How to Know if You’re “Behind,” and What That Even Means

The magic of social media is that it allows me a direct portal to reader concerns. When I asked y’all to tell me what you were worried about, someone wrote, “I want to know how behind I am.” I was struck by this, since most of the other submissions were very specific in nature: Should I focus on my 403(b) or IRA? Where should I house my emergency fund?

This one felt distinctly different, so I posted it and asked if anyone else was wondering the same.

Within an hour, I had 25 messages echoing some variation of the same:

“I know I’m behind.”

“I don’t want to know how behind I am.”

“I feel this way constantly.”

So the good news is, it seems like we’re all awash with feelings of inadequacy. Yay! Solidarity in pain!

But the question that remains is, behind what?

After toying with this question for awhile, I think I know what makes the most sense. We have to work backwards to know for sure. Otherwise, “behind” is arbitrary.

And because it’s helpful to use examples that you can then apply to yourself, I’d love to provide this retirement calculator resource that I used to make these determinations for myself, and walk you through it so you can do it, too.

It makes sense to me to look at this question factually, because it’s clear so many of us are sensitive or worried about it. We’ll get into the psychological component a little later in this post, but before we do that, I want you to truly know where you stand – maybe it’ll comfort you. Or maybe it’ll simply make this nebulous, far-off concept of retirement feel a little more real, and it’ll get you all jacked up on Mountain Dew.

As I manipulated the calculator, I noticed how sensitive the outcomes were. Think about it like shooting an arrow at something 500 feet away (like, a really f***ing powerful arrow, OK?). If you move your bow half an inch to the right, it feels like a pretty small change – but the distance between where it would’ve originally landed and where it’s going to land now are vastly different.

That’s how investing works. The direction you point the arrow now represents your decisions in present-day, the distance it has to travel is the time (35+ years), and where it lands is your outcome.

I feel very Khaleesi-esque using medieval weaponry as an investment metaphor so now that I’ve sufficiently embarrassed myself, let’s do this thing.

My hope is that by providing actual numbers, you’ll have a small benchmark – not to compare yourself, but rather as a sanity check. I always find that having some measuring stick against which to prop myself allows me to expand my consideration set for what I’d be capable of.

For example, I went on a walk the other morning with my friend who’s very into financial independence and early retirement. He’s 30, and he’s retiring at the age of 36. Yup – he’s saved so aggressively that he’s about to hit his “FI number,” or the number at which you can live off your investments’ interest, before he’s 40. This made me feel like my goal of 54 was WAY too lax, and I started imagining all the cool shit I could do as a 35-year-old retiree.

I want to warn you that we’re going to dive headfirst into some decently heavy-hitting financial terms and numbers and I encourage you with all my heart to tape your eyes open now, because I think actually understanding the objective reasoning behind why you may or may not be “behind schedule” will help you take some of the emotion out of this conversation. Scared yet? Let’s begin!

My path to retirement, according to this calculator

Here’s what the calculator requested of me, and you know what? I’m going to share – because walking the walk when it comes to transparency matters on this blog.

• Age: 25 (closer to 26, but who’s counting?)

• Pre-tax income: Combining my full-time job and multiple part-time jobs, between $75,000 and $80,000 (we’ll say $75,000 for this exercise)

• Current savings: $120,000

PAUSE! Let’s assess what we mean when we say “savings,” because this came up a lot in my DM conversations.

Savings = your savings and investments. In this definition, we’re including savings accounts, 401(k), IRAs, taxable brokerage accounts, checking, and more. This is not limited to literal “savings,” so don’t worry.

• Every month I save:

  • $1,065 in the 401(k) monthly ($600 + $465 match)

  • $500 in my Roth IRA (to hit the annual maximum of $6,000)

  • $700 in my General Investing account with Betterment

  • $300 in my regular savings account

  • Total: $2,565

• Then came the future stuff – what do I want for myself in retirement?

  • How much do I want to spend per month in retirement? $5,350 (this was a guess; it just feels like an amount that I wouldn’t really worry about)

  • Other expected income? $0 (catch me teaching water aerobics at the retirement community gym for free)

  • What age do you want to retire? 54 (only so I can keep up with my parents and show them they didn’t raise no fool)

  • Life expectancy? UGH, so morbid! I put 90, but who knows – my very healthy grandfather just passed suddenly of acute leukemia at the age of 84, so I feel like my expectations were a little shattered by that experience. It taught me life can sometimes be a lot shorter than you think – we thought he’d live to be 100.

  • Investment rate of return? 7%. I’m guessing based on the average for the last 100 years. You can play this more conservatively if you want. I’ve seen really conservative estimates use 4%, so it might be good to do a range.

Now for the fun part: Where will I be when I’m 54?

According to all the inputs above, this glorified spreadsheet told me:

I can retire at age 54 with $4.14M, and I’ll only need $3.97M to live until I’m 90 on my savings.

Now, this is obviously 11 years sooner than “retirement age,” but I think it’s reasonable.

Immediately, there are a few caveats that need to be made.

The average “rate of return” is a tricky mistress because we don’t live in a mathematically perfect vacuum

I’m assuming the average rate of return on the investments will be 7% – but a few “bad” years (read: low or negative returns) either in the very beginning when the principal balance is setting the tone or late in the game when I’d start using the money would really throw a wrench in this example. Even if you lowered the average rate of return to 6%, I’d only have $3.45M (HA, “only”), and we know that’s not enough since I’d need $3.97M to make this hypothetical scenario work.

KEY TAKEAWAY: It doesn’t matter if, 10 years from now, the market tanks -15% because there will be other years where it’s up 20%. The important thing is that the average rate of return, if you were to take all the results over the ~30-year period we’re using, is 7% or better. In a happier scenario, if it goes up to 8% on average, I’d have $5M. The average rate of return since 1957 is roughly 8%.

The only “savings” this math applies to is the savings that’s actually invested

I’m including all my savings here, and some of it isn’t invested to the same degree that the rest of it is. For example, my emergency fund is in a Betterment account called “Safety Net” that’s technically a taxable brokerage account (read: invested), but it’s only 15% stocks and 85% bonds. The growth in this account will never mirror the growth of the S&P 500 because it’s simply too “safe” to do so. That’s about $15,000 – there’s also approximately $12,000 in cash across a checking account and two savings accounts. The rest ($90,000) is invested in more aggressive accounts:

• The Roth IRA is entirely in VTSAX, which is a Vanguard index fund that tracks the entire stock market

• The 401(k) is in the Vanguard 2060, which is a Vanguard index fund that’s intended to reallocate over time for a target retirement date in the year 2060 (are you paying attention? If I want to retire when I’m 54, that’s 28 years from now – 2048 – I’m intentionally using a longer timeline so it’ll stay “riskier” and therefore more heavily invested in stocks, longer)

• The brokerage account is a “General Investing” account with Betterment that’s 90% stocks/10% bonds

  KEY TAKEAWAY: This calculator is an imperfect tool — I can’t input the more nuanced breakdown of all these different accounts, and truly, it would probably defeat the purpose of “rough estimate” anyway, since this isn’t precise enough to warrant that level of detail. The bottom line, however, is that you can’t assume you’ll make an average 8% rate of return on a savings account because it’s not invested. This is why I always encourage people (and I need to follow my own advice here!) to put the emergency fund aside, then lay off saving cash and invest instead. The $12,000 I have scattered across different checking and savings accounts isn’t doing a damn thing for me.

My intention is to save more than this every month as my income goes up, and yours probably is too

Yay, a positive twist!

In this scenario, I’m saving $2,565/mo. for the next 28 years and never increasing it. My intention is to increase this handedly as I make more money, but again, there’s no way to tell this calculator, “Hey! By the time I turn 30, I hope to be saving $5,000+ per month. Can you factor that in, please?”

All that to say, don’t be discouraged if the amount you’re saving right now results in a deficient outcome. It’s likely that you’ll be able to save more as you make more (and as you pay off student loan debt, which I know is a hot topic for a lot of us).

For example, I messed around with it and saw that I’d need to save $3,500/mo. (about $1,000 more than I am now) to retire at age 50 with the same parameters. I don’t know about you, but being told I’m an extra $1,000 per month away from retiring at the ripe old age of 50 really lights a fire under my ass. An extra $1,000 per month is truly not that hard to come by.

Assumptions this calculator is making

While the calculator can’t predict or account for big raises or serious changes, it’s assuming your salary will increase by 2% per year. This means a $60,000 salary this year will be a $61,200 salary next year. That’s a pretty safe bet, I’d assume, since most people probably receive some sort of merit increase or raise on an annual or biannual basis.

It’s also accounting for 3% inflation.

And while you’re expecting a 7% rate of return in the years leading up to your Golden Years, it assumes only 5% after you retire (because you’ll make your portfolio less risky once you know you’ll need the money).

In short, it’s doing a lot of things really well.

Now that you know how to figure out if you’re on track, let’s talk about this feeling of being “behind”

So depending on your personal situation, you’re either feeling very relieved or very panicked right now.

Either feeling is OK, and you know why? Because you have time.

You know why else it’s OK? Because some of the things that might be holding you back aren’t your fault.

I dig into some data in this post about how to pay off debt efficiently, but student loan debt is nearly inevitable and insanely high for most people who went through the standard 18-year-old’s approach to college.

Do we know now that you may have made some different choices had you known the full story? Probably. Can we blame High School You for doing what you thought was best for your future? Absolutely not.

In some cases, student loans aren’t crippling. Even $100,000 in student loan debt is manageable if you become, say, a dentist.

All that to say, it’s hard to save $2,500 per month if you’re paying off $800/mo. in loans. Please, for the love of God, do not beat yourself up or compare yourself to my example above if you saw some of those save rates and thought, I’m nowhere close. I didn’t have student loans, and that sent me eons ahead of schedule. (You can read this post if you’re interested in my background and how I’ve saved $120,000.)

While all that is true, there’s also (thankfully!) a piece of personal responsibility we can rely on here.

The system may be rigged and we might be playing some f***ed-up multiplayer game in a simulation run by Big Tech, but I know it’s still possible to save aggressively on both (a) low incomes and (b) with debt. It’s more challenging, sure, but it’s not impossible. If you’re serious about retiring before you’re 70 and you want to start adopting the mindset to do so, there are a few things to internalize right out the gate:

• We have to sacrifice caring what other people think. This is the #1 reason why it’s so difficult to save – because we’re humans, and we like to impress other humans. At our core, we’re really all those monkeys with the shiny pink butts walking around and wiggling them in one another’s faces. That’s why aspirational marketing does a number on us – because we see the lifestyle (the person) we could have or become, and we throw our credit cards at companies like Mercedes and Glossier and lululemon and Free People because by GOD, we want Becky in the apartment next door to see us slide into that shiny white E350 coupe.

  • The tradeoff is simple. You either work your whole life to impress other people, or you save for the first half so you can live the second free from responsibility doing whatever the hell you want. I think most of us would much rather be “free” than chained to the hedonic treadmill, but honestly, I can believe that to my very core and still buy an Audi (read: I bought an Audi).

• Nobody’s going to do it for you. This is a hard lesson in personal accountability, and these types of calculators can slap you across the face with it. The money isn’t going to come from some anonymous benefactor (unless, of course, you’re famous on OnlyFans, then maybe it will). But it’s empowering to step forward, both feet in the deep end, with 100% commitment – nobody’s going to do it for you because you’re the only one capable of setting YOU up for success. What an honorable role to play in your own life. YOU are your own anonymous benefactor. Once we internalize this, we remember that our Future Fabulous 50-Year-Old Self is counting on the 25-year-old version to put you first, Becky next door be damned.

• It might be shitty to be a 29-year-old who doesn’t go out to every happy hour, but it’s way shittier to be a 55-year-old stuck in a job you hate with retirement nowhere in sight. This is my attempt at using fear-based persuasion to get you to make good decisions. Is it working? I want you to imagine yourself at 55 years old with a deficient 401(k). You’re in a job you don’t love, but hey, at least you drive a BMW, right?! All your money every month goes toward your mortgage, car payments, and basic living expenses, and it feels like you’re just on a treadmill moving nowhere fast. This (very realistic) scenario is exactly why we’re willing to forego the materialistic stuff we can barely afford now – because we don’t want to set ourselves up for a mid-life crisis.

The blueprint that society gives us for life is to go to college, graduate, get a white-collar job working for someone else, spend almost every dollar we earn, work until we’re 70, then move to Florida and play shuffleboard until we die.

For some, this might sound like a fine plan. But I’d encourage you to think critically about what you want out of your one, singular shooting star of a life – do you want to work until you’re 70, or would you rather hang it up at 45 and spend years 45-85 doing whatever you want?

The critical, independent thought about designing your life intentionally instead of accepting the roadmap you’re given at birth is the larger picture here. So together, we’ll reframe “behind.” If my goal is to retire at 35, then holy shit, I am SUPER behind. But if 50 is my goal, I’m almost on track. If 65 is my goal, I’m done already and I’d never have to increase anything again.

Other resources

One of my favorite tools for developing my own strategy is this workbook that I built. It helps provide recommendations based on best practices, so if you feel like you’re learning a lot from these articles but need a little extra tactical help, it’s available here.