This July 4th, I am asking myself: what does it mean to be an American — waving a flag, watching a parade, reciting the Pledge of Allegiance, singing the national anthem?

None of these seem particularly unique to the American experience. Every country has its flag, pledge and national anthem.

The core of our shared identity is the US Constitution, so in celebration of Independence Day, perhaps a new tradition of showing a respect for the Constitution and committing to understand it would help us find common ground and bridge our differences.

So today, July 4th, 2025, I’m reviewing the 5th Amendment from the Bill of Rights. This amendment enumerates five different rights.

Grand Jury

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury”

The state cannot charge someone without having agreement by a body of citizens (non-state actors).

The term “infamous crime” comes from the infamia, a punishment under Roman law by which a citizen was deprived of his citizenship. Supreme Court cases in 1886, 1922 and 1957 led to the general interpretation of “infamous crime” to be crimes punishable by one year in prison; more generally, felonies.

Military Exception

“…except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of war or public danger“

Active members of the armed forces do not receive the right to a grand jury.

Double Jeopardy

“Nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb”

The state cannot try someone twice for the same crime. Generally, once a jury is selected or a plea has been entered, the prohibition against double jeopardy applies. This discourages the state from using the system to harass citizens.

Self Incrimination

“nor shall be compelled in any criminal case to be a witness against himself,”

Historically, up until the 18th century, torture was considered to be justifiable to exact information and confessions. The right against self-incrimination has been upheld repeatedly in 1936, 1940, 1944 and most famously in 1966 (Miranda). In the 21st century, the state cannot force the divulging of passwords or unencrypted copies of encrypted data.

Due Process

“…nor be deprived of life, liberty, or property, without due process of law“

A core component of “due process”, is procedural due process: the defendant must be given

• adequate notice
• the opportunity to be heard
• adjudication by a neutral third party (most commonly, the courts)

One reason that procedural due process must be afforded everyone, citizen or not, is the potential for the state to claim (through bureaucratic mistake, or deliberate malevolence) that a citizen is not a citizen, and then remove them without procedural due process.

The only protection citizens have against such a state action is to have a neutral third party to which the person can prove their citizenship.

Justice Antonin Scalia wrote “it is well established that the Fifth Amendment entitles aliens [non-citizens] to due process of law in deportation proceedings.”

The due process clause is one of the most important protections against actions by the state and the concepts go back to at least 1215. From the Magna Carta:

“No free man shall be seized or imprisoned, or stripped of his rights or possessions, or outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send others to do so, except by the lawful judgment of his equals or by the law of the land.”

The phrase “due process of law” first appears in 1354:

“No man of what state or condition he be, shall be put out of his lands or tenements nor taken (taken to mean arrested or deprived of liberty by the state), nor disinherited, nor put to death, without he be brought to answer by due process of law.”

Takings Clause

“…nor shall private property be taken for public use, without just compensation.”

Eminent domain is the power of the state to take private property. This final clause in the Fifth Amendment was aimed at ensuring the property owner received fair payment for property. Regrettably, this doesn’t apply to civil forfeiture, for which there are fewer protections.

For a more detailed review, please refer to the Wikipedia article.

Since childhood, I‘ve heard it said that Republicans are good for the economy. I heard it so much, I assumed it was true. But there is plenty of discussion on the web, so I wanted to gather data from official sources to see for myself.

I selected these measures of effectiveness.

• Stock Market Performance
• Economic Growth
• Unemployment Rate
• Increase in Deficit
• Inflation Rate
• Murder Rate

Reviewing 14 presidents beginning with Harry Truman, we get the following results (through the end of 2023):

On average, for every measure, Democrat administrations have done better than Republican administrations. Additional commentary can be found in this Wikipedia article including research that corporate profits are also significantly higher under Democratic administrations.

Note that while the averages for capital gain impact and inflation rates favor the Democrats, the correlations are low (0.1) and it cannot be asserted that Democrats (as a party) are better with respect to these measures. However, the correlations for unemployment, deficit and murder rates (0.4–0.6) imply a real difference by party. GDP growth correlation is weak (0.2), but still possibly significant.

In short, any belief that the Republican party is generally better for the economy is false, and the opposite is more likely to be true.

Disclosure

I have never been a registered Democrat, and have voted for many Republicans, though not since 2015.

Data Sources

S&P 500: Yahoo Finance

GDP Annual Growth: St Louis Fed GDP

Unemployment Rate: St Louis Fed UNRATE

Deficit: White House Historical Tables

Inflation Rate: Consumer Price Index for All Urban Consumers (CPI-U) bls.gov CUUR0000SA0

Murder Rate: FBI Crime Data Explorer

Some History

In 1960, every state had an anti-sodomy law. In Ohio, gay men were often jailed until 1972. Gay men were still prosecuted up through 2002. It wasn’t until 2003 in Lawrence v Texas at the Supreme Court, that gay men could have some confidence they wouldn’t be arrested for being gay. I was 45.

In 2015, Obergefell v. Hodges opened the door to same sex marriages. I was 57.

I still remember the fear and anxiety of living in a world that would rather lock me up.

For years, neither political party was willing to support equal rights for the LGBTQ community. The Democratic party started moving in the right direction, but progress was slow. Bill Clinton, while putting into place an executive order prohibiting discrimination against gay and lesbian federal workers, still signed DOMA in 1996. While Barak Obama supported civil unions, in 2004, felt it necessary to say “I’m a Christian, and so although I try not to have my religious beliefs dominate or determine my political views on this issue, I do believe that tradition and my religious beliefs say that marriage is something sanctified between a man and a woman.”

In 1978, when Arkansas and Oklahoma had passed laws prohibiting the employment of gay teachers, California State Senator Briggs started a similar ballot initiative in California. Gay Democrat David Mixter met with Republican Ronald Reagan who was planning a run for president. Reagan’s support helped stop anti-gay Proposition 6 from passing. Shortly after, gay Republicans formed Log Cabin Republicans. The organization had some impact in the 1980s, and the George W Bush campaign was remarkably free from anti-gay rhetoric.

But that was then.

Republicans 2023

As of 2023, Republicans have introduced an enormous number of anti-LGBT/anti-trans initiatives across the country.

• From the Equality Federation (311 bills)
• From the ACLU (389 bills)
• From the Trans Legislation Tracker (455 bills)

This is not random, but part of a political strategy. Recently Mother Jones had some interesting details about the organizations behind many of these initiatives.

The shift is not a secret, the Texas GOP released their platform on 6 July 2022. Of the 274 planks, we find:

• Homosexuality is abnormal (#155)
• No hormone blockers, hormones or surgery for those under age 21 (#156)
• Repeal of gay marriage (#208)
• Prohibit adoption by gays (#215)
• Repeal the 1965 voting rights amendment (#245)

The same platform document expands freedom in many medical rights (#134, 137, 142, 152, 165), but parents, children and doctors are not free to make medical decisions together regarding gender dysphoria. And doctors are punished with prosecution if they do. Even trans adults 18–21 are prohibited from gender-affirming care.

As someone who voted Republican in the past, I can understand the appeal of a party that claims to be for freedom and economic growth. But a party that is a mashup of libertarian and social conservativism is going to struggle to keep these in balance. And at this point, social conservatism is the predominant voice and the LGBTQ community is the target.

What Children Hear

Parents of trans children who are still voting Republican when that party is waging a war on their children should consider what message they are sending to their children.

You may not want to send the message, but what they’ll hear is that you care more about party affiliation than you do about their freedom or mental and physical health and safety.

For over half my life, homosexuality was criminalized in Ohio. Gay men were charged and jailed for having sex with other men. While I still love my family, I am realistic in knowing that they vote for candidates who would put me in jail and, while regretting that outcome, would not change their vote, even if they’d have a chance to go back in time. None of the freedoms I have today as a gay man are thanks to my family, and with the pendulum swinging back, it’s true as much today as it was 30 years ago.

For the LGBTQ community, chosen family is usually more important than blood family because they cannot count on or trust their own family to support them. As humans, our love is never perfect; as parents or as spouses. It is sad when party loyalty is more important than love for your children.

If you want to support your LGBTQ children, take some concrete steps to show that you understand what is happening today. Consider joining and supporting PFLAG. Contribute to organizations that are fighting for the rights of the LGBTQ community such as the ACLU, Equality Ohio or the Equality Federation. If you are a life-long Republican, take steps to fight those policies within the party. Abstain from voting for candidates who actively campaign on anti-LGBTQ policies. Let your children know the steps you are taking.

Your LGBTQ children are listening.

For an introduction to social security retirement benefits, please read this article first. This second article on social security describes additional retirement benefits that may be available to married couples.

If you are married, it is possible that the size of your social security benefit may be larger that what you might otherwise receive based on your own individual contributions into the system.

However, various factors including the Government Pension Offset (GPO) can reduce or eliminate the effect of those additional benefits.

Background

In the 1930s, benefits were established to compensate spouses who stayed home to raise a family and were financially dependent on the working spouse, even if they had no employment history.

However, it is now common for both spouses to work, each earning their own social security retirement benefit. Social security attempts to balance the needs of these two different household models.

Spousal Benefits

When the first spouse retires, the second spouse becomes eligible for a benefit of up to 50% of the first spouse’s social security retirement benefit. The second spouse must be at least 62 or taking care of a child under the age of 16.

Example 1: Spouse A retires at the normal retirement age (65–67 based on birth year), and receives $1000 a month in social security benefit. Spouse B is the same age as spouse A, but has never worked. Spouse B applies for spousal benefits and receives 50% of the spouse A retirement benefit, or $500.

However, if the second spouse has worked and is entitled to receive their own social security retirement benefit, the second spouse receives the bigger of the two benefits.

Example 2: Two working spouses of the same age retire at the normal retirement age and both receive a social security check. Based on each spouses earnings history, spouse A receives $1000 a month, and spouse B receives $800 a month. Because spouse B benefit is greater than 50% of the spouse A benefit, spouse B benefit is unchanged at $800.

Example 3: Two working spouses of the same age retire at the normal retirement age and both receive a social security check. Based on each spouses work history, spouse A receives $1600 a month, and spouse B receives $600 a month. Because spouse B benefit is less than 50% of the spouse A benefit ($800), spouse B receives $800 rather than $600.

Early Retirement

The penalties for early retirement apply to each spouse independently. If the first spouse retires early, as shown in the first article, the Primary Insurance Amount (PIA) could be reduced by as much as 30%.

However, if the second spouse applies for spousal benefits prior to their reaching the normal retirement age, the spousal benefit could reduced by as much as 35%.

Example 4: Spouse A is age 67 and retires at the normal retirement age receiving $1000 a month. Spouse B has never worked and is age 62 but chooses to apply for spousal benefits. The normal spousal benefit would be 50% of $1000, or $500. However, since spouse B is applying for benefits 60 months before their normal retirement age, the spousal benefit is reduced by an additional 35% resulting in a $325 benefit.

The reduction is computed by reducing the benefit by 25/36 of 1% for each month for the first 36 months.

36*(25/36)*.01 = .25

The reduction from the remaining 24 months reduce the benefit by 5/12 of 1% for each of these remaining months

24*(5/12)*.01 = .1

.25 + .1 = .35

(1.0-.35) * $500 = $325

If the second spouse retires at the normal retirement age, the second spouse would receive 50% of the original PIA, regardless of when the first spouse retired.

Example 5: Spouse A is age 62 and chooses early retirement. The PIA is calculated to be $1000 but is reduced to $700 due to early retirement. Spouse B has never worked, but is age 67 (normal retirement age). Spouse B receives 50% of $1000, or $500.

See this for additional details on the impact of early retirement on spousal benefit.

Widow/Widower Benefits

The deceased must have already qualified for benefits, normally 40 credits for those older than 30 (fewer credits are required for those who are younger).

If the widow(er) has reached the normal retirement age, the benefit will pay the greater of what the widow(er) was already receiving or 100% of the benefit amount the deceased was receiving.

If the widow(er) is age 60 or older, but not yet the normal retirement age, the benefit is adjusted downward up to 28.5% (.339 per month before normal retirement age). See Receiving Survivor Benefits Early.

If the widow(er) remarries after the death of their spouse, the remarriage will not terminate the widow(er)’s benefits as long as the benefits have been claimed prior to the remarriage.

Government Pension Offset (GPO)

While only about 15% of private sector employees have pensions, as much as 86% public sector employees (federal, state, local, education, health care) now have access to pensions.

However, many of those public sector organizations have received waivers to opt-out of the social security system. That means that during the time that people worked for one of these organizations, no social security tax was paid by the employer or withheld from the employee’s wages.

Before enactment of the Government Pension Offset (GPO) in 1977, if spouse B in Example 2 was a government employee who didn’t pay into social security and earned an $800 government pension, the SSA paid spouse B the full spousal benefit (50% of $1000) resulting in spouse B receiving a total of $1300.

The GPO was originally designed to limit the social security benefits of government employees who don’t pay social security taxes to be the same as workers in the private sector who paid social security taxes, in other words, the maximum of the two benefits. However, in 1983, congress changed the law so that the reduction in social security benefits was limited to two-thirds of the government pension.

Example 6: Two spouses retire at the normal retirement age. Spouse A receives $1000 a month from social security, and spouse B receives $800 a month from a pension (not social security). When spouse A dies, spouse B (the surviving spouse) would be entitled to receive $500 from the deceased spouse benefit. However, since spouse B is already receiving $800, 2/3 of that benefit ($533) is still greater than the $500 deceased spouse benefit, so spouse B does not receive any additional benefit.

Example 7: Two spouses retire at the normal retirement age. Spouse A receives $1200 a month from social security, and spouse B receives $500 a month from a pension (not social security). When spouse A dies, spouse B (the surviving spouse) would be entitled to receive $600 from the deceased spouse benefit. Spouse B’s pension is $500 a month, 2/3 of that is $333 which is less than the $600 deceased spouse benefit. The difference ($267) would be paid to spouse B as a surviving spouse benefit.

Divorce

If a person was married for more than 10 years, the spousal benefit is still available even after divorce. The ex-spouse must be at least 62, and if the ex-spouse has not yet retired, there is a two year delay before the person can apply for the spousal benefit.

If a person married, divorced and remarried, the spousal benefit is the benefit from the second marriage. If the person were married and divorced twice, (each marriage lasting longer than 10 years), the benefit will be the maximum benefit that would have been received under any one of the marriages.

Ex-spouse 1 social security retirement benefit: $1800/month

Ex-spouse 2 social security retirement benefit: $1000/month

The spousal benefit would be $900/month (50% of $1800).

Divorce and Widow(er)

If a person was married for 10 years or longer, and remained divorced without remarrying through age 60, the person is eligible to receive the full widow(er) benefit upon the death of the ex-spouse.

Summary

In addition to the individual social security retirement benefit, married couples have additional benefits, especially if one spouse had no individual income, or a lifetime earned income that was significantly lower than the other.

• Spouses qualify for their own retirement benefit or 50% of their spouses’ benefit, which ever is greater.
• If married 10 years or longer, even divorced spouses can qualify for a spousal benefit if they have not remarried.
• Applying for benefits before normal retirement age can reduce the spousal benefit as much as 35%.
• Those receiving government pensions may see their spousal benefit reduced or eliminated.
• Widow(er)s can qualify for up to 100% of the deceased spouse’s retirement benefit if the surviving spouse did not remarry before age 60.
• In some situations widow(er)s of ex-spouses may still qualify for widow(er) benefits.

The Social Security Administration (SSA) issues a Social Security Benefit Statement that you may receive in the mail or view online at https://secure.ssa.gov.

However, the statement does not tell the whole story.

Americans are fairly bad at retirement planning, saving only 11% of what they need in retirement. So how awful would it be to depend on social security only to receive hundreds less a month than you thought you were going to get?

Some retirees are dismayed when they receive as much as $480 less per month than what the statement says. This is not deception on the part of the SSA. Some things just aren't known until you retire.

Understanding the SSA benefit calculations will help you make sure that you have enough money to support yourself throughout your retirement and avoid unexpected surprises.

Minimum Requirements

To receive social security retirement benefits, you must have paid in to the system. Employees earn up to a maximum of 4 credits per year. Workers are entitled to receive social security retirement benefits once they have earned 40 credits.

Beginning in 1978, for each $250 of income in a year, an employee received one credit. The required earnings were indexed for inflation each year so the required earnings to earn one credit in 2020 has risen to $1470. In 2020, once an employee earned 4*$1470=$5880, they received 4 credits, the maximum credits for one year.

Average Indexed Monthly Earnings (AIME)

While 10 years earning $5,880 a year is enough to qualify for a social security retirement benefit, the benefit won’t be much. The SSA averages 35 years worth of earnings and any missing years are counted as $0 years. Therefore, you must have 35 years in the workforce to maximize your benefit.

The SSA keeps track of your lifetime reported earnings from the annual W-2s submitted by your employer(s). There is a cap on what wages are considered and what you pay tax on. This “capped” wage is labeled “Social Security Wages” (box 3) on your W-2. It may be less than your total wages which are labeled “Wages, tips other compensation” (box 1). [See Contribution and Benefit Base for more details.]

If you were self-employed, the IRS supplies the data you reported on tax form Schedule SE to the SSA.

To compensate for inflation, the SSA adjusts prior year earnings upward before averaging your earnings. Each year the SSA calculates the national average wage which they call the Average Wage Index (AWI). The SSA uses the AWI to adjust your prior years’ earnings.

The highest 35 years of these adjusted earnings are averaged to created the Average Indexed Monthly Earnings (AIME) [See these examples].

Primary Insurance Amount (PIA)

The Primary Insurance Amount (PIA) is the benefit a person would receive at their normal retirement age (65–67 based on birth year). At this age, the benefit is neither reduced for early retirement nor increased for delayed retirement.

The PIA is a sum of three percentages of different portions of your AIME.

• 90% of the lowest amount,
• 32% of the middle amount, and
• 15% of the remaining amount.

These different percentages are designed to provide the most help to those with the least incomes.

The three ranges of the AIME are separated by two bend points, which go up each year according to the AWI. The bend points that apply to you are those from the year you turn 62, no matter when you beginning collecting social security.

Example: Tahani is 67 in 2021 and is planning on retiring. Her AIME is $5700. She turned 62 in 2017, so the bend points are from 2017 in this table, $885 and $5336.

.90 * ($885) + .32 * ($5336–$885) + .15 * ($5700–$5336) = $2,275.42

Tahani’s PIA is $2,275.42.

Cost-Of-Living Adjustments (COLA)

Since the PIA is calculated using the bend points at age 62 (earliest retirement age), if the individual then waits to take retirement at normal retirement age, the amount of the PIA is adjusted by the Cost-of-Living Adjustments (COLA).

Example: Tahani retires at age 67 in 2021. The COLA for the four years from 2017 to 2021 are 2%,2.8%,1.6% and 1.3% respectively.

((($2275.40 * 1.02)*1.028)*1.016)*1.013) = $2,455.40

[SSA truncates each calculation to the nearest dime]

The SSA issues checks in even dollar amounts, so Tahani’s social security check would be $2,455.00. The retirement benefit continues to increase each year thereafter by the COLA.

Early Retirement

In the case of early retirement the AIME is reduced each month before normal retirement age.

Example: Eleanor plans on retiring in 2022 when she turns 62. Her normal retirement age is 67, so she is retiring 60 months early.

The reduction is computed by reducing the benefit by 5/9 of 1% for each month for the first 36 months.

36*(5/9)*.01 = .2

The reduction from the remaining 24 months reduce the benefit by 5/12 of 1% for each of these remaining months

24*(5/12)*.01 = .1

.2 + .1 = .3

By retiring early, Eleanor’s social security check would be reduced by 30%.

If at all possible, avoid applying for social security retirement benefits before your normal retirement age to avoid significant reductions in benefits, even if that means working part time until normal retirement age.

Delayed Retirement

For anyone born 1944 or later, each year that retirement is delayed after normal retirement age until age 70 provides an 8% increase.

Example: Janet is scheduled to retire in 2022 at age 69. Since Janet was born in 1953, her normal retirement age is 66. By retiring three years later, Janet’s social security check would be increased by (3*8) = 24%.

Windfall Elimination Provision (WEP)

In the early 80s, 60% of private employers had pensions. According to the U.S. Bureau of Labor Statistics, in 2020, that has declined to 15%. Conversely, prevalence of pensions in the public sector (federal, state, local, education, health care) has grown, with some 86% of public sector employees now having access to pensions.

However, many of those public sector organizations have received waivers to opt-out of the social security system. That means that during the time that people worked for one of these organizations, no social security tax was paid by the employer or withheld from the employee’s wages.

Congress passed legislation in 1983 to prevent what was considered “double dipping”. Employees who did not pay in to the social security system during those years, should not be entitled to receive credit for those years.

The WEP adjusts the first of the three factors of the PIA, downward from 90 percent to between 40 and 85 percent. However, it never reduces the size of the social security benefit by more than half of the public sector pension. Because the SSA does not know the size of the public sector pension until after the pension starts, the SSA cannot include a WEP calculation on the social security benefit statement.

The WEP is only applied if you have less than 30 years of substantial earnings on which you paid social security taxes. Teachers who are covered by such a pension program may have chosen to work private sector summer jobs with social security taxes withheld assuming this would qualify them for social security retirement benefits. However, they may find that their summer earnings were not sufficiently high to qualify as substantial earnings ($25,575 for 2020). Their earnings will still contribute to their AIME, but will not avoid the reduction factor caused by WEP. Fortunately, the reduction in social security retirement benefits through WEP is limited ($480 for 2020, $498 for 2021).

While there have been attempts to repeal the WEP (2013, 2015, 2017, 2019, 2021), these repeals have so far failed because the repeals have not addressed fundamental questions of fairness.

Summary

Understanding social security retirement benefits is challenging. Keep these key understandings in mind to make sure that you have enough money to support yourself throughout your retirement.

• Social security is based on your highest 35 years of inflation adjusted earnings. Because earnings are capped, the maximum social security amount at normal retirement age is $3,011 in 2020, or $3,790 for those who delayed until age 70 to apply for benefits.
• Early retirement can lower your retirement benefit as much as 30%.
• Delayed retirement can raise your benefit as much as 24%.
• Those who were in public sector pensions should try to ensure they have 30 years of substantial earnings on which social security taxes were withdrawn to avoid up to a $480 reduction in social security benefit (2020).

Married couples should also read this article that reviews additional benefits available to married, widowed or divorced couples.

You only need to do it once a year. And it just takes a few minutes.

Most of us say we only want a modest retirement. But what is modest? What is your annual income now? How much less would you be happy with? Will your expenses be higher or lower in retirement?

Take fifteen minutes and do a quick review.

Write down your age. Write down your approximate annual income. Go look up your total savings (401(k), IRA, savings accounts, etc.). Write the total down. That’s it. Now just read the rest of this article.

So how much does Social Security provide?

The maximum benefit you can get from social security (in today’s dollars) is $3,011 a month or $36,000 per year at full retirement age. But this benefit is if you made the maximum social security income (currently $137,500) for 35 years of your career. If instead you were paid an average income, your retirement benefit is more likely to be $1,884 a month or $22,608 per year (CNBC/Acorns presentation).

If social security were your only source of income, and you were paid at least an average income, your social security income would put you between the bottom 15% and 27% of households (Household Income Benchmarks).

$22,608 (15%) — $36,000 (27%)

How does that compare to your current annual income?

The difference (shortfall) is what you should plan for in retirement. If your current annual income is $68,400, (the US average household income in 2020), your shortfall in retirement would be between $32,000 and $46,000 as shown below.

$68,400 - $22,608 = $45,792

$68,400 - $36,000 = $32,400

Plan for the difference.

As true pension plans have all but disappeared, Americans must do their own planning and take advantage of whatever options are available to them such as 401(k), 403(b), 457 and TSP. For those without access to employer plans, there are a variety of IRAs.

The fundamental question, “How much will I need to save to generate that income?” The simple answer is: 20–25 times the annual income you need (4% rule, 5% rule, 5% IRS rule).

Continuing with the above examples:

$45,792 multiplied by 20–25 ➡️ $916,000 — $1,145,000

$32,400 multiplied by 20–25 ➡️ $648,000 — $810,000

So to retire at the US average household income requires somewhere between $650,000 and $1.2 million in today’s dollars.

Note that this is how much you would need today, not 20 or 30 years from now. The average household income keeps rising, about 2.6% a year, so if you are retiring in 20 years, you will need 1.026²⁰ times as much or $1.1 — $1.9 million.

How can you accumulate that much?

The US government created 401(k), 403(b), 457 and TSP plans for us to have an incentive to save money for retirement. If you worked in workplaces with a 401K from age 30 to 65, were paid an annual salary of $68,400, and your total contributions were 16%, you would be able to retire with the same income. (If an employer contributes 3%, then the employee would need to contribute 13% for a total contribution rate of 16%).

However, it is not a sure thing that we can be employed for 35 years and contribute 16%, so better to contribute 20% (including employer match) while you have access to these plans.

Right about now, you might be thinking:

“I understand the examples you are using, but I’m not 30. Where do I stand at my age, and how hard do I need to work to catch up with where I should be?”

Here is a table of retirement savings by age, showing median and average American retirement savings, and what is actually needed to retire with a household income of $68,400.

If you have achieved the Median, congratulate yourself! It may not be ideal, but it is better than half the rest of the country! If you have achieved the Average, give yourself another gold star! If you already have the Required amount, that is fantastic! Keep it up!

If you have not achieved the Required amount for your age, increase your 401(k) contribution as much as possible. Employees can donate up to $19,500 a year before tax, and for those over 50, $26,000 a year. If you are pressed, raise your contribution 2% each year until you are contributing in the 16%-20% range (IRS contribution limits).

Even if you don’t have access to a workplace savings plan such as a 401(k), save into an IRA or even a taxable account. And for the self-employed/free lancers/musician, etc., there is the SEP-IRA or solo-401(k) designed for that purpose.

Footnotes.

• Traditional advice is to plan on 75% of your pre-retirement income. Research from J.P. Morgan and Ariely and Holzwarth indicate that retirees are likely to spend more than their pre-retirement income in the first few years of retirement.
• The examples here are aimed at generating the US average household income in retirement. Lots of people live comfortably on the average household income, especially if they have always done so.
• How much income one needs in retirement depends on where you live and what your spending habits are. 2020 median household income in Mississippi: $45,081, in Maryland: $84,805.
• For those who are accustomed to higher incomes, downward adjustment may be difficult. Double the numbers in the Required column, to be in the top 25% of earners (Household Income Percentiles).