Plan 6: Median Mike

Let’s make a plan for the median household in the United States.

I’ve presented a few retirement plans for high income earners.  And though the simple math between income, expense, and savings rate holds true at all income levels, it’s much easier to meet your basic needs on six figures than on five.

So with apologies to his cousin, Average Joe, let’s make a plan for Median Mike.

A graph of a table with a complicated diagram of a plan


According to the latest available census bureau data, the median household has:

  • $59,039 income
  • $0 in retirement savings at Age 30 (Note: Many have substantial retirement savings, but the median family has little or none – I saw $0-$700) 

So let’s start a savings plan today that will last until Age 90:

  • Save 10% of gross income
  • Retire at Age 65,
  • Social Security will provide about $23,700 (real) per year


Replace 70% of household income in retirement, and outlive savings.

The Median Mike Plan

Start Today: Save 10%

Let’s start by saving 10% of each paycheck towards retirement.  Mike’s household starts saving now, retires at age 65 (with social security benefits) and enjoys 25 years of retirement.

Median Mike's trajectory with a 10% savings rate from Age 30
Figure 6.1: The Median Household Saving 10% Starting at Age 30

The image above shows a pretty successful plan considering the account balance of $0 at Age 30.  If Mike’s household can save $492 per month, they’re fairly well assured to have a comfortable retirement.

Start Today: Save 15%

If Mike is like a lot of people, once he sees the above plan he gets really aggressive and wants to speed it up and win sooner!  Instead of savings 10% of the household income, Mike decides to save 15%:

Median Mike's trajectory with a 15% savings rate from Age 30
Figure 6.2: The Median Household Saves 15% Starting at Age 30

Suddenly, retirement looks a lot more fun.  The median expected case continues to ramp up through old age, indicating Mike is likely to be able to leave a legacy for his children and grandchildren.  Most of the worst case scenarios are easy enough to plan around, and the best case scenarios are off the charts.

Wait a Decade to Start – Save 10%

Mike is 30, and he hasn’t started saving yet.  What happens if he waits another decade to start?

Median Mike's trajectory with a 10% savings rate from Age 40
Figure 6.3: Wait Ten Years to Start

It looks pretty bad.  Mike isn’t going to be able to retire safely at Age 65, and might not ever be able to retire.  Mike is less able to respond to surprises and emergencies, and his household is under additional stress from their financial situation.

According to, money problems are the second leading cause of divorce.  Start saving today Mike, and reduce the chances you’ll die broke and alone!

Here’s a picture of a cute puppy in case that last graph got you down:





Start today.

The middle family in the country just needs to save $500 per month to be assured of a good quality of life forever.  If you’re not able to save $500, start by saving $50.  Then look at your budget and squeeze out another $50.  Start hustling on ebay or delivering pizzas.  The sooner you start the less it will hurt.  But you have to start!

The median household at Age 30 with no savings can do it.  What’s your excuse?


I use the median instead of the average because of how asymmetrical the distribution of wealth is. I think it’s a better representation of a typical family’s situation.

2 Replies to “Plan 6: Median Mike”

  1. I think that most everyone can stand to save at least 15% of their income. The median savings in your projects is 450-600k by retirement, which would only given $16-24K in retirement, when they had been living at probably at least $35-40K post-tax with the median income you gave.

    Saving early is absolutely key! But you also have to save enough.

    Keep up the good work, mouse. I love looking at these models.


    1. Thanks TPP! Yes in this case working to 65 years of age and activating a modest social security benefit knocks out a big chunk of their requirements. With $21k from Social Security, they just need to make up another $20k or so to keep their standard of living — $500k is the right target to aim for.

      Of course, if they want to retire at age 55 instead, they’ll have to amp up the savings.

      Also, when you’re in the $40k income range, post tax should just about be equal to pre-tax, especially if you’ve been going after your Roth contributions.

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