Time for some more scary retirement readiness statistics – or at least scary for most Americans who are no doubt nowhere near on track to be able to afford to retire before age 75.
A recent CNN/Money video report said that by age 40, your investments should be 5 times your annual salary and your investments should be earning about 25% of your salary each year. That would mean a 40-year-old making $65,000 per year should have $325,000 invested in retirement accounts already. The "5 times your salary" total is "a good benchmark," the video tells us, and goes on to say that by age 50, a person should have 10 times your salary in retirement accounts and that by age 65, the goal to have a secure retirement is having 23 times your salary.
I know several 40-year-olds who are in the $65,000 salary ballpark, and I also know they all fall well short of having $325,000 socked away for retirement, even before what happened to those retirement accounts in 2008. Yes, 2009 provided a somewhat of a recovery with the Dow up 18.8% for the year, the NASDAQ up 43.9% and the S&P 500 up 23.5%. But I fear far too many still shell-shocked middle-age Americans did not contribute enough of their paychecks in 2009 – if they still had a job – to retirement accounts.
