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April 25, 2014

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I side with the group that thinks expenses
Are the way to determine retirement savings
requirements. Income is only relevant if
you deduct out savings and adjust the taxes
To post retirement brackets etc.

There's no simple answer as to "How much should you save for retirement?". The short answer is "As much as possible".

Here are the statistics for my final job as an aerospace engineer with an MS degree, that was from March 1959 (age 24) to September 1992 (age 58). My starting salary was $9,000/year - My final salary was $72,500/year.

When I retired our savings at Fidelity Investments totalled $320,000. As of today they are $7,584,000 which is a compound annual growth rate of 16.01%.

My record is far from typical and one I could have never predicted, since the majority of our money was accumulated after we retired.

How did it happen?
1) We retired debt free with income from two pensions and also each added in Social Security upon reaching 62.

2) In 1993 I subscribed to a comprehensive data, charting, and analysis program that I read about in the Wall Street Journal and went on to turn myself into an accomplished investor.

3) The dot.com bubble was starting as I retired and by March 6th. 2000 I had turned my $320,000 into $3,309,000 when my analysis convinced me to get out of high tech funds completely and go to a safe harbor until I had decided what to do next. I stayed in very safe investments, such as bond funds and it took me until 10/30/2003 to reach $4M. By 3/14/2006 I was at $5M. Then as the great recession was starting and my indicators were flashing warning signals I decided that from here on out I would move into the slow lane and become a pure bond investor. I reached $6M on 4/7/2009 and $7M on 7/20/2012. These days my annual growth rate is a shade less than 5%.

Along the way I also developed a strong relationship with the owner of the data, charting, and analysis service I was using and through him I was able to produce my own software that provided some new capabilities and market it to any of the other subscribers that were interested. Eventually my software needed an upgrade if it was to keep running and I was unwilling to put the time in to do it so I gave my coding to the company free of charge. They incorporated it into their own software and also made my subscription free of charge.

Bottom Line - To emulate my success would be difficult if not impossible because you would need another dot.com bubble. The stockmarket is not the same place it was in 1993, it is manipulated by the huge Wall St. firms with their supercomputers and high tech wizards doing program trading, as recent articles and TV programs have described.

There is no simple answer to "How much should you save for retirement?". The short answer is "As much as possible".

Here are the statistics for my final job as an aerospace engineer with an MS degree . They cover most of my working life starting on March 1959 (at age 24) to September 1992 (age 58) when I retired. My starting salary was $9,000/year - my final salary was $72,500/year.

When I retired our savings at Fidelity Investments totalled $320,000. As of today they total $7,584,000 which ammounts to an annual growth rate of 16.01%. My record is far from typical and one I could have never predicted since the majority was accumulated after we retired.

How did it happen?
1) We retired debt free with income from 2 pensions and after we reached 62 we also received our SS checks.

2) In 1993 I subscribed to a comprehensive data, charting, and analysis service that I read about in the Wall St. Journal and used it to turn myself into an accomplished investor. I also attended the company's annual conference held in different cities.

3) The dot.com bubble was just starting as I retired and by March 6th. 2000 I had turned our $320K into $3.3M when my analysis indicated a major market top was forming. This is when I sold everything over 4 market days. I then stayed in very low volatility junk bond funds. I then discovered that these types of funds could be timed using various methods that didn't require very many trades. By 10/30/2003 I had reached $4M, and still using primarily the same kind of funds by 3/14/2006 I was at $5m.

In late 2007 my indicators were flashing warning signals so I decided that from here on out I would stay in the slow lane and become a pure bond investor by buying individual corporate and municipal bonds as well as some CDs that were still paying around 5%. With this technique I reached $6M on 4/7/2009 and $7M on 7/20/2012. These days my growth rate is a little under 5%.

Along the way I also developed a strong relationship with the owner of the service I subscribed to and started producing some compatible software that I was able to market to any other subscribers that were interested. Eventually this software became out of date and I would have needed to learn how to program in MS Windows and do a rewrite that would take me about a year at the very least. I was enjoying retirement so much that this was not something I wanted to do. I then decided to give my software free of charge to the owner and he would take whatever he needed and incorporate it into his software. He did that and in return no longer charges me for my subscription.

Bottom Line - To emulate my success would be difficult these days because you would need another dot.com bubble. Also the market has changed a lot since 1992. It is now manipulated by the largest Wall St. firms with their supercomputers and high tech wizards engaging in program trading, as recent articles & TV programs have described.

limey, you're 90, about to be 6 ft under. What you did 20-30 years ago cannot be replicated, you even said so yourself. Why keep talking about it.

Gtt,
Your a jerk. We ALL love Old Limey.
Kris

Kris:
Thanks for your support. By the way I'm a young 79 year old, haven't spent a night in a hospital since I had my tonsils out as a small child and also go hiking in the hills surrounding our valley every week with my daughter.

Old Limey,
You are a Prince among men. You represent the values, ethics, and class that I wish was more prevalent nowadays.
Enjoy your anniversary coming up young man!
Huge fan,
Kris

I felt it could be simple 3 step formula. How much you spend now, inflation and what you want to achieve. These 3 parameters could help in knowing the retirement money.... Suresh...

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