You need 1x salary in retirement by 35

[Rukh O'Rorke]

Dec 8, 2016 9:41:58 GMT -5 minnesotapaintlady said:

Dec 8, 2016 1:43:28 GMT -5 Rukh O'Rorke said:

I can't wrap my head around it being better making half the money.

It may be that quality of life isn't affected that much or even goes up. 

I heard the new boss was a caustic micromanager, and his wife left him for their accountant - his childhood best friend!

[NastyWoman]

Dec 6, 2016 9:25:45 GMT -5 minnesotapaintlady said:

Dec 6, 2016 9:09:34 GMT -5 @sroo4 said:

So she can die early and grumpy?     


Totally unrelated,  but have you ever seen a happy looking runner?   Ughh they are always making those "OMG Why the hell am I doing this?!?" faces... 

Well, some kind of exercise.  Lifestyle choices can ward off heart disease even with a strong family history.  

 weight lifting like   and  should work right?

[tskeeter]

Dec 5, 2016 12:22:47 GMT -5 Mrs. Dinero said:

Are you on target?
Forbes says Americans, as a whole, are not.
Age Salary
35 1x
45 3x
55 5x
67 8x

Majority of us here probably are. This might be a conversation to have with friends and family though.

I think the shortcomings of these stats is that they aren't directly applicable if you are going to retire before full retirement age, or if you need to plan for long life expectancy.

We have both situations.  I decided to bag the working thing at 60.  And DW's grandmother lived to nearly 103.  So we plan for 45 years of retirement, rather than the more common 20 year retirement.

Our work with financial planners as well as my own use of several retirement planning applications indicates that the 19 times gross income that we have accumulated, plus SS and a modest pension will meet our needs.  As a safety net, we do not include the value of the house in our projections and we carry LTC insurance.

If I was planning for an early and long retirement, I think I'd plan for more than 20 times gross income in retirement savings.  Especially if I didn't have pension income to help.

[NastyWoman]

Dec 5, 2016 14:46:57 GMT -5 minnesotapaintlady said:

I can never figure out what income to use.  My full-time job?  My full-time + part-time?  All jobs and child support? 

I like the expenses model better.  25X annual expenses at retirement.   I can't remember what the benchmarks are by age for that model though.

Based on the income model I will never be able to retire. However, based on the annual expense model I am there and then some. Mostly this is the result of getting a very late start on saving for retirement. So I paid of my 30yr conventional mortgage in just under 11 yr, max out all retirement vehicles and salt away as much as I can aside from that -> so I live off 40-45 % off my income. With a small pension, SS, and my savings my retirement income will be >my living expenses even now. I will just put in a few more years to build up a better buffer, just in case. But it is a good feeling to know that I don't have to keep working and if I get the boot because of whatever, I'll be just fine 

[svwashout]

Dec 10, 2016 3:41:11 GMT -5 tskeeter said:

Dec 5, 2016 12:22:47 GMT -5 Mrs. Dinero said:

Are you on target?
Forbes says Americans, as a whole, are not.
Age Salary
35 1x
45 3x
55 5x
67 8x

Majority of us here probably are. This might be a conversation to have with friends and family though.

I think the shortcomings of these stats is that they aren't directly applicable if you are going to retire before full retirement age, or if you need to plan for long life expectancy.

We have both situations.  I decided to bag the working thing at 60.  And DW's grandmother lived to nearly 103.  So we plan for 45 years of retirement, rather than the more common 20 year retirement.

Our work with financial planners as well as my own use of several retirement planning applications indicates that the 19 times gross income that we have accumulated, plus SS and a modest pension will meet our needs.  As a safety net, we do not include the value of the house in our projections and we carry LTC insurance.

If I was planning for an early and long retirement, I think I'd plan for more than 20 times gross income in retirement savings.  Especially if I didn't have pension income to help.

Same here, I initially retired at 49 and my grandparents who lived past their 40s died in their 90s. No pension and don't know how much SS will come to me; I've read half-ish is a reasonable guess. No house and no LTC insurance.

Back then I was a bit over 20x AGI, but when I accepted the deal management offered to postpone retirement my AGI went up quite a bit the past two years so I fell short. This year my income returns to normal so I should be back on track. Of course my boss could decide to turn me into a permanent wage slave by doubling my income every year.

I think the 8x AGI target at retirement comes from the old 3-legged stool model where you add 25% of old income from a 3% safe withdrawal rate on retirement savings to 30% pension and 20% from SS to get to 75% of pre-retirement income. With no pension and no SS, the savings target would rise from 8x to 25x.

I'd agree the expense model is more relevant than the income model, but you never know if the extra free time opens up a burning desire for expensive hobbies like collecting antiques or fine wines. Although there's no limit to wants, if you can say that in retirement you can afford anything that you could while you were working, I'd call that maximum readiness.

Targets for the expenses model can probably be similarly scaled and adjusted for retirement age too. To do this divide your work time into quarters, so if you start at 22 and retire at 50, they would be
29 @ 4x,
36 @ 12x,
43 @ 20x,
and 50 @ 33x.
Note that this is for "annual expenses minus pension and social security income" -- not raw expenses.

[thyme4change]

I'm at 4x (5x if I can include my home equity!) I will be 48 in a few weeks and my hubs is 45 - so it looks as if we are ahead.

I'm going to buy a new purse!

[Rukh O'Rorke]

Dec 11, 2016 11:17:40 GMT -5 svwashout said:

Dec 10, 2016 3:41:11 GMT -5 tskeeter said:

I think the shortcomings of these stats is that they aren't directly applicable if you are going to retire before full retirement age, or if you need to plan for long life expectancy.

We have both situations.  I decided to bag the working thing at 60.  And DW's grandmother lived to nearly 103.  So we plan for 45 years of retirement, rather than the more common 20 year retirement.

Our work with financial planners as well as my own use of several retirement planning applications indicates that the 19 times gross income that we have accumulated, plus SS and a modest pension will meet our needs.  As a safety net, we do not include the value of the house in our projections and we carry LTC insurance.

If I was planning for an early and long retirement, I think I'd plan for more than 20 times gross income in retirement savings.  Especially if I didn't have pension income to help.

Same here, I initially retired at 49 and my grandparents who lived past their 40s died in their 90s. No pension and don't know how much SS will come to me; I've read half-ish is a reasonable guess. No house and no LTC insurance.

Back then I was a bit over 20x AGI, but when I accepted the deal management offered to postpone retirement my AGI went up quite a bit the past two years so I fell short. This year my income returns to normal so I should be back on track. Of course my boss could decide to turn me into a permanent wage slave by doubling my income every year.

I think the 8x AGI target at retirement comes from the old 3-legged stool model where you add 25% of old income from a 3% safe withdrawal rate on retirement savings to 30% pension and 20% from SS to get to 75% of pre-retirement income. With no pension and no SS, the savings target would rise from 8x to 25x.

I'd agree the expense model is more relevant than the income model, but you never know if the extra free time opens up a burning desire for expensive hobbies like collecting antiques or fine wines. Although there's no limit to wants, if you can say that in retirement you can afford anything that you could while you were working, I'd call that maximum readiness.

Targets for the expenses model can probably be similarly scaled and adjusted for retirement age too. To do this divide your work time into quarters, so if you start at 22 and retire at 50, they would be
29 @ 4x,
36 @ 12x,
43 @ 20x,
and 50 @ 33x.
Note that this is for "annual expenses minus pension and social security income" -- not raw expenses.

interesting! I used to plan for retirement without SS, but it got too depressing - as in - I'd never be able to. However, I've caught up a bit with retirement savings from where I was previously, but your new figures do put me back some! I didn't start saving for retirement until 32, unfortuately! I guess my price to pay is working until 68. If I plug this into your scheme:


41
- 4
50
- 12
59
- 20
68
- 33

and subtract the 401k and SS taxes from my pay, I am at only 7.7 times living at 52.  


But why is retirement at 33x income? You mentioned the target as 25x income for the end goal? That would replace income at 4%, and replace 75% of it at 3%, which I think was the target?

[hoops902]

Dec 8, 2016 1:43:28 GMT -5 Rukh O'Rorke said:

Dec 6, 2016 12:56:04 GMT -5 minnesotapaintlady said:

Well wouldn't he BE in better shape assuming he's now cool with making 50% less?  Why would he need to replace double his salary? 

This is another reason I prefer the expenses model.  If you have two people making 100K/year and the one is saving 50% of his salary while the other only 10%, it's doubtful they will have the same income needs in retirement. 

Personally, I'm always better with 2 times the salary.

I can't wrap my head around it being better making half the money.

Well yeah, a YMer should be. But YMers by rule don't double their salary then immediately double their fixed obligations...lots of "commoners" do.