for their golden years — how much do you have? :: BY JILL SCHILDHOUSE
I
t’s hard not to have a little “grass is greener” envy when comparing your finances to others.
You’ve no doubt wondered how
your friends or neighbors support their lifestyles, or whether they can afford to retire early — or at all. A lot of people strive to have a
certain amount saved by the time they quit working. For some, it’s the
Fed Consumer Expenditure Data
Average annual household spending by age group
thumb recommendations. Fidelity, for example, recommends that people have six times their income saved for retirement by age 50. T. Rowe Price recommends having 5.5 to 11 times your salary in retirement savings by age 60. Most Americans fall far
short of those goals. Indeed,
magical, albeit arbitrary, $1 million. Others follow salary-based, rule-of-
the median household has just $87,000 in retirement savings, according to the Federal Reserve’s most recent survey of consumer finances.
$1,455 The monthly housing expenses for retirees.
HOW MUCH MOST RETIREES MAKE AND SPEND Newly released data reveals that the average retirement income for adults age 65 and older is $75,254, while the average annual expenses for adults 65 and older total $48,872 annually. Most experts say you
Under Age 55
Age 55-64
Age 65-74
Age 75+
Source: Federal Reserve’s 2022 Consumer Expenditure Survey
Beware ‘Lifestyle Creep’ R
BY JENNIFER NELSON
etiring comfortably should be everyone’s goal — but
even if you mean well in your savings efforts, human nature can prove to be quite the obstacle. That’s because, over our
lifetimes and as our incomes rise over time, people will make incremental decisions that can add up big-time to the negative. Picture this: After getting a
raise, instead of investing it or paying down debt, you upgrade to a larger home or trade in your old car for something nicer.
78 NEWSMAX MAXLIFE | JUNE 2024
Maybe you join a more
expensive gym (because it was closer to your home), begin shopping at a higher-end grocery store, or update your wardrobe. It’s called “lifestyle creep”
or “lifestyle inflation,” and it can happen to the best of us. As we earn more, our tastes and expectations creep up, too. The problem is we often don’t even notice the gradual increase in our spending. It can also happen because
we have the illusion of having more money than we had
before, so we scale up our lifestyle. But the problem is, a $10,000 or $15,000 raise can quickly disappear if you spend it on flashy upgrades rather than debt management, emergency savings, or retirement planning. To help, here are six tips to
keep lifestyle inflation at bay the next time you get a big raise, bonus, or financial windfall.
1
Plan for your next upgrade. Change lifestyle creep from something that traps you to something you
plan for. What type of lifestyle do you envision? Want to eventually upsize your home, take a longer vacation, or even do something as relatively small as buying nicer linens and towels? Plan upgrades by
researching the costs before buying, then making a budget, creating a stretch goal, and plotting a time frame.
2
Invest windfalls. Direct any unexpected financial windfalls (bonuses, tax refunds) toward savings or
$64,798
$70,039 $56,374 $49,807
RETIREES©ISTOCK / COIN JAR/PITUKTV/SHUTTERSTOCK HOME ICON/IRFAN_SETIAWAN/SHUTTERSTOCK / MONEY/ELENAR/SHUTTERSTOCK
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