So we've talked about the average 401K balance for someone in their 20s, which was right around twenty-one thousand dollars. Once you get into your 30s, if you want to look at the average 401K balance, it's grown, it's doubled, but it's only about forty-eight thousand dollars on average for someone in their 30s. And if you look at the total contribution rate between employer and employee, it's improved a touch, it's 12.7 percent, but it's not 25.
I think it's interesting; you know, you're going to notice every decade that we go through, the closer you get to the retirement goal, if you procrastinate, or you know anybody who thinks that, "why do I need to worry about retirement? I've got plenty of years," you'll notice that savings rates are going to keep creeping higher because people will become self-aware that retirement is happening whether they plan or don't plan, so they'll save more. I'm trying to give you the heads up. This isn't enough. You need to go ahead and challenge yourself as soon as possible so that you don't have a disappointment at some point in your future. If you want to check yourself, if you want to do a state of the union, according to Fidelity, by the time you reach age 40, you should have 2.6 times your annual income saved. That should be the value of your retirement account. But again, we think if you can be saving 25%, there's a good chance you're going to blow these numbers out of the water because even for someone who doesn't start saving until 30, if you just say at age 30, "you know what, I just woke up, I just found the Money Guy show, I just started taking this seriously, and I'm going to start saving 25% of my gross income," if you can do that starting at age 30, you will likely be able to replace 80% of your pre-retirement income by the time you get to 59. You are still retiring early even if you didn't get off your duff until 30. If you wait until 35, now we're at the what I'm going to call the normal retirement age.
Even for folks who don't start saving until 35, if you can save 25% starting at age 35, it's likely you'll be able to replace 80% of your pre-retirement income by the time that you get to normal retirement age, 64. If you wait until 39, to the end of the decade, okay, now you're having to work closer to 70. Now you're having to push that retirement date out. A lot of grace in the ability that when you start saving for retirement, getting serious under 40. So, if you're in your 20s or 30s, this is your chance. Now you know, you said something. You said, "you've got to check yourself," would you say that, so you don't wreck yourself and wreck your retirement? Is that really what you're trying to share? I think that's exactly what I was saying.
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