I’m all for saving money, but stories like this one in today’s NYT always get my proverbial goat. It’s a review of two books, one of which emphasizes that saving one million dollars by the time you retire is officially not enough.

“Indeed, writing that you need at least a seven-figure nest egg is perhaps the biggest contribution that Michael K. Farr makes in A Million Is Not Enough,” the reviewer writes.

Ugh. That reminds me of the people who say you just can’t live in New York City on less than $150K a year. You want to shake them and say: “Gee — don’t about six million people do exactly that?”

A few facts for those who live outside Manhattan:

— The median household net worth in America is about $55,000. That number is, if you hadn’t noticed, substantially less than $1 million.

— Even for people about to retire (the 55-64 age bracket), the median is $112,000. (See here.)

— If you remove home equity — which is probably fair, since retirees can’t eat their guest bedroom — median net worth for families nearing retirement is just $32,000.

On one hand, those numbers are a bit scary, and they’re an excellent reminder that it is important to save, invest, et cetera at a young age. But on the other, they’re also proof that the vast majority of Americans will not have anything close to $1 million at retirement, and yet they will survive. Setting a goal that, for most Americans, seems so astronomically absurd only pushes them into inaction.

08 April 2008

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