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November 12, 2008

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"The time of saving forever and retiring at 65 with no job is passing many people by. One of the key reasons for this is that many people are unwilling to make the spending sacrifices now in order to have a work-free retirement."

I think another reason is that people spend so much time at work their whole lives that they don't have any outside interests and don't know what to do with themselves once they retire even if they could afford to not work. That's kind of depressing. I think you need a balance of working hard to save enough money to retire, but allow some time for outside interests so you have something to do once you get there.

FMF,
I have a question on #2 - where you suggest withdrawal rate of 3%. I'm targetting 1%, perhaps that is too conservative. My thought is that money market funds can deliver about 1-1.5% more than inflation rate. Even if taxes & inflation are accounted for, this approach would allow me to draw the same amount adjusted for inflation till eternity, and leave the same inheritance in real terms. Am I delaying my retirement to eternity???
Regards, Param

Some unidentified source said:

"The time of saving forever and retiring at 65 with no job is passing many people by. One of the key reasons for this is that many people are unwilling to make the spending sacrifices now in order to have a work-free retirement."


Okay, I'll stipulate guilt. Rent, medical expenses, plus a student loan payment take 87 percent of my income. What spending sacrifices whould I make now?

Param --

Maybe, maybe not. Depends how much you can sock away now and how much you can live on in retirement.

Poor --

Only one way to create more savings -- increase the gap btween what you make and what you spend. Two ways to do that: make more or spend less.

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