The key number to retire: 20

We often hear save 10% for retirement and you’ll be fine. I don’t know of evidence to make that statement true. What’s the key number to retire at 65? The answer is 20. If you have 20 years of savings set aside, you’ll make it to 85. According to Harvard, the life expectancy for men is 73 and for women 79. This varies greatly by ethnicity.

This box of money would ease some retirement worries
  • For American Indian and Alaska Native: 65.2 years, same as in 1944
  • White Americans: 76.2 years
  • Black Americans: 70.8 years
  • Asian Americans: 83.5 years
  • Hispanic Americans: 77.7 years

What’s the use of working until 65 to die at 73? What’s the use of working until you die at 65? Your guess is as good as mine. We have a life expectancy issue and a retirement income issue.

There are lots of assumptions baked into having 20 years of savings. This includes how much your income grows every year, when you start saving, how much you save, and how much your savings earns over time. It includes inflation, caring for your parents, missing work because of medical illness, caring for a child, pregnancy for women, and many others that make retirement planning messy. For the sake of this post, we’ll focus on the first part.

Horrible example – $15 / hr, starts working at 18, no raises ever, no savings interest, retires at 65, saves 10% a year

This person will make $30,000 a year with 2,000 hours of work. Every year, they will save $3,000. After 48 years of busting their back, achy joints, and creaky knees, they will have saved $144,000 in total. This will cover 4.8 years of retirement, excluding Social Security. That’s a lousy retirement.

Horrible example #2 – $15 / hr, starts working at 18, 2% annual raise, no savings interest, retires at 65, saves 10% a year

This person starts at $30k a year, ends at $76.09k at 65, and saves $238k. Better right? Wrong. Because they leave the workforce with a higher income, they can only cover 3.13 years of a lousy retirement.

Worse example ##3 – $15 / hr, starts working at 18, 2% annual raise, annual savings compounded at 4% a year, retires at 65, saves 10% a year

First, the compounded savings rate is preposterous. We don’t know of any investment that has returned steady amounts over long periods of time.

How do the numbers change? Because our savings earns interest, we end up $597k. That’s better! That’s 7.85 years of retirement covered, and with Social Security, we have a chance at covering our income needs. By simply earning 4% a year, we increased our savings by $359k.

Previous example, with 15% savings rate

If you could swing saving 15% of your income, you would have $896k. This is exactly 50% more than $597k. That gives us 11.77 years for our wealth to run out. We have a better chance of reaching our expected life expectancy.

Best example, with 15% savings rate, 6% interest, and 2% annual raises

In our best example, we end up with $1.5 million in savings. Our savings are enough to cover us for 20.41 years. We are secure knowing if we live past our expected life expectancy, our needs are taken care of, without relying on any future interest. There are many combination of ways to get to 20 years of savings. Earn more while working, save more, save longer, and earn more. Start a business or hustle on the side.

We are no where close to what we need. We have many years of working, saving, and compounding to retire. Saving 10% for many of us is a stretch. Earning 6% consistently is tough. I admire Gen Z, who have a median of $33,000 saved for retirement. They are way smarter than I was. This quote from the Fortune piece frightens me.

That’s compared to $162,000 for Baby Boomers, $87,000 for Gen Xers, and $50,000 for Millennials. The estimated median savings among all workers is $67,000.


Boomers were born from 1946 to 1964. The oldest boomer is now 77, and the youngest 59. If you have $162k set aside for retirement, with plans to retire soon, that sounds stressful. Our own path was tough to save in our 20’s and 30’s, and we have started saving now in our 40’s. Look after yourself first, a good friend of mine told me. As long as companies make money, they’ll be fine.

Wishing you a successful retirement and rewirement.

Sincerely yours,


Published by smilingdad

My story is one of tragedy and redemption. We've made many mistakes along the way regarding our money. Our goal here is to show you how to take care of your money life long, and as much as we can, help the Earth along the way. I call it sustainable personal finance and ethical capitalism. Currently, I am a part time writer for Cleantechnica and part-time licensed financial professional, along with being a full-time dad.

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