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June 13, 2011


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I think for the most part the age 65 retirement is becoming a myth. People are bored and don't have the funds to live till 90 or 100 anymore. When retirement was 65 the lifespan was much lower for an individual.

Also most seniors end up in higher tax brackets when they retire than when they were working because all of their deductions are gone. It's a shame most people don't know how to save correctly and retire correctly and they end up losing a huge chunk of money to taxes throughout their lifetime.

I have around 1.5 times salary saved, but roughly ten times expenses. It irks me sometimes that these articles are so specifically targeted at "normal" workers who barely save a double-digit percentage of their wages (or less) and will retire at 65. By failing to articulate and advocate for higher savings rates we loose the opportunity to normalize the practice and help perpetuate the (somewhat pathetic) financial status quo.

I think having a plan that allows for retirement is better than most are doing now so I like the article. Those who save much more are able to retire much earlier and those who save less retire later. I may not want to retire at 65 but I want to be able to retire much sooner. This lets me see if I am ahead of the pack or behind.

On track to maybe a little ahead. We will see what the next 10 years brings.

"most seniors end up in higher tax brackets when they retire than when they were working because all of their deductions are gone."

Most seniors end up in lower tax brackets in retirement because their income is lower.

I don't think 12 times will be sufficient. If you accept the assumption that your post-retirement expenses will be 80% of your pre-retirement income, then 12 times your pre-retirement income is 15 times your post-retirement expenses. That suggests a withdrawal rate of 6.67% per year in retirement. At that withdrawal rate, you've got about a 50/50 chance of running out of money within 30 years.

Most data I've seen suggest that 4% is the maximum safe long-term withdrawal rate, which means that you need about 25 times your post-retirement annual expenses. Again, if you accept their premise that post-retirement expenses are 80% of pre-retirement income, you would need 20 times your pre-retirement income saved.

I guess it also depends on what you assume you'll get from Social Security. Myself -- I'm in my early 30s -- I'm expecting nothing.

How do I figure if I'm doing ok if I get a pension at retirement of half pay for the rest of my life?

cmadler - The article is adding social security payments - that may move the withdrawal rate down to a more acceptable amount.

My husband and I are 28, have about 1.5 times our annual salaries saved, and 4-5 times our annual expenses. I think we are doing pretty well so far. :-)

@Josh (the first reply) -- I think pretty much your entire post is wrong.

A bit depressing for me at first glance.

My salary is now $110,000/yr. I'm 34 years old. I have $60K in retirement put away. That's merely roughly 55% of my yearly pay.

But when I stop to think about it, it's not as bad as it looks. First off, I'm putting away about $20,000/yr minimum in addition to debt reduction. That's 18%+ a year. Secondly, I wasn't in the profession I'm in now making this kind of salary all along. I was making 33K/yr as a public school teacher for four years, and my wife had medical issues with bills during that time, and I dug out of the mountain of credit card and consolidation loan debt.

So, I think I'll get there. Once my second mortgage is paid off, I'll be throwing another $4000/yr in retirement, too.

The math is skewed by the presumptive retiree's cost of living. If you make $200,000 before tax, take out $40,000 in federal income tax and a bunch of other stuff, you could expect $100,000 in real income (numbers rounded very conservatively).

The skew? It's in the cost of living. If you only spend $40,000, and it's not too hard to figure this if you are debt free and kids expenses are taken out of the equation, then savings of $60,000 a year are reasonable. That's 1.5 times annual expenses in retirement that you are saving each year while working. Any retirement date looks very doable then. If you could get down to $25,000 a year in living expenses most degreed salaries would get you to a comfortable retirement age.

By this yardstick I'm doing great. At 55 I have beyond the 12 times they suggest. However, I agree with FMF. It should be based on what you spend not on how much you earn. By that standard I'm doing even better, because I live off maybe 40 to 50 percent of what I earn. I also plan to quit before I'm 60. Most likely in a couple of years.

I think I'm OK. My wife has already retired with a $45,000 per year pension. If I deduct that from my current annual salary, we have over 14 times in savings and 20 times if the mortgage-free house is included. And you can bet your sweet bippy that I'll be taking my SS payments the very minute I hit 62 yrs old (3 1/2 yrs from now). Can I go outside and play now?

Nashville --

Only if you take me with you. ;-)

Hey FMF, at one point you say you have 12 times your income already saved and at another point you say you have 8.5 times your income. Am I missing something?

headoftheline --

The 12 times is expenses (read the first bullet point) and the 8.5 times is income.

I have 2x income saved at 34 years old, but for the first 5 years of my career I was paying off loads of debt, so I was undersaving then. I'm saving around 35% of my income now, so expect to be around 8x income at 45 and 20x income at 55. I also will have a 34% pension income as well.

No, you wrote 12 times income in the article. So which is it?

Young Limey, any relation to Old Limey?

I suspect you may retire before 55 if you want...

I am age 38 and have 10 times my lowest level income (tends to vary from year to year depending on bonus levels) in net worth and this is 50X annual expenses. Not sure what the goal is, maybe 20 times income and 100X annual expenses? Time and further reflection will sort it out.


An investment beating inflation by 4.5% is a bit high imo. the 20 year median is %4.1 for money in the stock market: (Source:


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