**You should be able to run your own damn numbers about how much money you need to save up.**

I mean, that’s what I did back in 2016 in this post on my blog.

By now you’ve probably seen the by 35 meme that has an entire generation in a tizzy spawned by an article that says they are “supposed” to have saved 2x their income by now.

By 35, you should have twice your salary saved, according to retirement experts: https://t.co/QoVA6EFpHJ

— MarketWatch (@MarketWatch) May 12, 2018

When I ran my own version of the J.P. Morgan milestones (and I have no idea who did this first, J.P Morgan or Fidelity, Fidelity is quoted in the article, all I know is it wasn’t me that had the idea), I got a number very similar to 2x salary. In fact, if you make closer to $200,000, and hope to replace that income, my number is closer to 3x.

A key difference between the J.P Morgan milestones and Fidelity milestones are that J.P Morgan says you need to be at 2x by 35 if you’re saving 5% per year in the future, and Fidelity says you need 2x by 35 if you’re saving 15%.

How can the results differ so much? Easy. Return assumptions.

#### You know what they say about assuming.

J.P. Morgan assumes you get 6.5% returns pre-retirement and 5% returns post-retirement. Fidelity assumes the following enormous wall of text. Go ahead, see if you can figure out what this says:

The 10x savings rules of thumb are developed assuming age-based asset allocations consistent with the equity glide path of a typical target date retirement fund, a 15% savings rate, a 1.5% constant real wage growth, a retirement age of 67, and a planning age through 92. The replacement annual income target is defined as 45% of preretirement annual income and assumes no pension income. This target is based on Consumer Expenditure Survey 2011 (BLS), Statistics of Income 2011 Tax Stat, IRS 2014 tax brackets, and Social Security Benefit Calculators. Fidelity developed the salary multipliers through multiple market simulations based on historical market data, assuming poor market conditions to support a 90% confidence level of success. These simulations take into account the volatility that a typical target date asset allocation might experience under different market conditions. Volatility of the stocks, bonds, and short-term asset classes is based on the historical annual data from 1926 through the most recent year-end data available from Ibbotson Associates, Inc. Stocks (domestic and foreign) are represented by Ibbotson Associates SBBI S&P 500 Total Return Index, bonds are represented by Ibbotson Associates SBBI U.S. Intermediate Term Government Bonds Total Return Index, and short term are represented by Ibbotson Associates SBBI 30-day U.S. Treasury Bills Total Return Index, respectively. It is not possible to invest directly in an index. All indexes include reinvestment of dividends and interest income. All calculations are purely hypothetical and a suggested salary multiplier is not a guarantee of future results; it does not reflect the return of any particular investment or take into consideration the composition of a participant’s particular account. The salary multiplier is intended only to be one source of information that may help you assess your retirement income needs. Remember, past performance is no guarantee of future results. Performance returns for actual investments will generally be reduced by fees or expenses not reflected in these hypothetical calculations. Returns also will generally be reduced by taxes.

TLDR: the Fidelity portfolio assumes you’re invested very conservatively for the last 30 years of your life.

‘Okay’, you tell me, ‘enough about those idiots at the brokerage houses, what do your numbers say?’

I’m glad you asked.

#### To quote myself:

It doesn’t take much teasing of the data to find an interesting conclusion – if you are going to retire at 65 and are able to consistently save 15% throughout your working life, it’s important to get started by 35, but it is okay if you haven’t made much progress yet.

You would need to stay invested fairly aggressively to expect 6.5% returns over your lifetime, but it certainly isn’t unreasonable to expect to achieve.

It is also worth noting that these milestones are completely reverse engineered against having a certain amount of assets by a certain age, they say absolutely nothing about how reasonable it is to expect anyone to have saved up that amount by that time.

A little quick arithmetic tells us that if you were working from 25-35 and saving 15% per year, you’d have saved 1.5x your salary plus growth. Conveniently, if you are earning our aforementioned 6.5%, you end up with 2.02x your income at 35.

However, what if you were saving 15%, but your salary started lower than it finished? As it turns out, that makes a pretty big difference. If you made $50K to start, and five years in got a raise to $100K, at the end of your ten years you’ll have just 1.44x your income saved up. Much more realistic.

Even more realistic than that is if you saved nothing during your first five years at $50K, but saved $30K during the second five years at $100K. Then you’d have $170K by year 10, and wait, there’s more, instead of your spending being based off of $85K, ($100K minus 15% savings), the spending you’d need to cover when you retire would be $100K minus 30% savings, $70K. With $170K put away you’re well ahead of the game.

Obviously this is more complicated than it looks at first glance, but to sum things up: if you have 2x your income saved by 35 you are definitely on track, but if you don’t, you’re not off track, you just need to get started.