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Old 09-25-2012, 10:18 AM   #31
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Originally Posted by JanetRose View Post
I read somewhere recently....

•At age 35, you should have saved an amount equal to your annual salary.

•At age 45, you should have saved three times your annual salary.

•At 55, you should have five times your salary.

•When you retire at age 67, you should have eight times your annual pay.
I'm exactly on track (I'm 51), but I recently increased the amount of my contribution.

I'm concerned that the Social Security will tank in the next 16 years. I wonder if they take that into account.

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Old 09-25-2012, 10:22 AM   #32
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I think if people followed these guidelines would have an excellent start on having a reasonably secure retirement. Of course, individual circumstances can make quite a bit of difference in your "needs" post retirement. For example, do you have a pension (from a source other than SS)? Are you planning on living in the same house in the same city post retirement? Will your house be mortgage free when you retire?

My husband and I heard the line that we would spend approximately 80% of our pre-retirement income while retired...in other words, our expenses would not decline other than modestly. Because we chose to move from a very high cost of living area where we carried a significant mortgage to a lower cost area where we own our home free of any mortgage, our expenses declined by way more than 60%.....in other words, we are living on less than 40% of the money we spent before. We have been retired (me 100%, and DH works part time) for 6.5 years. To date, we have spent NONE of the principal that we retired with, and have lived exclusively off my pension, DH's modest income, and income from our investments. We live comfortably, and travel when we want. I don't foresee a circumstance where we "run out" of money before we pass on, even if we live to be close to 100.

I think these sorts of guidelines are useful in getting people to think about retirement savings, but that's about all. Individual choices and needs can change the amount needed. Unfortunately, I think most people fall well short of these guidelines and still are planning on being heavily dependent on Social Security.....that's scary.
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Old 09-25-2012, 12:43 PM   #33
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Originally Posted by FINFAN View Post
I can't even SEE the curve! More like a 3-way fork in the road..do I pay to keep ill parents going, or college or retirement? So far trying to keep all 3 above water, but it's rising...FAST!(misery loves company, eh?)
You and me both. 100% of my take-home is what it takes to keep Tex Jr. in college right now. Once he graduates, that's a nice chunk of change that will be available, but even if it all goes into retirement it's not a drop in the bucket considering our age.

The very first time I ever talked to anyone about retirement, he told me that we should have started saving 5 years earlier, but that we could catch up by setting aside about half of our combined income for a few years, and then backing off to about 25-30% for the rest of our working lives. Not to make too fine a point of it, but... Yeah. As if. Not when you're dealing with lay-offs, medical bills not covered by insurance, and college expenses.

I guess that Mrs. Tex and I just have never been willing to live like Cistercian monks, so that we could start to "do things" when we retire.

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Old 09-25-2012, 01:28 PM   #34
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I see the problem. According to that chart, I should be 8 years younger.
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Old 09-25-2012, 01:37 PM   #35
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One thing most of those suggested targets factor in is the return on that investment. If you invest 8-10x your annual income and are able to get a 10% ROI (yeah i know in this economy that can be wishful thinking) then you would have ~your annual salary in investment income on which to live while leaving the principle alone.
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Old 09-25-2012, 01:49 PM   #36
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Originally Posted by Katy Belle View Post
Yeah, I agree. With an income of $200,000 x 8 = 1.6 million...that is kind of in line, maybe even a bit low. But if your income is low, I can't think that will be nearly enough!
Exactly. Now if we could count on SS I would probably be comfortable with 8x our annual income in retirement funds, but we can't.

On the other hand, it is a lot less daunting to look at that recommendation than it is to look at many other calculators. And there is probably quite a bit of value in that from an emotional standpoint, simply because people are more likely to strive for a goal that seems obtainable than for one that seems impossible. I know that's been a struggle for us... The idea of coming up with a sum that represents more than half of our entire lifetime earnings in order to retire is almost enough to make one take a "live for today" approach and give up on any pitiful, inadequate attempts at saving.

Originally Posted by Minnesota! View Post
You need to remember that your cost of living in retirement will be less. Most people have their house paid off, minimal credit card debt, no parking/transportation to work costs, no costs of eating lunch in the cafe each day, work clothes, fundraisers at work, etc.
That depends so much on circumstance, though. Our house is already paid off and DH has a company car, so in retirement our housing costs will stay the same or go up (depending on if we move) and our transportation costs will go up. The only costs that will decline are groceries and college savings contributions as the kids grow up and move out. And medical costs are a total wild card - you could have minimal needs or you could end up with OOP costs that add up to far more than a mortgage payment.
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