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Old 09-25-2012, 08:18 AM   #16
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If that's in an IRA/401(k), I'm actually ecstatic to read that. DH and I are 38 and we have a little over the 3x annual salary saved already.

Now...somebody needs to help me convince him that when the merger of his company and another happens next month, when he gets his 401(k) with the new company, he MUST put 5% into it. Because the new company matches up to 5%. He only wants to do 3%. I did the figuring and that extra 2% plus the company's contribution would add up to another $1k per year. And since we're young, that would add up to a nice chunk of change upon retirement.
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Old 09-25-2012, 08:21 AM   #17
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We're ahead of the game according to the OP's post, but I agree it seems low.
I agree. Especially with health care costs being a big question mark for retirement.
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Old 09-25-2012, 08:22 AM   #18
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Quote:
Originally Posted by apirateslifeforme View Post
If that's in an IRA/401(k), I'm actually ecstatic to read that. DH and I are 38 and we have a little over the 3x annual salary saved already.

Now...somebody needs to help me convince him that when the merger of his company and another happens next month, when he gets his 401(k) with the new company, he MUST put 5% into it. Because the new company matches up to 5%. He only wants to do 3%. I did the figuring and that extra 2% plus the company's contribution would add up to another $1k per year. And since we're young, that would add up to a nice chunk of change upon retirement.
If the company matches 100% of the first 5% you contribute, and you're only putting in 3%, you are leaving 2% of your salary on the table, just gifting it back to them, nice of you! (use that, maybe it'll help!)
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Old 09-25-2012, 08:24 AM   #19
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Quote:
Originally Posted by apirateslifeforme View Post
If that's in an IRA/401(k), I'm actually ecstatic to read that. DH and I are 38 and we have a little over the 3x annual salary saved already.

Now...somebody needs to help me convince him that when the merger of his company and another happens next month, when he gets his 401(k) with the new company, he MUST put 5% into it. Because the new company matches up to 5%. He only wants to do 3%. I did the figuring and that extra 2% plus the company's contribution would add up to another $1k per year. And since we're young, that would add up to a nice chunk of change upon retirement.
He MUST do that! He won't miss spending that 2%, but it will make a huge difference in the long run.
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Old 09-25-2012, 08:32 AM   #20
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That seems really, really, almost ridiculously low to me. The last calculator I looked at recommended an amount equal to ~20 times our annual income to maintain our current standard of living in retirement. But I think these "rules of thumb" assume a target audience with a higher-than-average income. I can't see anyone honestly saying that $328,000 in savings (median income in my zip code times 8) would be sufficient for retirement, particularly for post-social-security generations.
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Old 09-25-2012, 08:58 AM   #21
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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.
We are definitely on track, then, considering we are under the age of 35 and already have that much saved. Momma might have taught me how to spend...but daddy taught me how to save
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Old 09-25-2012, 09:05 AM   #22
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Originally Posted by Colleen27 View Post
That seems really, really, almost ridiculously low to me. The last calculator I looked at recommended an amount equal to ~20 times our annual income to maintain our current standard of living in retirement. But I think these "rules of thumb" assume a target audience with a higher-than-average income. I can't see anyone honestly saying that $328,000 in savings (median income in my zip code times 8) would be sufficient for retirement, particularly for post-social-security generations.
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!
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Old 09-25-2012, 09:12 AM   #23
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Interesting, but doesn't seem realistic. Eight times DH & my salaries (and DH is 67) is only $600,000. Do you really think that is enough money for retirement? Seems pretty low to me.
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.

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That would be in an IRA or 401k or combination of the 2. I'm 55 and am on track according to this, wish I had more. However, looking at my moms finances, she's 89, her cost of living is next to nothing. About $500 a month, with the biggest chunk being her supplemental health insurance. Her $1250 social security check more than covers that, throw in a $400 a month pension she gets, $150 in investment income, and the $1,000 a month she is required to take out of her IRA, she has more disposable income now than when she was working.
Same for my mom - who is almost 62. She has been retired 7 years now and makes more money in retirement a month than she did working. Very very low cost of living - house is paid off, all she has is property taxes (total of 400/year), car insurance, utilities, and she buys toys - new truck, new camper, new motor home, classic car, etc. They travel all over the country...monthly they are gone for at least a week, if not longer. Her advisor has told her she has enough money to live that lifestyle until she is 92 and then will need to start scaling back. I think that's pretty damn good!

8 times our salary would do wonders. Once our house and student loans are paid off, and kids are out of college....we could easily live on 1/4 of what we make now. Even less if needed. So say our annual salary is 100,000....8 x = 800,000. That gives us "8 years" but if we can live on 1/4 of that - so 25,000/year, we can stretch that 8 years into 32. I am good with that!
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Old 09-25-2012, 09:17 AM   #24
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Wow, that seems really, really low!
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Old 09-25-2012, 09:20 AM   #25
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Each of my parents lived on about $1,000 a month in retirement. They had minimal to no lodging costs, health care was covered by Medicare, and so that basically left them food, utilities and transportation to cover.

While you might be pretty active in early retirement, most people have dramatically slowed down by their '80s.
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Old 09-25-2012, 09:22 AM   #26
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Yeah...no where near that amount in retirement savings vehicles, but it you count all assets (including home equity), we are probably a little over. However, I have the girls' college to pay for, so after I am through with that (at age 55 or so) I figure I will have maybe twice yearly income saved...so no...not nearly enough.

After college expenditures are over, I hope to be able to really ramp up retirement savings.
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Old 09-25-2012, 09:50 AM   #27
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Quote:
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.
Couple of questions,
What are the factors. Are they assuming folks won't have a pension. I work for a company that still gives defined pensions.

Are they including other assets like homes?

I totally admit to starting late with the retirement savings thing. I really didn't start saving until my mid 30's for various reasons then I ramped up for about 7-10 years. now we've slowed the savings (we still do at least the minimum to get matching dollars) due to college tuition.
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Old 09-25-2012, 10:09 AM   #28
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Well according to that then DH and I are ahead of the game we are 34 and already have tucked away in retirement savings more than our combined annual salary. Not by much, I think we just hit it this year, but I've been saving since I was 22. He came to the game late on savings but is finally catching up.
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Old 09-25-2012, 10:09 AM   #29
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Quote:
Originally Posted by eliza61 View Post
Couple of questions,
What are the factors. Are they assuming folks won't have a pension. I work for a company that still gives defined pensions.

Are they including other assets like homes?

I totally admit to starting late with the retirement savings thing. I really didn't start saving until my mid 30's for various reasons then I ramped up for about 7-10 years. now we've slowed the savings (we still do at least the minimum to get matching dollars) due to college tuition.
Hmmm, I didn't think about this at all. DH will have a small (very small!!!) defined benefit pension so I guess we are not so badly off.
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Old 09-25-2012, 10:11 AM   #30
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Quote:
Originally Posted by eliza61 View Post
Couple of questions,
What are the factors. Are they assuming folks won't have a pension. I work for a company that still gives defined pensions.

Are they including other assets like homes?

I totally admit to starting late with the retirement savings thing. I really didn't start saving until my mid 30's for various reasons then I ramped up for about 7-10 years. now we've slowed the savings (we still do at least the minimum to get matching dollars) due to college tuition.
I would be prepared for everything without a pension. Companies can and have cut off pensions during down financial times. If you have this much saved without the pension, and the pension doesn't go away, that's extra gravy. But, that is just mu advice and I am no personal financial planner, so take it for what it's worth.
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