1/3 of Baby Boomers have no retirement savings...

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CyclingDuo
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1/3 of Baby Boomers have no retirement savings...

Post by CyclingDuo » Wed Nov 07, 2018 11:50 am

Obviously this is not the situation Bogleheads (or anyone else) would want to end up in at the age of 58, so it is good reading for those who are younger and saving for retirement to make sure at least this part of history is not repeated for younger generations:

Nearly one-third of baby boomers had no money saved in retirement plans* in 2014, when they were on average 58 years old, according to the researchers. (They analyzed data at various ages using multiple nationally representative surveys.)
https://www.cnbc.com/2018/11/07/one-thi ... yptr=yahoo

*Includes workplace plans and individual retirement accounts

Among boomers with positive balances, the median savings was around $200,000. Experts have said people may need a nest egg of more than $1 million to carry them through a 30-year retirement.

Fast forward to 2018, those who were on average 58 years old in 2014 are now 62. This leads us to the reality of what many in the situation of the 1/3 of Boomers that had no retirement savings in 2014 at age 58 will now face...

Increased debt levers and expenses coupled with less savings will make it hard for baby boomers to leave work at 65 and maintain their pre-retirement standard of living, the researchers note.

"They may need to consider working longer, reduce their standard of living, and make smart choices regarding Social Security and deploying their savings in retirement," Streeter said.


Only posting this as a reminder of the importance of managing debt, living within your means to ---> below your means, saving for retirement on a consistent and regular basis while letting the power of compounding work for you over several decades.

Being Baby Boomers ourselves (57 & 60), it is always rather eye opening to be reminded of the third of our generation who have ended up at this point with little to no retirement savings.

Here's to those of you in your 20's, 30's, and 40's being able to save what you can in the early years of your careers for retirement through your workplace plans (401k/403b/457b) and individual retirement accounts to avoid being in a similar situation when you reach age 58 and beyond.

A reminder of the power of starting early...

Image

The above graph shows that saving 15% of even what one might consider a lower end entry level career gross income salary of $29,000 - $40,000 puts one on a good path in their 20's to reach their goals at retirement. Workplace plans, IRA's, taxable accounts set on automatic pilot are all part of the pay yourself first strategy to not end up at age 58 with no retirement savings like a third of our generation has ended up.

The following chart is a somewhat realistic look at what level of income and multiple of your income to shoot for to support your desired lifestyle...

Image

Finally, this graph from a recent article even affords a more flexible picture of savings rate, starting age for saving, and choosing a variety of retirement ages for those currently in their 20's, 30's, and 40's:

Image
https://www.cnbc.com/2018/11/05/retirem ... yptr=yahoo

In other words, sock it away early and on a consistent basis even if you think the amount is small in the first decade or two of your working career. Nobody wants to end up like a third of the Baby Boomers have ended up as they approach retirement.

:sharebeer
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PFInterest
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by PFInterest » Wed Nov 07, 2018 11:59 am

lol.
werent they saying there would be a run on the index market as boomers pulled out their money and spent it all?

good work there older generation.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by sjt » Wed Nov 07, 2018 12:05 pm

Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
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CyclingDuo
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by CyclingDuo » Wed Nov 07, 2018 12:18 pm

sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
:mrgreen: :beer

Not everyone has the luxury of retiring early. And then there is a segment of workers that love what they do and have no desire to retire early. I guess everyone else falls in between those book ends.

We come from families where grandparents and parents all worked well beyond any official retirement age not because they needed to, but because they wanted to since they loved their work and sense of identity it afforded them. Never really thought about all of that at the time, but now that we have reached our ages and the points in our careers that we have, we think we now understand why they kept on working - even at a part-time or consultant basis.

Our jobs have always afforded us 2-4 months off every Summer for the past 33 years and one month during the holidays, so in essence - we have already experienced 11 years of retirement or mini-retirement when you add up all of that time off. So instead of being age 57 & 60 work toll wise, we're really only age 46 and 49 at the moment meaning that we are on track to retire at our adjusted work toll age of 55 six to nine years from now. :mrgreen: :mrgreen:
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by KyleAAA » Wed Nov 07, 2018 12:20 pm

How many of them have pensions or taxable accounts? These studies don't take a holistic view of the population's personal finances, so I'm not sure we can draw any conclusions from them. It seems unlikely 1/3 of boomers will be eating cat food in retirement, though.

kelvan80
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by kelvan80 » Wed Nov 07, 2018 12:23 pm

This is the unfortunate reality for my parents. Always entrepreneurs, always behind on taxes, can't manage fluctuating income so end up in debt, windfalls clear the debt and the cycle continues. I think they invented YOLO and have $6500 in retirement accounts. It definitely sparked a change in myself in our early 20s so at least there's that. We will retire early while they may still be working. It's rather bizarre.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by frugalecon » Wed Nov 07, 2018 12:28 pm

CyclingDuo wrote:
Wed Nov 07, 2018 12:18 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
:mrgreen: :beer

Not everyone has the luxury of retiring early. And then there is a segment of workers that love what they do and have no desire to retire early. I guess everyone else falls in between those book ends.

It is also the case that not everyone has the luxury of working as long as they would like. I have a friend who is a baby boomer who never saved significantly for retirement nor sought out a career that had a defined benefit pension. He questioned my own choices, to build savings and follow a stable but somewhat boring career path. He always said "I'm going to be working well into my 70s, but I like what I do!"

Well, he ended up laid off in his early 60s, and hasn't been able to find or hold a job for more than five years. He has now burned through his meager retirement savings and is effectively destitute. It isn't an easy life for him, and he wouldn't be able to manage without public assistance programs, food pantries, and cash infusions from friends.

smitcat
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by smitcat » Wed Nov 07, 2018 12:40 pm

The chart on multiple saved by income level is very misleading at best.
Carefully evaluating your real retirment (or FIRE) sosts and using a suitable mutiple is a much better approach.

smitcat
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by smitcat » Wed Nov 07, 2018 12:45 pm

Reading the larger picture of retirement savings by age is even more profound....

https://www.cnbc.com/2017/04/07/how-muc ... y-age.html

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by jharkin » Wed Nov 07, 2018 1:10 pm

CyclingDuo wrote:
Wed Nov 07, 2018 11:50 am

Experts have said people may need a nest egg of more than $1 million to carry them through a 30-year retirement.
I always wonder, who are these "experts" and what data is this number based on? Really convenient that it came out to such a nice round number.


Consider that my retired MIL, with her 2BR condo, 1 cat and an old civic manages to get by just fine on only a $150k next egg...
Yet my wife and I are likely to need closer to $2M the way we spend...
And yet other folks, who are luckily enough to have pensions might not need anything.

Point is, the "under saving" problem is very real (my parents are in this situation), but the rule of thumb answer is waaaaaay oversimplified. It also tends to provoke a " that's so impossible so I'm not even going to try" fatalistic response in many readers outside this forum.

CyclingDuo wrote:
Wed Nov 07, 2018 11:50 am

The following chart is a somewhat realistic look at what level of income and multiple of your income to shoot for to support your desired lifestyle...

Image
I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?

wilked
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by wilked » Wed Nov 07, 2018 1:21 pm

Baby Boomers, as a rule, bought their houses in the 70s / 80s.
Image

For a big portion of them, their houses are a big part of their nest egg. Without accounting for that and pensions, any analysis is flawed

Jack FFR1846
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Jack FFR1846 » Wed Nov 07, 2018 1:22 pm

Charts with "times income" are simply stupid. Joe Smith making $60k a year and living off $50k a year has the same need in retirement as Mary Jones, making $950k a year and living on $50k a year.
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by CyclingDuo » Wed Nov 07, 2018 1:51 pm

smitcat wrote:
Wed Nov 07, 2018 12:40 pm
The chart on multiple saved by income level is very misleading at best.
Carefully evaluating your real retirment (or FIRE) sosts and using a suitable mutiple is a much better approach.
Not easily done for somebody in their 20's, 30's, or 40's to anticipate actual retirement age, costs, location, expenses when they are in their 60's outside of some serious W.A. guessing. Yes, the honing becomes clearer as one settles into a lifestyle and cash flow that is more consistent. Hence the charts - be it those posted above, or those at Fidelity, or other sites to at least use the multiples and criteria as a starting point. No way was our household on any sort of a consistent cash flow during our 20's, 30's, and 40's as we lived in NYC/Houston/San Fran/Austria/Germany and had child rearing thrown into all of that as well well flying back and forth across the pond several times a year. Things only started to become much clearer and tamed down a bit in our 50's to start true evaluating of cash flow needs.

In our case, the charts and graphs of the multiple are fairly realistic if we were living off of our risk portfolio only. However, we have other legs of income projected in retirement (two SS incomes, one pension income, rental income) that means the risk portfolio doesn't need to be as high as some of the multiples show.

Regardless, the financial planning community - be they experts or not - have come up with the data, charts and graphs even though they may not pertain to everyone's individual situation.
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CyclingDuo
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by CyclingDuo » Wed Nov 07, 2018 1:57 pm

jharkin wrote:
Wed Nov 07, 2018 1:10 pm
I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?
I would assume it has to do with lifestyle creep and the thought that the cash flow for a higher income household may have overall higher expenses (larger home, higher utility bills, higher property taxes, more travel, more taxes, etc...). Example - retiring in San Francisco vs. retiring in say South Dakota.

This chart shows if you want a certain level of income from your risk portfolio in retirement, then such a target amount is needed....

Image
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2pedals
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by 2pedals » Wed Nov 07, 2018 2:11 pm

For many earlier generations sons and daughters took care of aging parents in farming communities. No retirement and no retirement savings were needed, but times have changed.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by randomguy » Wed Nov 07, 2018 2:27 pm

KyleAAA wrote:
Wed Nov 07, 2018 12:20 pm
How many of them have pensions or taxable accounts? These studies don't take a holistic view of the population's personal finances, so I'm not sure we can draw any conclusions from them. It seems unlikely 1/3 of boomers will be eating cat food in retirement, though.
Pretty much all of them have SS. LCOL, paid off house and a couple of SS checks is enough for a lot of people to pretty much continue their current lifestyle. The bottom 1/3rd of households is making like 30k/year. They don't millions in retirement dollars. Or even 500k.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by smitcat » Wed Nov 07, 2018 2:28 pm

CyclingDuo wrote:
Wed Nov 07, 2018 1:57 pm
jharkin wrote:
Wed Nov 07, 2018 1:10 pm
I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?
I would assume it has to do with lifestyle creep and the thought that the cash flow for a higher income household may have overall higher expenses (larger home, higher utility bills, higher property taxes, more travel, more taxes, etc...). Example - retiring in San Francisco vs. retiring in say South Dakota.

This chart shows if you want a certain level of income from your risk portfolio in retirement, then such a target amount is needed....

Image
The chart ony comes close if each category saves 10% of gross each year - no matter if they make 60K or 300K.
It only works if they need about 80% of their gross salary for expenses after retirement.
It only works if their investment retuirn is 6% annually.
It only works if their Fed and State taxes are "average".
It is misleading at best and potentially detrimnetal as a planning tool.

randomguy
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by randomguy » Wed Nov 07, 2018 2:30 pm

jharkin wrote:
Wed Nov 07, 2018 1:10 pm


I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?
These charts are for presentations to mass groups of people to give a general idea of the required amounts of money. They are approximately right for the average person. If you want to know about your specific situation pretty much every broker has some calculator that shows how you are doing with your numbers.

Thegame14
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Thegame14 » Wed Nov 07, 2018 2:31 pm

does it say how many of them have guaranteed pensions? They were kind of a big thing back then.....

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by vitaflo » Wed Nov 07, 2018 2:33 pm

Thegame14 wrote:
Wed Nov 07, 2018 2:31 pm
does it say how many of them have guaranteed pensions? They were kind of a big thing back then.....
Or how many of them live in LCOL areas and have VA benefits? This constitutes a majority of my family and none of them have retirement savings. SS is plenty.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by LiterallyIronic » Wed Nov 07, 2018 2:34 pm

sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
Good luck finding a chart for that. I had to make my own in Excel for finishing university at 32 and retiring at 50. Spoiler alert: it requires saving a painful amount of money.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by GerryL » Wed Nov 07, 2018 2:42 pm

PFInterest wrote:
Wed Nov 07, 2018 11:59 am
lol.
werent they saying there would be a run on the index market as boomers pulled out their money and spent it all?

good work there older generation.
That idea that Boomers would suddenly be pulling their money out of index funds was always specious. No one empties their accounts as soon as they hand in their badge at work. With the possibility of a 30-year retirement, they need to be investing for the future. Those of us who have healthy tIRAs are even reinvesting portions of their RMDs.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by randomguy » Wed Nov 07, 2018 2:43 pm

LiterallyIronic wrote:
Wed Nov 07, 2018 2:34 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
Good luck finding a chart for that. I had to make my own in Excel for finishing university at 32 and retiring at 50. Spoiler alert: it requires saving a painful amount of money.
Sure but you waited an extra decade to start working.:) Start working at 22 like an average college grad and it only takes about 25% of gross to get in you in the ball park (assume real returns of 4-6%. Taxes and SS depend a bit on if you are talking one or 2 people). 55 is only like 20%. Those are high but not crazy high savings rate especially for couples.

randomguy
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by randomguy » Wed Nov 07, 2018 2:45 pm

GerryL wrote:
Wed Nov 07, 2018 2:42 pm
PFInterest wrote:
Wed Nov 07, 2018 11:59 am
lol.
werent they saying there would be a run on the index market as boomers pulled out their money and spent it all?

good work there older generation.
That idea that Boomers would suddenly be pulling their money out of index funds was always specious. No one empties their accounts as soon as they hand in their badge at work. With the possibility of a 30-year retirement, they need to be investing for the future. Those of us who have healthy tIRAs are even reinvesting portions of their RMDs.
It isn't about a sudden huge withdrawal. It is a general trend where instead of having people investing 10 trillion, they are investing 9.5 trillion. Will small changes make a big difference? I sort of think it gets lost in the noise.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by H-Town » Wed Nov 07, 2018 2:49 pm

CyclingDuo wrote:
Wed Nov 07, 2018 11:50 am
In other words, sock it away early and on a consistent basis even if you think the amount is small in the first decade or two of your working career. Nobody wants to end up like a third of the Baby Boomers have ended up as they approach retirement.

:sharebeer
I think you can chalk it up to a bad decision such as marrying a spender and then going through an expensive divorce :mrgreen:

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by jharkin » Wed Nov 07, 2018 2:52 pm

CyclingDuo wrote:
Wed Nov 07, 2018 1:51 pm

Not easily done for somebody in their 20's, 30's, or 40's to anticipate actual retirement age, costs, location, expenses when they are in their 60's outside of some serious W.A. guessing. Yes, the honing becomes clearer as one settles into a lifestyle and cash flow that is more consistent. Hence the charts - be it those posted above, or those at Fidelity, or other sites to at least use the multiples and criteria as a starting point. No way was our household on any sort of a consistent cash flow during our 20's, 30's, and 40's as we lived in NYC/Houston/San Fran/Austria/Germany and had child rearing thrown into all of that as well well flying back and forth across the pond several times a year. Things only started to become much clearer and tamed down a bit in our 50's to start true evaluating of cash flow needs.
I dont know... Im in my early 40s and I have enough of a guess of what my retirement expenses might be to at least plan on...

* Start with current expenses
* Look at my housing cost, and calculate the year the house wil be paid off and then remove that
* Figure out all the childcare and commuting related expenses and remove those
* look at current costs for ACA, plans, medicare premiums, OOP maxes and add those in
* add in a bunch for more travel and hobby expenditures

Add all that up, subtract what social security projects, adjust for inflation and then I can work backward and see what I need to save. The result is probably even too high if we move to a lower COL are in retirement... But Id rather over save than under...


Not perfect, but a (*$&%(*$ of a lot better than just saying "1 million dollars"

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by DC3509 » Wed Nov 07, 2018 2:53 pm

vitaflo wrote:
Wed Nov 07, 2018 2:33 pm
Thegame14 wrote:
Wed Nov 07, 2018 2:31 pm
does it say how many of them have guaranteed pensions? They were kind of a big thing back then.....
Or how many of them live in LCOL areas and have VA benefits? This constitutes a majority of my family and none of them have retirement savings. SS is plenty.
+1. Should people have more in retirement savings? Yes. But a lot of people out there are not living the type of life that is common on this message board -- no debates about cars, houses, jobs, European vacations, etc. A lot of people in LCOL or rural areas own their houses, own and drive the same beat up cars, and do just fine on a combination of extremely modest savings, social security, medicare/medicaid, charity, thrift, and some good luck. I live in a HCOL area and have all of the same "problems" about how do you allocate and invest and save when you have all of these other things you are savings for/debating buying/etc. I am always amazed at how the rest of my family that lives in a very LCOL area do not seem to have any of these problems and in fact don't even seem to worry about money that much. They certainly have way less of it and worry about it a lot less than the average poster here. It is a great paradox. Having more money doesn't necessarily mean you are concerned about money less.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by wabbajack » Wed Nov 07, 2018 2:56 pm

2pedals wrote:
Wed Nov 07, 2018 2:11 pm
For many earlier generations sons and daughters took care of aging parents in farming communities. No retirement and no retirement savings were needed, but times have changed.
I'm surprised this isn't given more discussion. The idea that retirement as one long weekend dong things like: traveling, gardening, etc. simply cannot be the case for the majority of retirement-age people.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by LiterallyIronic » Wed Nov 07, 2018 3:02 pm

randomguy wrote:
Wed Nov 07, 2018 2:43 pm
LiterallyIronic wrote:
Wed Nov 07, 2018 2:34 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
Good luck finding a chart for that. I had to make my own in Excel for finishing university at 32 and retiring at 50. Spoiler alert: it requires saving a painful amount of money.
Sure but you waited an extra decade to start working.:) Start working at 22 like an average college grad and it only takes about 25% of gross to get in you in the ball park (assume real returns of 4-6%. Taxes and SS depend a bit on if you are talking one or 2 people). 55 is only like 20%. Those are high but not crazy high savings rate especially for couples.
Heh, 25% of gross is what I save. $15,888 of $63,500, which, assuming 7% return, will get me to $600,000 in 18 years. I wouldn't call it "only" 25% of gross, though. I mean, on the remaining 75% of gross ($47,612), I have to pay taxes, pay my mortgage (plus extra on the principal in order to pay it off in the same 18 years), and support myself, my toddler, and my wife who stays at home with the aforementioned toddler.

Sure, I'm not saving half of gross or anything, but it's a lot tougher to save an arbitrary percentage of gross the lower your income is.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Sam1 » Wed Nov 07, 2018 3:09 pm

CyclingDuo wrote:
Wed Nov 07, 2018 1:57 pm
jharkin wrote:
Wed Nov 07, 2018 1:10 pm
I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?
I would assume it has to do with lifestyle creep and the thought that the cash flow for a higher income household may have overall higher expenses (larger home, higher utility bills, higher property taxes, more travel, more taxes, etc...). Example - retiring in San Francisco vs. retiring in say South Dakota.

This chart shows if you want a certain level of income from your risk portfolio in retirement, then such a target amount is needed....

Image
I disagree with this premise. If anything, I need less to retire on since so much of my current income is dedicated to retirement savings, college savings (no financial aid available), mortgage in a HCOL and childcare.

For example, when a second child arrives the childcare and 529 will eventually total 6k a month for 2 kids. We won’t have that expense in retirement.

Our home is small and utilities aren’t any more than a large house in a LCOL area.

I calculated we save, spend on expenses we won’t have in retirement (mortgage, childcare) or pay out in taxes over 80 percent of our 400k plus HHI. I think around 40 percent of our income goes to retirement savings and our brokerage account. So there’s 40 percent we do NOT need in retirement.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by BigMoneyNoWhammies » Wed Nov 07, 2018 3:17 pm

KyleAAA wrote:
Wed Nov 07, 2018 12:20 pm
How many of them have pensions or taxable accounts? These studies don't take a holistic view of the population's personal finances, so I'm not sure we can draw any conclusions from them. It seems unlikely 1/3 of boomers will be eating cat food in retirement, though.
+1

Considering the fact that the Baby Boomer generation is collectively the wealthiest generation of people that have ever lived on planet earth, I'm not sweating their chances at decent retirements too much.

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GerryL
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by GerryL » Wed Nov 07, 2018 3:35 pm

BigMoneyNoWhammies wrote:
Wed Nov 07, 2018 3:17 pm

Considering the fact that the Baby Boomer generation is collectively the wealthiest generation of people that have ever lived on planet earth, I'm not sweating their chances at decent retirements too much.
Key word here is "collectively." The wealth is not evenly distributed. I saved ferociously and am doing just fine. It's not my fault if someone didn't save as diligently as I did or if they were not as lucky as I was. But even so, having a significant portion of the population struggling in retirement is worrisome.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Nestegg_User » Wed Nov 07, 2018 3:39 pm

LiterallyIronic wrote:
Wed Nov 07, 2018 3:02 pm
randomguy wrote:
Wed Nov 07, 2018 2:43 pm
LiterallyIronic wrote:
Wed Nov 07, 2018 2:34 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
Good luck finding a chart for that. I had to make my own in Excel for finishing university at 32 and retiring at 50. Spoiler alert: it requires saving a painful amount of money.
Sure but you waited an extra decade to start working.:) Start working at 22 like an average college grad and it only takes about 25% of gross to get in you in the ball park (assume real returns of 4-6%. Taxes and SS depend a bit on if you are talking one or 2 people). 55 is only like 20%. Those are high but not crazy high savings rate especially for couples.
Heh, 25% of gross is what I save. $15,888 of $63,500, which, assuming 7% return, will get me to $600,000 in 18 years. I wouldn't call it "only" 25% of gross, though. I mean, on the remaining 75% of gross ($47,612), I have to pay taxes, pay my mortgage (plus extra on the principal in order to pay it off in the same 18 years), and support myself, my toddler, and my wife who stays at home with the aforementioned toddler.

Sure, I'm not saving half of gross or anything, but it's a lot tougher to save an arbitrary percentage of gross the lower your income is.
yep... that’s part of the disconnect between those getting a higher income than the “average”, much less those that are a bit below. There’s a limit on how much one needs for food, utilities, transportation to the job (even when it is bus or train), much less the bigger costs of housing and health insurance (which may be very low cost if one is closer to the poverty line). Considering that $68 k is not that far from an entry level college professor in many fields one cannot argue that they should get more education to advance their careers (just getting the position is an advancement versus the many stuck in postdocs).

AFA planning, I had done plans on largely worst case conditions: 2-3% inflation, zero or low wage increases, negative growth of portfolio and considered that having 2.5 M was a target. We ended up lucky in that we largely stayed employed with good incomes (we ended up in 33% marginal rate before retirement)... but had to fight for that with relocation and almost constant “reapplication” for DW job, where we were successful (obviously others weren’t :| so life could have turned out significantly different). We hit our number and then some with very high savings and not having lifestyle creep. our retirement wouldn’t have been possible, in the time or manner, under a lower income scenario; others in DW family that didn’t have the same incomes likely won’t be able to retire ... more likely will just reach a point where they will not be able to work and have to get by as best as they can with SS and potentially small pensions.

Mr.BB
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Mr.BB » Wed Nov 07, 2018 3:51 pm

CyclingDuo wrote:
Wed Nov 07, 2018 12:18 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
:mrgreen: :beer

Not everyone has the luxury of retiring early. And then there is a segment of workers that love what they do and have no desire to retire early. I guess everyone else falls in between those book ends.

We come from families where grandparents and parents all worked well beyond any official retirement age not because they needed to, but because they wanted to since they loved their work and sense of identity it afforded them. Never really thought about all of that at the time, but now that we have reached our ages and the points in our careers that we have, we think we now understand why they kept on working - even at a part-time or consultant basis.

Our jobs have always afforded us 2-4 months off every Summer for the past 33 years and one month during the holidays, so in essence - we have already experienced 11 years of retirement or mini-retirement when you add up all of that time off. So instead of being age 57 & 60 work toll wise, we're really only age 46 and 49 at the moment meaning that we are on track to retire at our adjusted work toll age of 55 six to nine years from now. :mrgreen: :mrgreen:
I work with some very successful people who are in their seventies and in their mid-sixties and they love what they do, they're good at what they do, and they make a crapload of money. they still enjoy going to work (even if they don't have to work) and they do things that most other people can't afford to do. Not everyone wants to retire early.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Mr.BB » Wed Nov 07, 2018 3:52 pm

CyclingDuo wrote:
Wed Nov 07, 2018 12:18 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
:mrgreen: :beer

Not everyone has the luxury of retiring early. And then there is a segment of workers that love what they do and have no desire to retire early. I guess everyone else falls in between those book ends.

We come from families where grandparents and parents all worked well beyond any official retirement age not because they needed to, but because they wanted to since they loved their work and sense of identity it afforded them. Never really thought about all of that at the time, but now that we have reached our ages and the points in our careers that we have, we think we now understand why they kept on working - even at a part-time or consultant basis.

Our jobs have always afforded us 2-4 months off every Summer for the past 33 years and one month during the holidays, so in essence - we have already experienced 11 years of retirement or mini-retirement when you add up all of that time off. So instead of being age 57 & 60 work toll wise, we're really only age 46 and 49 at the moment meaning that we are on track to retire at our adjusted work toll age of 55 six to nine years from now. :mrgreen: :mrgreen:
Last edited by Mr.BB on Wed Nov 07, 2018 3:54 pm, edited 1 time in total.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Mr.BB
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Mr.BB » Wed Nov 07, 2018 3:54 pm

I would love to see a follow up with the specific people they interviewed originally in that study and see how they are 4-5 years later.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

bhsince87
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by bhsince87 » Wed Nov 07, 2018 3:57 pm

GerryL wrote:
Wed Nov 07, 2018 2:42 pm
PFInterest wrote:
Wed Nov 07, 2018 11:59 am
lol.
werent they saying there would be a run on the index market as boomers pulled out their money and spent it all?

good work there older generation.
That idea that Boomers would suddenly be pulling their money out of index funds was always specious. No one empties their accounts as soon as they hand in their badge at work. With the possibility of a 30-year retirement, they need to be investing for the future. Those of us who have healthy tIRAs are even reinvesting portions of their RMDs.
There's also the fact that the millenials are an even larger cohort, and they are hitting the age where retirement savings tend to start.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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willthrill81
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by willthrill81 » Wed Nov 07, 2018 3:59 pm

randomguy wrote:
Wed Nov 07, 2018 2:27 pm
KyleAAA wrote:
Wed Nov 07, 2018 12:20 pm
How many of them have pensions or taxable accounts? These studies don't take a holistic view of the population's personal finances, so I'm not sure we can draw any conclusions from them. It seems unlikely 1/3 of boomers will be eating cat food in retirement, though.
Pretty much all of them have SS. LCOL, paid off house and a couple of SS checks is enough for a lot of people to pretty much continue their current lifestyle. The bottom 1/3rd of households is making like 30k/year. They don't millions in retirement dollars. Or even 500k.
Indeed. I have a family member who only has a small (five figure) 401k yet would be very happy with $25k of annual income in retirement. Depending on when he starts benefits, SS for him and his wife will roughly cover that. I've tried to persuade him to do more, but he's not at all interested.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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willthrill81
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by willthrill81 » Wed Nov 07, 2018 4:01 pm

bhsince87 wrote:
Wed Nov 07, 2018 3:57 pm
GerryL wrote:
Wed Nov 07, 2018 2:42 pm
PFInterest wrote:
Wed Nov 07, 2018 11:59 am
lol.
werent they saying there would be a run on the index market as boomers pulled out their money and spent it all?

good work there older generation.
That idea that Boomers would suddenly be pulling their money out of index funds was always specious. No one empties their accounts as soon as they hand in their badge at work. With the possibility of a 30-year retirement, they need to be investing for the future. Those of us who have healthy tIRAs are even reinvesting portions of their RMDs.
There's also the fact that the millenials are an even larger cohort, and they are hitting the age where retirement savings tend to start.
I believe it was earlier this year that a study indicated that more Millennials (as a %) were saving for retirement than Baby Boomers.

In addition, research is clear that most retirees do not spend down their portfolios, at least in nominal dollars. So the notion that Baby Boomers would wreck the stock market by selling everything as soon as they hit retirement was bogus. My father is nearly 70 yet insists on maintaining a 100% stock allocation "because that's where you can grow your money."

Another expert prediction bites the dust.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

JediMisty
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by JediMisty » Wed Nov 07, 2018 4:05 pm

I'm wondering if these figures take into account that many folks may have multiple accounts with different brokerage firms and their employer 401k, annuities, and pensions? It appears to be the "average balance".

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willthrill81
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by willthrill81 » Wed Nov 07, 2018 4:14 pm

JediMisty wrote:
Wed Nov 07, 2018 4:05 pm
I'm wondering if these figures take into account that many folks may have multiple accounts with different brokerage firms and their employer 401k, annuities, and pensions? It appears to be the "average balance".
Some studies examine only accounts, which leads to the problem you outline. Others, including that cited by the OP, examine retirees themselves (i.e. "nationally representative sample"), which overcomes this problem. Based on the latter, the title of the thread is roughly accurate.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

randomguy
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by randomguy » Wed Nov 07, 2018 4:22 pm

LiterallyIronic wrote:
Wed Nov 07, 2018 3:02 pm
randomguy wrote:
Wed Nov 07, 2018 2:43 pm
LiterallyIronic wrote:
Wed Nov 07, 2018 2:34 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
Good luck finding a chart for that. I had to make my own in Excel for finishing university at 32 and retiring at 50. Spoiler alert: it requires saving a painful amount of money.
Sure but you waited an extra decade to start working.:) Start working at 22 like an average college grad and it only takes about 25% of gross to get in you in the ball park (assume real returns of 4-6%. Taxes and SS depend a bit on if you are talking one or 2 people). 55 is only like 20%. Those are high but not crazy high savings rate especially for couples.
Heh, 25% of gross is what I save. $15,888 of $63,500, which, assuming 7% return, will get me to $600,000 in 18 years. I wouldn't call it "only" 25% of gross, though. I mean, on the remaining 75% of gross ($47,612), I have to pay taxes, pay my mortgage (plus extra on the principal in order to pay it off in the same 18 years), and support myself, my toddler, and my wife who stays at home with the aforementioned toddler.

Sure, I'm not saving half of gross or anything, but it's a lot tougher to save an arbitrary percentage of gross the lower your income is.
Taxes even it out quite a bit. 25% is a good amoint and it gets you to retirement in about 30 years. For you that is 60. For a 22 year old it is 60. If you want to retire at 50, you are going to be up aroind 50%. Time is as big of factor as amount. Start late and you need to save a lot more

smitcat
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by smitcat » Wed Nov 07, 2018 4:27 pm

JediMisty wrote:
Wed Nov 07, 2018 4:05 pm
I'm wondering if these figures take into account that many folks may have multiple accounts with different brokerage firms and their employer 401k, annuities, and pensions? It appears to be the "average balance".
Read this article for more details....

https://www.cnbc.com/2017/04/07/how-muc ... y-age.html

LiterallyIronic
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by LiterallyIronic » Wed Nov 07, 2018 4:53 pm

randomguy wrote:
Wed Nov 07, 2018 4:22 pm
LiterallyIronic wrote:
Wed Nov 07, 2018 3:02 pm
randomguy wrote:
Wed Nov 07, 2018 2:43 pm
LiterallyIronic wrote:
Wed Nov 07, 2018 2:34 pm
sjt wrote:
Wed Nov 07, 2018 12:05 pm
Yuck - who wants to work until 62+? Where's the chart for retiring at 55?


:sharebeer
Good luck finding a chart for that. I had to make my own in Excel for finishing university at 32 and retiring at 50. Spoiler alert: it requires saving a painful amount of money.
Sure but you waited an extra decade to start working.:) Start working at 22 like an average college grad and it only takes about 25% of gross to get in you in the ball park (assume real returns of 4-6%. Taxes and SS depend a bit on if you are talking one or 2 people). 55 is only like 20%. Those are high but not crazy high savings rate especially for couples.
Heh, 25% of gross is what I save. $15,888 of $63,500, which, assuming 7% return, will get me to $600,000 in 18 years. I wouldn't call it "only" 25% of gross, though. I mean, on the remaining 75% of gross ($47,612), I have to pay taxes, pay my mortgage (plus extra on the principal in order to pay it off in the same 18 years), and support myself, my toddler, and my wife who stays at home with the aforementioned toddler.

Sure, I'm not saving half of gross or anything, but it's a lot tougher to save an arbitrary percentage of gross the lower your income is.
Taxes even it out quite a bit. 25% is a good amoint and it gets you to retirement in about 30 years. For you that is 60. For a 22 year old it is 60. If you want to retire at 50, you are going to be up aroind 50%. Time is as big of factor as amount. Start late and you need to save a lot more
Respectfully disagree. You can't just pick a percentage and know how long it takes to get to retirement without knowing expenses as a ratio of income. I save $1,324 per month, which is 25% of my gross income. Which, assuming 7% return, gets me to $600,000 in 16 years from now (given that I'm currently at $67,000 saved).

Put in the figures here: https://www.edwardjones.com/preparing-f ... lator.html. Age 34, retire at 50, contributing $15,900 annually, and growing 7%, results in $638k. That $600k gives me a 4% SWR rate of $24,000, which includes a decent buffer over what I need. I expect to be living on 1/3rd my current income in retirement, while most online calculators assume 80%. And between most of my retirement being Roth and the standard deduction, I expect to pay zero taxes in retirement.

smitcat
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by smitcat » Wed Nov 07, 2018 5:07 pm

LiterallyIronic wrote:
Wed Nov 07, 2018 4:53 pm
randomguy wrote:
Wed Nov 07, 2018 4:22 pm
LiterallyIronic wrote:
Wed Nov 07, 2018 3:02 pm
randomguy wrote:
Wed Nov 07, 2018 2:43 pm
LiterallyIronic wrote:
Wed Nov 07, 2018 2:34 pm


Good luck finding a chart for that. I had to make my own in Excel for finishing university at 32 and retiring at 50. Spoiler alert: it requires saving a painful amount of money.
Sure but you waited an extra decade to start working.:) Start working at 22 like an average college grad and it only takes about 25% of gross to get in you in the ball park (assume real returns of 4-6%. Taxes and SS depend a bit on if you are talking one or 2 people). 55 is only like 20%. Those are high but not crazy high savings rate especially for couples.
Heh, 25% of gross is what I save. $15,888 of $63,500, which, assuming 7% return, will get me to $600,000 in 18 years. I wouldn't call it "only" 25% of gross, though. I mean, on the remaining 75% of gross ($47,612), I have to pay taxes, pay my mortgage (plus extra on the principal in order to pay it off in the same 18 years), and support myself, my toddler, and my wife who stays at home with the aforementioned toddler.

Sure, I'm not saving half of gross or anything, but it's a lot tougher to save an arbitrary percentage of gross the lower your income is.
Taxes even it out quite a bit. 25% is a good amoint and it gets you to retirement in about 30 years. For you that is 60. For a 22 year old it is 60. If you want to retire at 50, you are going to be up aroind 50%. Time is as big of factor as amount. Start late and you need to save a lot more
Respectfully disagree. You can't just pick a percentage and know how long it takes to get to retirement without knowing expenses as a ratio of income. I save $1,324 per month, which is 25% of my gross income. Which, assuming 7% return, gets me to $600,000 in 16 years from now (given that I'm currently at $67,000 saved).

Put in the figures here: https://www.edwardjones.com/preparing-f ... lator.html. Age 34, retire at 50, contributing $15,900 annually, and growing 7%, results in $638k. That $600k gives me a 4% SWR rate of $24,000, which includes a decent buffer over what I need. I expect to be living on 1/3rd my current income in retirement, while most online calculators assume 80%. And between most of my retirement being Roth and the standard deduction, I expect to pay zero taxes in retirement.
I wish you very much luck with that plan, it hinges on the least income I have seen.
It also appears to rely on no tax increases, a stronger market, no college savings, and no unusual expenses along the way.
Perhaps when your toddler is a bit older your spouse will add to the income and savngs.
Perhaps your relative incomes will go up over the next 16 years.

Please note - you do not need Roths to be at zero taxes with income levels in that range.

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Re: 1/3 of Baby Boomers have no retirement savings...

Post by Nate79 » Wed Nov 07, 2018 6:09 pm

It is ludicrous to only look at "retirement accounts" to draw a conclusion about the wealth of seniors for retirement. It completely ignores net worth and overall asset position as well as income sources. Things like business ownership, home value, rental values and income streams, pensions, etc.

My parents own a small farm with a net worth >$1m, pension, SS, paid for home yet no retirement accounts.

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jharkin
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by jharkin » Wed Nov 07, 2018 7:06 pm

randomguy wrote:
Wed Nov 07, 2018 2:30 pm
jharkin wrote:
Wed Nov 07, 2018 1:10 pm


I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?
These charts are for presentations to mass groups of people to give a general idea of the required amounts of money. They are approximately right for the average person. If you want to know about your specific situation pretty much every broker has some calculator that shows how you are doing with your numbers.
That wasn’t my question. I’ve done all my own planning, spending probably hundreds or thousands of hours over the years building my own projection tool with tax projections,Roth conversion optimization, return and inflation assumptions, our various assets and projected expenses, backtesting scenarios etc.


My question was exactly what I asked: why do they figure somebody who earns 50k needs only 6x salary, but the 300k person needs 14x? ( using the 4% SWR rule of thumb, the savings targets provide only 25% of preretirement income for the 50k case, but almost 60% of preretirement income for the 300k case.) I can guess it’s some combination of SS bend points, tax brackets and expected lifestyle creep, but it would be interesting to actually see the study that produced it.

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CyclingDuo
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by CyclingDuo » Wed Nov 07, 2018 7:31 pm

Sam1 wrote:
Wed Nov 07, 2018 3:09 pm
CyclingDuo wrote:
Wed Nov 07, 2018 1:57 pm
jharkin wrote:
Wed Nov 07, 2018 1:10 pm
I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?
I would assume it has to do with lifestyle creep and the thought that the cash flow for a higher income household may have overall higher expenses (larger home, higher utility bills, higher property taxes, more travel, more taxes, etc...). Example - retiring in San Francisco vs. retiring in say South Dakota.

This chart shows if you want a certain level of income from your risk portfolio in retirement, then such a target amount is needed....

Image
I disagree with this premise. If anything, I need less to retire on since so much of my current income is dedicated to retirement savings, college savings (no financial aid available), mortgage in a HCOL and childcare.

For example, when a second child arrives the childcare and 529 will eventually total 6k a month for 2 kids. We won’t have that expense in retirement.

Our home is small and utilities aren’t any more than a large house in a LCOL area.

I calculated we save, spend on expenses we won’t have in retirement (mortgage, childcare) or pay out in taxes over 80 percent of our 400k plus HHI. I think around 40 percent of our income goes to retirement savings and our brokerage account. So there’s 40 percent we do NOT need in retirement.
Wow! Tough crowd...

Sam, I'm not sure I understand your disagreement. :?

Things we do know....

Exact amount of our current annual expenses in today's dollars (includes: wants/needs/variables). The amount does not include current savings, any expenses related to work, or any items/expenses that we will no longer need in retirement. We do anticipate - in today's dollars - a continued need for our utilities, our property tax, our health insurance in some shape or form, our love of food/wine/dining, our travel, our auto insurance, our maintenance/repairs, our charitable donations, our connectivity for radio/music/internet/cell service, our clothing, our entertainment and so on and so forth as what we are currently paying in today's dollars. With the advent of grandchildren at some point, we expect our expenses to actually increase!!!!
:dollar
:mrgreen:
:sharebeer

We can plug things into FIRECalc, i-ORP, Fidelity, Personal Capital, etc... in terms of the amount of our pension and when taken, the amount of our SS and when taken, the amount of other income streams to show exactly in today's dollars any gap that will need to be filled to cover our expenses. If that gap is a certain dollar amount in today's $$$$$, then the above chart shows how much money one would need to have saved that can handle a 4% withdrawal rate to cover the gap. The chart says for $40K of desired annual income, you need $1M. For $50K of desired income, you need $1.25M and so on and so forth. It's not a bad guide/starting point at all in our opinion. The scenarios that we plug into our calculators show us what size pot of :moneybag we need to provide the annual income needed.

What do you feel is incorrect with such a premise?

Should we all ignore the study that showed only higher income earners spend less in retirement compared to lower and middle income earners spending more?

ICI Analysis Shows Americans Maintain or Increase Spendable Income After Claiming Social Security

https://money.cnn.com/2017/07/28/retire ... index.html

https://www.ici.org/research/retirement ... ent_income

For us, we feel that it was not until after our children had left the house and finished their college educations that we were able to finally settle into the latter portion of our working careers where we could get a truer picture of what our actual annual expenses as a couple are so that we could begin to hone in on our final decade of work, and what retirement would look like expense wise. I think it is a given that the expenses of child rearing and sending them through college is done and over with - so obviously not a part of your expenses for retirement planning and the income needed.

Anyway, we know exactly what our annual expenses are. We know exactly what our pension is projected to be no matter what year we take it.. We know exactly what our projected SS will be no matter what year we take it. And based on that, we know exactly what would be required to cover any gap in our annual expenses if need be. Fortunately we currently are in a good position - although being conservative we always want to plan for and consider the "what ifs".
"Everywhere is within walking distance if you have the time." ~ Steven Wright

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CyclingDuo
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by CyclingDuo » Wed Nov 07, 2018 7:41 pm

Nate79 wrote:
Wed Nov 07, 2018 6:09 pm
It is ludicrous to only look at "retirement accounts" to draw a conclusion about the wealth of seniors for retirement. It completely ignores net worth and overall asset position as well as income sources. Things like business ownership, home value, rental values and income streams, pensions, etc.

My parents own a small farm with a net worth >$1m, pension, SS, paid for home yet no retirement accounts.
We will agree with you on this. The incomes streams (or possible sale of assets) and all legs of income in retirement should be considered:

rental income
social security
pension
land rental for farms
sale of land or real estate
sale of a business

Everyone's individual circumstances are different. Not everyone owns a farm. Not everyone is planning on selling their home/real estate to finance their retirement. Not everyone will receive SS. Not everyone will receive a pension. Not everyone will sell their Van Gogh paintings.

For the majority, the workplace retirement plan(s) and individual retirement account(s) along with some taxable investments may be it. For others, farms, alternative investments, real estate, rental income, sale of business, etc... may be additional sources of financing retirement beyond SS and risk portfolios.
"Everywhere is within walking distance if you have the time." ~ Steven Wright

randomguy
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Re: 1/3 of Baby Boomers have no retirement savings...

Post by randomguy » Wed Nov 07, 2018 7:50 pm

jharkin wrote:
Wed Nov 07, 2018 7:06 pm
randomguy wrote:
Wed Nov 07, 2018 2:30 pm
jharkin wrote:
Wed Nov 07, 2018 1:10 pm


I'm not following the logic of the chart.. why do the higher incomes need higher multiple of income saved? Are they discounting for the SS bend points offsetting more expenses for the lower income cohort? or something else?
These charts are for presentations to mass groups of people to give a general idea of the required amounts of money. They are approximately right for the average person. If you want to know about your specific situation pretty much every broker has some calculator that shows how you are doing with your numbers.
That wasn’t my question. I’ve done all my own planning, spending probably hundreds or thousands of hours over the years building my own projection tool with tax projections,Roth conversion optimization, return and inflation assumptions, our various assets and projected expenses, backtesting scenarios etc.


My question was exactly what I asked: why do they figure somebody who earns 50k needs only 6x salary, but the 300k person needs 14x? ( using the 4% SWR rule of thumb, the savings targets provide only 25% of preretirement income for the 50k case, but almost 60% of preretirement income for the 300k case.) I can guess it’s some combination of SS bend points, tax brackets and expected lifestyle creep, but it would be interesting to actually see the study that produced it.

There is a link to the paper in the article but yeah it is pretty much all taxes and SS. I am not sure I have read this specific paper but a lot of them also look at 70-80% income replacement.

If your making 50k you need about 40k of income in retirement (your not saving 10% anymore and federal and state taxes go to almost zero). Someone making 50k will get around 20k of SS. If they have a spouse thats another 10k. 300k to generate 10k of income is right in line with what you would expect.

300k person needs 270k after savings. Taxes for this person is a lot more complicated. They are probably paying 60-80k depending on their exact situation. They will get about 32k of SS. And lets assume they have a spouse get 16k. 14.8*300k = 4.4 million *.04 = 177k 173+48 = 221k. That is a bit low but it is in the ballpark.

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