How Much Money Should I have saved?

People just shouldn't count on inheriting money, or hoping that they will discover vast sums of unclaimed wealth via unclaimed asset searches through various state treasurer websites. No getting rich is not an instantaneous endeavor. Rather it takes years of hard work, savings, investing, and living beneath your means.

Unfortunately, for many unexpected expenses (kids, medical bills, car repairs) can put a crimp in the best laid plans. That's why it's wise to overspend when you're young. The folks at Fidelity recently published their research recommending what level of savings people should have (depending on their age) in order to make sure that they won't be impoverished during retirement.

Fidelity's rule of thumb for savings is below:

• 35 year olds should have 1x their annual earnings
• 40 year olds should have 2x their annual earnings
• 50 year olds should have 4x
• 60 year olds should have 6x their annual earnings.

Of course this is a rule of thumb and it probably won't work for everybody.  Some people should have a bit more than these figures if they are likely to live into their 100's...   And people who spend significantly less than they earn should be able to get away with significantly lower levels of savings.  Additionally, the longer you work, the less savings (in real terms) you will probably need.  Because if you retire at 50 years old, you'll have many years of paying for your own healthcare and no Social Security income.  However, if you wait until you're 70 to retire, you'll be eligable for gov't health insurance, and more than likely you'll be getting a healthy monthly check from the Social Security Administration.

(It's also worth noting that Fidelity assumes a long run return of 5.5% on your savings.  However, given how poorly the stock market has performed since 2000, and the federal reserves tendency to keep interest rates extremely low (Thereby taxing savers), that 5.5% return might be difficult to earn during the five years.

We're also interested to hear about your own thoughts on savings---What do you think is the right amount for you given your current age? Are you ahead or behind where you thought you would be at this time.  What advice would you give you children regarding their savings plans?