What size “nest egg” should my husband and I have, and by what age?
I would focus first on maxing out your RRSPs (or 401k) each year, and once you've done that, try to put another 10% of your income away into unregistered long term growth savings. Let's say you're 30 and you've been doing that since you graduated 7 years ago, and maybe you averaged 8% p.a. return and an average of $50k per year salary (as a round number).  I would say you should have 60k to 120k in straight up investments around age 30.  If that's the case, you're probably well on your way to a very comfortable retirement. There's a bit of working backwards that's required.   This is a summary of a spreadsheet I wrote which helps to get to the answer. What you see here is that at age 25, one might have saved about a half year's salary, assuming they worked 5 years. The numbers grow exponentially to at 65, about 15 years salary saved. This will allow a withdrawal of about 60% final income each year using the 4% guideline. More will come from Social Security in the States to get closer to 100%. The sheet start with assumptions, a 10% per year rate of saving, and an 8% annual return. Salary is assumed to rise 3% per year. One can choose their age, enter their current numbers and their own assumptions. I had to include some numbers and at the time, 8% seemed reasonable. Not so sure today. What I do like is the concept of viewing savings in terms of 'years salary' as this leads to replacement rate. Will $1M be enough for you? Only you can answer that. But the goal of 80-100% replacement income is reasonable and this sheet can be used to understand the goals along the way. (note, the uploaded sheet had 15% saving rate, not the 10 I thought. I used 15 to show a 10% saving along with a 5% match to one's 401(k). Those interested are welcome to enter their own numbers. The one objection I've seen is the increase to salary. Increases tend to be higher in the first 20 than the second, or so I'm told.) For most people, a million dollars is about right. Here's the back of the napkin math that you should consider to find your own estimate: If you take 1 and divide it by 2, that's roughly the size of the nest egg you'll need to live indefinitely. For example, if your retirement investments are earning 5% a year, and you want to live on $50,000 a year, you would need a $1,000,000 nest egg (50,000 / 0.05) Note that you don't have to make any assumptions about how long you'll live. The whole idea of a nest egg is that you live off the interest it earns each year without ever dipping into the principle. It's the gift that keeps on giving! When you die, you can pass it along to children, charities, etc. One more thing to consider is that $1M today is not the same as $1M 30 years from now because of inflation.  Consider that just 30 years ago (1980) the average house price in the US was only about $69K and a new car cost around $7K on average.  When you retire, it isn't much of a stretch to assume that you could be paying $1.5M for a typical house, $100K for mid-grade car, by the time you retire in 30 years.  Of course, over the rest of your working life your salary will likely increase due to inflation too, so that will help. In 1980 the average US income was around $19K/year. So even though that number seems huge, it is because it is denominated in currency that has been devalued significantly. Here's another answer on the topic: Saving for retirement: How much is enough? An angle on it this question made me think of: a good approach here is to focus on savings rate (which you can control) rather than the final number (which you can't, plus it will fluctuate with the markets and make you nervous). For example, focus on saving at least 10% of your income annually (15% is much safer).  If you focus on the final number: The way it works in the real world is that you save as much as you can, but there are lots of random factors and unknowns. Some people end up having to work a lot longer than they hoped to. Others end up able to retire early. Others retire on time but have to spend less than they hoped. But the one thing you can often control (as long as you have an income and no catastrophes, anyway) is that you spend less than you make. There are three numbers that matter in that calculation: 1) How much do you expect per month from in pension/social security/or other retirement programs? 2) At what age will each of you retire? 3) How long will each of you live? 4) What will your annual expenses be when you retire? Unfortunately #3 is the most important of the three and the hardest to know with any certainty.
"I would suggest you do three things: If you do all three of these, the time will come when ""2 months off to go to Italy this winter and ride bikes through wine country"" is something you both want to do, can afford to do, and have arranged your lives to make it feasible. Or whatever wow-cool thing you might dream of. Buying a vacation property. Renovating an old house. The time may also come when you can take a chance on no income for 6 months to start a business that will give you more flexibility about when and where you work. Or when you can switch from working for a pay cheque to volunteering somewhere all day every day. You (as a couple) will have the freedom to make those kinds of decisions if you have that safety net of long term savings, as long as you also have a strong and happy relationship because you didn't spend 40 years arguing about money and whether or not you can afford things." "I see three areas of concern for your budget: This is way high.  I am not sure how much of a house you live in, but the total of these two numbers should be around 25% not 41%. I am a person that considers giving an important part of wealth building, and gives to my local church.  But as one other person has rightly said, this amount is irresponsible.  I am okay at 12%, but would like to see you at 10% until you are in a little better shape.   That is pretty vague for a significant portion of your income.  What makes up that other category?   You are doing pretty darn good financially, although I would like to see some contributions to investments.  I think you are kind of failing there.  Your debt management is spot on.  That is okay, we can all get better at some stuff. There needs to be some numbers behind these percentages.  The bottom line is if you make an average household income, say around 55K, you are going to struggle with or without children.  If you guys make about 110K, and your wife makes 50% of your income, and she quits work to take care of the kidlets, then you will be in that ""boat"". Having said all that I find 37% of your income as questionable.  At least 5% of that should be invested, so we are kind of like at 32%.  That is a significant amount of money." I'm talking about household income. $300k is a huge amount of money for a single person to make, but $150k is certainly doable for most doctors/lawyers/engineers. If your spouse is also a high earner that will help put over the 1% threshold. http://www.myretirementblog.com/average-retirement-savings-by-age.html For ages 25-34: Obviously that's a huge range, and a 26 year old would at the very low end, but I would say anywhere near $25,000 is a ton. "If you dig deeper and look at the original study, what's being measured is ""retirement-plan participation"": specifically, money in 401(k) plans and IRAs.  This omits every other possible source of retirement money: things such as general savings, non-retirement investments, property ownership, pensions, etc. As an extreme example, I know someone who's retired with property worth a million dollars, another million dollars in stock, a pension providing thousands of dollars a month plus health insurance, and not one penny of what the study would consider ""retirement savings"". Yes, the average American family is under-prepared for retirement.  But it's nowhere near as bad as the article makes it sound." "I can understand your nervousness being 40 and no retirement savings.  Its understandable especially given your parents.   Before going further, I would really recommend the books and seminars on Love and Respect.  The subject matter is Christian based, but it based upon a lot of secular research from the University of Washington and some other colleges.  It sounds like to me, this is more of a relationship issue than a money issue.   For the first step I would focus on the positive.  The biggest benefit you have is:  Your husband is willing to work!  Was he lazy, there would be a whole different set of issues.  You should thank him for this.   More positives are that you don't have any credit card debt, you only have one car payment (not two), and that you are paying additional payments on each.  I'd prefer that you had no car payment.  But your situation is not horrible. So how do you improve your situation? In my opinion getting your husband on board would be the first priority.  Ask him if he would like to get the car paid off as fast as possible, or, building an emergency fund?  Pick one of those to focus on, and do it together.   Having an emergency fund of 3 to 6 months of expense is a necessary precursor to investing, anyway so you from the limited info in your post you are not ready to pour money into your 401K. Have you ever asked what his vision is for his family financially?  Something like:  ""Honey you care for us so wonderfully, what is your vision for me and our children?  Where do you see us in 5, 10 and 20 years?""     I cannot stress enough how this is a relationship issue, not a math issue.  While the problems manifests themselves in your balance sheet they are only a symptom.  Attempting to cure the symptom will likely result in resentment for both of you.  There is only one financial author that focuses on relationships and their effect on finances:  Dave Ramsey.  Pick up a copy of The Total Money Makeover, do something nice for him, and then ask him to read it.  If he does, do something else nice for him and then ask him what he thinks." There was a book written by Harry Dent in the early 90's that talked about the approaching demographic problem. The simple version of his theory is that people spend the most money between 45-49, after which people begin to become a drain on the economy as they utilize government benefits and begin draining retirement plans.   Boomers are moving out of this range and there is no group substantially large enough to follow them, according to him, until the mid 2020s when the Echo Boomers come through.   While he had some things way off and, u fortunately, seems to be overcompensating as of late and only hawking his newsletters, he had some great points in his first book.   To me, you can't fudge those numbers and what he said makes a lot of sense. That seems to be very similar to this article. Retirement calculation, in general, should be based on the amount of money needed per year/month and the expected life expectancy. Life expectancy, if calculated to 90 years (let's say) indicates that post retirement age (60 yrs.) your accumulated/invested money should generate adequate income to cover your expenses till 90 years. The problem in general is not how long you shall live but what would be your expected spending from retirement to end of life expectancy. The idea is at the minimum your investments should generate income that is inflation adjusted. One way to do this is to consider your monthly expense now i.e. the expense that is absolute minimum for carrying on (food, electricity, water, medicines, household consumables, car petrol, insurance, servicing, entertainment, newspaper etc.) this does not contain the amortizable liabilities (home loan, child's education, other debts). It is better to take this amount per family rather than per person and yearly rather than monthly (as we tend to miss a lot of yearly expenses). This amount that you need today will increase at a Compounded Annual Growth Rate (CAGR) of the average inflation. For example, if today you spend 100 per year in 7 years you will need to spend appx. 200 at 10% inflation. Now, your investments will not increase post your retirement, so your current investment needs to do two things (1) give you your yearly requirement (2) grow by a fixed amount so that next year it can give you CAGR adjusted returns. In general, this kind of investment grows by high net amounts initially and slowly the growth decrease. The above can be calculated by Net Present value (NPV) formulae (http://en.wikipedia.org/wiki/Net_present_value). The key is to remember that the money that is invested when you retire should be able to give you inflation adjusted returns to cover your yearly expenses. How much money you need depends on your life style/expectation and how much return is received depends on the instruments that you invest on. As for your question above on the difference between the age of you and your spouse, it better to go with the consolidated family requirement and get an idea of how much investment is necessary and provision the same as soon as possible from your as well as your spouse's income. Hope this helps.- thanks The purpose of this spammy Motley Fool video ad is to sell their paid newsletter products.  Although the beginning of the video promises to tell you this secret trick for obtaining additional Social Security payments, it fails to do so.  (Luckily, I found a transcript of the video, so I didn't have to watch it.) What they are talking about is the Social Security File and Suspend strategy.  Under this strategy, one spouse files for social security benefits early (say age 66).  This allows the other spouse to claim spousal benefits.  Immediately after that is claimed, the first spouse suspends his social security benefits, allowing them to grow until age 70, but the other spouse is allowed to continue to receive spousal benefits.   Congress has ended this loophole, and it will no longer be available after May 1, 2016. "My basic rule I tell everyone who will listen is to always live like you're a college student - if you could make it on $20k a year, when you get your first ""real"" job at $40k (eg), put all the rest into savings to start (401(k), IRA, etc). Gradually increase your lifestyle expenses after you hit major savings goals (3+ month emergency fund, house down payment, etc). Any time you get a raise, start by socking it all into your employer's 401(k) or similar. And repeat the above advice." First, welcome to Money.SE. If you are interested in saving and investing, this is a great site to visit. Please take the tour and just start to read the questions you find interesting.  1 - even though this is hypothetical, it scales down to an average investor. If I own 1000 shares of the 1 billion, am I liable if the company goes under? No. Stocks don't work that way. If all I have is shares, not a short position, not options, I can only see my investment go to zero.  2 - Here, I'd ask that you edit your country in the tags. I can tell you that my newborn (who is soon turning 17) had a stock account in her name when she was a few months old. It's still a custodian account, meaning an adult has to manage it, and depending on the state within the US, the age that it's hers with no adult, is either 18 or 21. Your country may have similar regional rules.  Also - each country has accounts specifically geared toward retirement, with different favorable rules regarding taxation. In the US, we have accounts that can be funded at any age, so long as there's earned income. My daughter started one of these accounts when she started baby sitting at age 12. She will have more in her account by the time she graduates college than the average retiree does. It's good for her, and awful for the general population that this is the case. "In my opinion, you can't save too much for retirement. An extra $3120/yr invested at 8% for 30 years would give you $353K more at retirement.  If your ""good amount in my 401k"" is a hint that you don't want us to go in that direction, then how about saving for the child's college education? 15 years' savings, again at 8% will return $85K, which feels like a low number even in today's dollars, 15 years of college inflation and it won't be much at all.  Not sure why there's guilt around spending it. If one has no debt, good retirement savings level, and no pressing need to save for something else, enjoying one's money is an earned reward.  Even so, if you want a riskless 'investment' just prepay the mortgage. You'll see an effective return of the mortgage rate, 4%(?) or so, vs the .001% banks are paying. Of course, this creates a monthly windfall once the mortgage is paid off, but it buys you time to make this ultimate decision.  In the end, I'd respond that similar to Who can truly afford luxury cars?, one should produce a budget. I don't mean a set of constraints to limit spending in certain categories, but rather, a look back at where the money went last year and even the year before that. What will emerge are the things that are normal, the utility bills, tax bill, mortgage, etc, as well as the discretionary spending. If all your current saving is on track, the investment may be in experiences, not financial products." When you say: I am 48 and my husband is 54. We have approx. 60,000.00 left in our retirement accounts. We want to move our money into something so our money will grow. We've   been looking at annunities. We've talked to 4 different advisors about   what is best for us. Bad mistake, I am so overwhelmed with the   differences they all have til I can't even think straight anymore. @Havoc P is correct: ...It's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could   invest poorly and maybe end up with 50K when you retire, or invest   well and maybe end up with 80-90k. But your goal is probably more like   a million dollars, or more, and most of that will come from future   savings. This is what a planner can help you figure out in detail. TL; DR Here is my advice: I'd suggest waiting until a bit after you are married. To Eagle1's point, even $23,000 is not a huge sum of money.  You didn't make any mention of a desire to buy a home, but if that becomes part of the plan, I'd want every cent of liquidity I can get. I wrote Student Loans and Your First Mortgage to explain why your buying power for the house is lowered by paying that loan. In your case, $5000 is 20% of $25000. For a good 20% down purchase, I'd want those funds available. You also don't mention retirement accounts. Depending on the home purchase timing, I'd start to think about putting aside at least the $5500 per year IRA/Roth IRA maximum. I understand that, but there are so many mitigating factors now that I don't feel safe. It's more like thinking that airplanes are safe, but if you're walking through the airport and you notice the pilot at the bar and them see him with his shirt untucked as he bumps his head getting into the airplane you might not get onto that airplane.   I wouldn't give this advice to someone in their 20s, but we are in our 50s. We have enough to live on comfortably with savings and my husband's pension and social security and passive income from the rental. It's just not worth the risk. As it is I am retired and can travel and eat whatever I want whenever I want. And the rental property is our hedge against inflation. I just see no reason to risk that.