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Powerman 
LSU Fan
Corpus Christi, TX
Member since Jan 2004
116244 posts
| Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
63840 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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CoolHand 
USA Fan
Member since Dec 2011
1457 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 at 1:32 pm to Powerman)
That doesn't sound right at all.
Did they mention anything about inflation?
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K E V 8 4
LSU Fan
H-town
Member since Jul 2010
190 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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GoCrazyAuburn 
Auburn Fan
Member since Feb 2010
9239 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 at 2:30 pm to Powerman)
Yea, that is pretty low, especially if you plan on maintaining standard of living.
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TheHiddenFlask 
Clemson Fan
The Welsh red light district
Member since Jul 2008
16420 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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C
LSU Fan
The Woodlands, TX
Member since Dec 2007
17514 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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Poodlebrain
LSU Fan
Way Right of Rex
Member since Jan 2004
12891 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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Hand 
Army Fan
far side of the moon
Member since Dec 2007
1959 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 at 3:27 pm to Poodlebrain)
... and lifestyle.
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blueridgeTiger
x
Member since Jun 2004
9013 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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K E V 8 4
LSU Fan
H-town
Member since Jul 2010
190 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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Hand
Army Fan
far side of the moon
Member since Dec 2007
1959 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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Breadcrumbs
LSU Fan
Baton Rouge
Member since May 2005
2808 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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OnTheBrink 
Alabama Fan
TN
Member since Mar 2012
1897 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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NELAtigers 
New Orleans Saints Fan
Member since Nov 2010
1278 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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JWS3 
Purdue Fan
Baton Rouge
Member since Jun 2008
2502 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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Powerman
LSU Fan
Corpus Christi, TX
Member since Jan 2004
116244 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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TheHiddenFlask
Clemson Fan
The Welsh red light district
Member since Jul 2008
16420 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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Hand
Army Fan
far side of the moon
Member since Dec 2007
1959 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
63840 posts
| re: Yes, another retirement thread - RE: How much you need to retire (Posted on 9/13/12 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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