Yes, another retirement thread - RE: How much you need to retire
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Yes, another retirement thread - RE: How much you need to retire
Posted by Powerman on 9/13 at 1:12 pm
Saw on the Sheperd Smith show yesterday they said that you should look to have 8 times your current salary (for someone in their 20s to 30s I suppose) at retirement.

They said you should have double by age 40 to reach this goal

Maybe I'm wrong, but doesn't 800% of annual income seem like not that much to retire on

Let's say you make 100K a year. That's a pretty strong income. Can't see how you could retire on 800K in future dollars and get by.




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Posted by LSURussian on 9/13 at 1:30 pm to Powerman
quote:

but doesn't 800% of annual income seem like not that much to retire on

Yes.




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Posted by CoolHand on 9/13 at 1:32 pm to Powerman
That doesn't sound right at all.

Did they mention anything about inflation?



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Posted by K E V 8 4 on 9/13 at 1:41 pm to Powerman
See the table below from a WSJ article several years back. I thought this was a simple, elegant and reasonable guideline for savings and debt at certain ages.

Age // Savings:Income // Debt:Income
20 // 0.01 // 2.25
25 // 0.05 // 2.00
30 // 0.10 // 1.70
35 // 0.90 // 1.50
40 // 1.80 // 1.25
45 // 3.00 // 1.00
50 // 4.50 // 0.75
55 // 6.50 // 0.50
60 // 8.90 // 0.20
65 // 12.00 // -

Source: Dorman Farrell LLC

ETA: For the average Joe; I'd expect most posters here to be beating those guidelines. Edited again to add source.


This post was edited on 9/14 at 8:34 am

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Posted by GoCrazyAuburn on 9/13 at 2:30 pm to Powerman
Yea, that is pretty low, especially if you plan on maintaining standard of living.


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Posted by TheHiddenFlask on 9/13 at 2:47 pm to GoCrazyAuburn
I'm banking on closer 800% of my current salary per year.

That's a terrible rule of thumb.



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Posted by C on 9/13 at 3:01 pm to TheHiddenFlask
Well it probably assumes minimal debt including home mortgage. You also get better deals at movie theaters and bus fares. So it works out...


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Posted by Poodlebrain on 9/13 at 3:05 pm to Powerman
How long are you going to live? That, more than anything, will determine how much you need.

This post was edited on 9/13 at 3:06 pm

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Posted by Hand on 9/13 at 3:27 pm to Poodlebrain
... and lifestyle.


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Posted by blueridgeTiger on 9/13 at 3:29 pm to Powerman
I've heard that to maintain your lifestyle you need an income of about 80% of your pre-retirement income.


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Posted by K E V 8 4 on 9/13 at 3:31 pm to Hand
I agree on life expectancy AND lifestyle. But, by framing it in terms of a multiple of your current earnings, it inherently assumes a "similar" lifestyle.


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Posted by Hand on 9/13 at 3:33 pm to Powerman
I always tell people that ask (there aren't that many) that they'll need $1MM adjusted for inflation.

Assuming 3% inflation and 40 years until I retire, I'll need $3.26MM.

The truth is that most people won't have anywhere what they need to retire. I've worked with a lot of smart (or so I thought) people with finance and accounting backgrounds that refused to participate in company sponsored or individual retirement programs. If these "above average" people aren't, then I know the guys working in the ship yards and so forth aren't.



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Posted by Breadcrumbs on 9/13 at 3:33 pm to Powerman
an old rule of thumb was that every $200,000 in savings would generate $10,000 in income for 25-30 years in retirement. So you'll need $1,000,000 saved for $50,000 in income needed in retirement. I also understand that prices double approx. every 20 years so $50,000 will only buy $25,000 of stuff 20 years from now due to inflation.

As for how much to save...A LOT.
10%/yr for necessities
15%/yr to be comfortable
20%/yr for a luxury lifestyle

ETA: inflation info


This post was edited on 9/13 at 3:51 pm

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Posted by OnTheBrink on 9/13 at 3:36 pm to Hand
quote:

The truth is that most people won't have anywhere what they need to retire


I feel like this and I do all I can to assure that I will.

quote:

refused to participate in company sponsored or individual retirement programs


Then, I look around my office and see people like this and it makes me feel better. A little better.



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Posted by NELAtigers on 9/13 at 3:50 pm to Powerman
quote:

Maybe I'm wrong, but doesn't 800% of annual income seem like not that much to retire on


Is this including some type of pension and the 800% is to supplement that or is it saying $0 coming in from a pension type retirement?

If it is the first, it makes sense. If it is the second, I don't buy it.



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Posted by JWS3 on 9/13 at 4:26 pm to Hand
quote:

The truth is that most people won't have anywhere what they need to retire. I've worked with a lot of smart (or so I thought) people with finance and accounting backgrounds that refused to participate in company sponsored or individual retirement programs. If these "above average" people aren't, then I know the guys working in the ship yards and so forth aren't.


The guys in the ship yards may be doing better than you think. Those without real knowledge of finance are sometimes the ones that will get help, develop a simple plan, and stick to it over the long term.



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Posted by Powerman on 9/13 at 4:49 pm to JWS3
quote:


The guys in the ship yards may be doing better than you think. Those without real knowledge of finance are sometimes the ones that will get help, develop a simple plan, and stick to it over the long term.

Yeah. Some are actually really good with money

I'm in a yard right now and there are a lot of people driving really modest vehicles that make a really good living

So they're either pretty responsible or they have a lot of child support to pay out



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Posted by TheHiddenFlask on 9/13 at 5:05 pm to Powerman
There are several guys in my home town (very small ~2000) that are multi millionaires thanks to employee stock ownership plans in Exxon/Mobil/Chevron/Texaco. They saved a lot and they saved it all in oil indutry stocks, weathering out the bad times.

A lot of guys who spent their entire lives being lower middle class retired to a life better than most upper middle classers will ever see.



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Posted by Hand on 9/13 at 6:02 pm to JWS3
I didn't mean it in a derogatory manner. The point being that the Pareto principle probably holds true for retirement savings participation rates across education levels, professions, social classes, sex, race, religion, etc.


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Posted by LSURussian on 9/13 at 7:54 pm to Hand
quote:

I always tell people that ask (there aren't that many) that they'll need $1MM adjusted for inflation.

They won't have a very fulfilling retirement on only $1 million, IMO.
$3 million is a minimum needed.



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