Math checks out: Boomer savings targets exceed average wage returns
Analysis using Social Security Administration wage data and S&P 500 total returns suggests that saving 5% of the average wage would result in approximately $550,000, while a 10% savings rate would yield about $1.1 million.
Financial influencer Caleb Hammer recently appeared on The Joe Rogan Experience, asserting that US baby boomers should have accumulated between $2 million and $5 million in savings by investing 5% to 10% of their average salary into the S&P 500 since 1990. Hammer expressed a lack of sympathy for those who failed to meet these targets, a sentiment that resonated with younger workers facing high housing costs and stagnant wages. Joe Rogan subsequently used Perplexity AI to verify the claim, with the artificial intelligence tool responding that the figure would be around $2 million to $5 million depending on specific assumptions.
However, a detailed analysis using Social Security Administration wage data and S&P 500 total return data indicates that Hammer’s figures likely assume higher earnings or savings rates than the national average. According to the Social Security Administration, the national average wage was $21,027.98 in 1990 and rose to $69,846.57 by 2024. Moneywise, which conducted the analysis, assumed contributions were made at the end of each year, a conservative approach compared to monthly contributions.
Under these parameters, saving 5% of the average wage each year from 1990 through 2025 would result in approximately $550,000. A 10% savings rate would yield about $1.1 million. While substantial, these figures fall well below the $2 million to $5 million range cited by Hammer. To achieve the higher targets, an investor would likely need a combination of above-average earnings, employer retirement matches, a longer investing timeline, or stronger market assumptions.
The S&P 500 has experienced significant volatility since 1990, including the dot-com collapse, the 2008 financial crisis, the COVID-19 crash, and the 2022 bear market. Despite these disruptions, long-term compounding remains effective for disciplined investors. A person saving 10% of average wages from 1990 through 2025 would have contributed less than $150,000 in total, yet could have ended up with more than $1 million, with the majority of the final balance derived from compounding rather than personal contributions.
Real-world outcomes are often influenced by factors beyond market returns, such as medical bills, layoffs, divorce, caregiving, and lifestyle creep. Dalbar’s Quantitative Analysis of Investor Behavior study notes that over 20 years, the average retail investor underperformed the S&P 500 by just over 6% annually due to behavioural challenges. Research from Vanguard suggests that working with a financial advisor can add about 3% in net returns over time through portfolio construction, tax efficiency, and behavioural coaching.
