Retirement savings guidelines by age

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rule low
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Retirement savings guidelines by age

Post by rule low » Sun Jan 12, 2020 4:15 pm

Short time lurker, first time poster here! Wondering about everybody's opinion on age guidelines for retirement savings. Did a search and didn't see a similar topic posted but I apologize if I missed an earlier discussion on this subject.

The one I see referenced the most often is Fidelity's rule of thumb on the subject: 1x income @ 30, 2x @ 35, 3x @ 40, 3x @ 45, 6x @ 50, 7x @ 55, 8x @ 60, 10x @ 67.

Clearly, this should be tweaked according to one's own situation and spending habits. But does everybody feel like this is a good starting point for tracking one's progress in retirement savings? I've also seen posts here talking about basing it on 25x expenses at retirement instead of a multiplier of income - but it seems more difficult to foresee my expenses 30 years into the future (especially wrt healthcare expenses). Are there any other models that people recommend for retirement savings checkpoints by age?

The Fidelity model is way more aggressive than the average person's saving habits but I'm not sure if that has more to do with the average person undersaving (probably!) or because Fidelity has a vested interest in convincing people to invest more money. I'm a bit late to the retirement savings game (mid 30s currently, didn't save in my 20s) so I feel an urge to catch up now. I'm currently saving as much as I can (max 401k, backdoor Roth, another 12k+ in a mega backdoor Roth) but even with this savings rate, it'll take me ~5 years of grinding to reach Fidelity's benchmark. Though I assume it'll be easier to maintain that progress once I catch up to those guidelines, that length of intense savings obviously isn't that appealing lol.

Dialing back the after-tax contributions would make current life more comfortable and most retirement calculators think I could still hit 2, 2.5M at retirement age with just a max 401k. Trying to see what most people's opinions are on the subject - am I crazy trying to chase numbers to meet a benchmark?

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Re: Retirement savings guidelines by age

Post by LadyGeek » Sun Jan 12, 2020 4:20 pm

Welcome! That article seems to be nothing more than "save as much as you can as early as you can".

The wiki has the same idea. See: Importance of saving early

You need to spend save 10x @ 67 to make up for not saving 1x @ 30.

Update: Changed "spend" to "save" per willthrill8's correction below.
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Re: Retirement savings guidelines by age

Post by longinvest » Sun Jan 12, 2020 4:22 pm

You could consider the approach described in this post, instead: viewtopic.php?p=4946841#p4946841.
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Re: Retirement savings guidelines by age

Post by willthrill81 » Sun Jan 12, 2020 4:24 pm

LadyGeek wrote:
Sun Jan 12, 2020 4:20 pm
You need to spend 10x @ 67 to make up for not saving 1x @ 30.
I'm guessing you meant to say "save" rather than "spend."
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Re: Retirement savings guidelines by age

Post by JoeRetire » Sun Jan 12, 2020 4:29 pm

rule low wrote:
Sun Jan 12, 2020 4:15 pm
Short time lurker, first time poster here! Wondering about everybody's opinion on age guidelines for retirement savings. Did a search and didn't see a similar topic posted but I apologize if I missed an earlier discussion on this subject.

The one I see referenced the most often is Fidelity's rule of thumb on the subject: 1x income @ 30, 2x @ 35, 3x @ 40, 3x @ 45, 6x @ 50, 7x @ 55, 8x @ 60, 10x @ 67.

Clearly, this should be tweaked according to one's own situation and spending habits. But does everybody feel like this is a good starting point for tracking one's progress in retirement savings?
Nope. Measuring your progress in retirement savings using a formula based on your income makes little sense to me.
I've also seen posts here talking about basing it on 25x expenses at retirement instead of a multiplier of income - but it seems more difficult to foresee my expenses 30 years into the future (especially wrt healthcare expenses).
Just because it's difficult doesn't mean it's not the right way.
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Re: Retirement savings guidelines by age

Post by manatee2005 » Sun Jan 12, 2020 4:32 pm

rule low wrote:
Sun Jan 12, 2020 4:15 pm
Short time lurker, first time poster here! Wondering about everybody's opinion on age guidelines for retirement savings. Did a search and didn't see a similar topic posted but I apologize if I missed an earlier discussion on this subject.

The one I see referenced the most often is Fidelity's rule of thumb on the subject: 1x income @ 30, 2x @ 35, 3x @ 40, 3x @ 45, 6x @ 50, 7x @ 55, 8x @ 60, 10x @ 67.

Clearly, this should be tweaked according to one's own situation and spending habits. But does everybody feel like this is a good starting point for tracking one's progress in retirement savings? I've also seen posts here talking about basing it on 25x expenses at retirement instead of a multiplier of income - but it seems more difficult to foresee my expenses 30 years into the future (especially wrt healthcare expenses). Are there any other models that people recommend for retirement savings checkpoints by age?

The Fidelity model is way more aggressive than the average person's saving habits but I'm not sure if that has more to do with the average person undersaving (probably!) or because Fidelity has a vested interest in convincing people to invest more money. I'm a bit late to the retirement savings game (mid 30s currently, didn't save in my 20s) so I feel an urge to catch up now. I'm currently saving as much as I can (max 401k, backdoor Roth, another 12k+ in a mega backdoor Roth) but even with this savings rate, it'll take me ~5 years of grinding to reach Fidelity's benchmark. Though I assume it'll be easier to maintain that progress once I catch up to those guidelines, that length of intense savings obviously isn't that appealing lol.

Dialing back the after-tax contributions would make current life more comfortable and most retirement calculators think I could still hit 2, 2.5M at retirement age with just a max 401k. Trying to see what most people's opinions are on the subject - am I crazy trying to chase numbers to meet a benchmark?
It doesn't matter what the formula says you should have at what age. What matters is that your increase your income as much as you can and that you save and invest as much as you can. It's never too late to start. My parents for example lost everything in mid 40s and still retired at 62.

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Re: Retirement savings guidelines by age

Post by KlangFool » Sun Jan 12, 2020 4:37 pm

rule low wrote:
Sun Jan 12, 2020 4:15 pm

it seems more difficult to foresee my expenses 30 years into the future (especially wrt healthcare expenses).
rule low,

It is very simple.

1) Use your current annual expense.

2) There is a slim to zero chance that you will retire at 67 years old.

KlangFool

Admiral
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Re: Retirement savings guidelines by age

Post by Admiral » Sun Jan 12, 2020 4:46 pm

Income is meaningless. Expenses are everything. Most people 30 years out from retirement are unable to project what their expenses in retirement will be (not to mention their social security). Once you get closer, you will have a decent sense of how much you will spend. At that point, it's a multiple of expenses based on years of retirement and the withdrawal rate that you're comfortable with, after retirement income is accounted for.

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Re: Retirement savings guidelines by age

Post by rule low » Mon Jan 13, 2020 5:20 pm

longinvest wrote:
Sun Jan 12, 2020 4:22 pm
You could consider the approach described in this post, instead: viewtopic.php?p=4946841#p4946841.
This is interesting - I'll take a look at it. Thanks!
KlangFool wrote:
Sun Jan 12, 2020 4:37 pm
rule low wrote:
Sun Jan 12, 2020 4:15 pm

it seems more difficult to foresee my expenses 30 years into the future (especially wrt healthcare expenses).
rule low,

It is very simple.

1) Use your current annual expense.

2) There is a slim to zero chance that you will retire at 67 years old.

KlangFool
Does the second point just mean that there will be life variables that will move that retirement age earlier/later such that it's pointless to think about an exact date as long as I'm saving as much as possible and investing properly?
Admiral wrote:
Sun Jan 12, 2020 4:46 pm
Income is meaningless. Expenses are everything. Most people 30 years out from retirement are unable to project what their expenses in retirement will be (not to mention their social security). Once you get closer, you will have a decent sense of how much you will spend. At that point, it's a multiple of expenses based on years of retirement and the withdrawal rate that you're comfortable with, after retirement income is accounted for.
I understand that I should focus more on process (saving/investing) rather than results (final portfolio balance/retirement date) but how do I evaluate if I'm "on track" so to speak? The picture will certainly be clearer once I get closer to retirement but there's always the fear of being behind schedule and I'd have to scramble to make things work out in my 50s.

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Re: Retirement savings guidelines by age

Post by KlangFool » Mon Jan 13, 2020 5:29 pm

rule low wrote:
Mon Jan 13, 2020 5:20 pm
Does the second point just mean that there will be life variables that will move that retirement age earlier/later such that it's pointless to think about an exact date as long as I'm saving as much as possible and investing properly?

The picture will certainly be clearer once I get closer to retirement but there's always the fear of being behind schedule and I'd have to scramble to make things work out in my 50s.
rule low,

<<Does the second point just mean that there will be life variables that will move that retirement age earlier/later such that it's pointless to think about an exact date as long as I'm saving as much as possible and investing properly?>>

Correct! One correction. I do not believe in saving as much as possible. I believe in saving as much as I spend. Aka, only save 1 year of expense every year.

<<The picture will certainly be clearer once I get closer to retirement but there's always the fear of being behind schedule and I'd have to scramble to make things work out in my 50s.>>

If you calculate your portfolio size and annual saving based on current annual expense, then, apply a nominal return rate of 5% to 7%, you would know when you will hit your number. It is simple math. The only question is whether you are willing to calculate and look at the number.

I save 1 year of expense every year. I know that I will reach my number in less than 20 years. It is very simple.

KlangFool

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Re: Retirement savings guidelines by age

Post by MathWizard » Mon Jan 13, 2020 5:41 pm

1) The rules of thumb can be way off for those in professional fields.
Investing in yourself on your twenties to increase you future income
is one of the best choices you can make.

2) Income should be replaced by expenses. Doubling your salary does not
make you poorer, but doubling your expenses can.

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Re: Retirement savings guidelines by age

Post by KlangFool » Mon Jan 13, 2020 5:46 pm

MathWizard wrote:
Mon Jan 13, 2020 5:41 pm
1) The rules of thumb can be way off for those in professional fields.
Investing in yourself on your twenties to increase you future income
is one of the best choices you can make.

2) Income should be replaced by expenses. Doubling your salary does not
make you poorer, but doubling your expenses can.
MathWizard,

FYI. OP is in the mid-30s.

<< I'm a bit late to the retirement savings game (mid 30s currently, didn't save in my 20s)>>

KlangFool

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Re: Retirement savings guidelines by age

Post by Carl53 » Mon Jan 13, 2020 5:53 pm

A long time ago, I had a goal of 10X annual pay. Pay went up a lot and so did savings. When I pulled the plug (and watched my portfolio dramatically decline in 2008) I had about that 10X pay factor. Plus I figured that I had no more college expenses, no need to make large 401k contributions. Also, my company offered retiree health insurance, I had a decent pension and a projected someday significant SS benefit. All of these had varying degrees of uncertainty associated with them. Fortunately the portfolio recovered, the health insurance and pension remain surprisingly (to me) are yet intact despite the company bankruptcy 6 years after I retired. They lasted one year longer than I had projected. Many do not have SS in their future. Your individual situation will dictate what you need to have saved. I would subtract from your current annual expenses those expenses that might be going away such as mortgage, college and 401k. Add those that might be new such as health care insurance, travel etc. Subtract what you will receive in SS and pension (less taxes) discounted back to today. Divide this back into what you have saved. Note that you could reduce pretax accounts by an appropriate tax rate. This will give you how many years of expenses your portfolio will cover assuming you just match inflation. Then you need to consider how many years you and your spouse may live.

I'd suggest using BigFoot's Retiree Model or even building your own spreadsheet. I did, but the pre-retired model had a lot of holes in it. Best laid plans though can give you false hope and lead to despair when the unexpected happens as I found out in 2008 (preBH) and lost a big chunk of our portfolio and subsequently went too conservative and thus did not recover as much as might have.

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Re: Retirement savings guidelines by age

Post by Dottie57 » Mon Jan 13, 2020 6:37 pm

Op, I had a late start with retirement savings. First 401k at 31yo. I made very little, so 15% of very little is teeny, tiny. Start ramping up now and at 60 you will be happy you did.

Wrt knowing how to target a number. The best thing you can do is set a good healthy target saving rate. Pay yourself first and the rest is for your expenses. In the retirement literature the suggested saving rate ( from gross) is 15-20%. If markets don’t do well, then work at saving more. 2000 - 2010 the markets did not do well. It seemed like I made very little progress so I ended up saving a bit more.

I could never figure out a number but I could set a saving rate.

Good luck.

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Re: Retirement savings guidelines by age

Post by KlangFool » Mon Jan 13, 2020 7:19 pm

OP,

Don't feel so bad about starting late. I save 1 year of expense every year. But, 10+ years ago, I lost 50% of my portfolio by gambling on Telecom stocks. So, I was about the same situation as you are now.

KlangFool

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Re: Retirement savings guidelines by age

Post by Unladen_Swallow » Mon Jan 13, 2020 7:31 pm

Admiral wrote:
Sun Jan 12, 2020 4:46 pm
Income is meaningless. Expenses are everything. Most people 30 years out from retirement are unable to project what their expenses in retirement will be (not to mention their social security). Once you get closer, you will have a decent sense of how much you will spend. At that point, it's a multiple of expenses based on years of retirement and the withdrawal rate that you're comfortable with, after retirement income is accounted for.
Agree with Admiral. Saving for retirement is a dynamic plan that is refined periodically as you have more information. Expenses are key, not income.

Edited: I read you are in mid 30s. No problem. Most people in their 20s are not saving, you are in a fine position. It is understandable to worry a bit reading benchmarks and such. Don't. Your current saving plan is good. Don't scale back. As you advance in your career, you will have the ability to both spend and save more. If you plan to work 30 more years, that is plenty of time to save. Plenty. Since the time I got financially savvy to my planned retirement is perhaps half the number of years.

I don't know if you have/will have a family etc. Your plans will adjust as needed if you marry, have kids, or take on any other responsibilities. Life adjusts, so do you. Nothing to worry about. When you are in your 40s, a lot will become clearer.
Last edited by Unladen_Swallow on Mon Jan 13, 2020 7:45 pm, edited 2 times in total.
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Re: Retirement savings guidelines by age

Post by rascott » Mon Jan 13, 2020 7:34 pm

I have Fidelity for my 401k servicer.... so am familiar with those benchmarks you see. I'll take a slightly different view and say if you can hit them, you are probably in pretty decent shape..... and probably ahead of 90% of the country.

Obviously expenses are what matter.... but my goal for retirement is to fully replace our current household income..... even though we currently save 30+%.

Is that over-saving? Probably.... maybe.... but so what. I'd rather error on the side of over-saving.

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Re: Retirement savings guidelines by age

Post by Wanderingwheelz » Mon Jan 13, 2020 7:45 pm

Basing your needed retirement savings on your earned income is silly. My wife and I have always made far more money than we need, or will ever need in retirement. Just because a person earns $150,000 doesn’t mean they will retire with a need of 80% of that amount- a common assumption made in what you read online. Maybe people really do succumb to lifestyle creep- spending almost all of what they earn? Probably.

Regardless, I’m comfortable with 30x expenses as a general rule of thumb for a person who expects a retirement of @30 years, since that’s what you really need to provide for- your expenses.
Last edited by Wanderingwheelz on Mon Jan 13, 2020 7:50 pm, edited 1 time in total.

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Re: Retirement savings guidelines by age

Post by EddyB » Mon Jan 13, 2020 7:48 pm

willthrill81 wrote:
Sun Jan 12, 2020 4:24 pm
LadyGeek wrote:
Sun Jan 12, 2020 4:20 pm
You need to spend 10x @ 67 to make up for not saving 1x @ 30.
I'm guessing you meant to say "save" rather than "spend."
Who knows, that might be true too! :-(

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Re: Retirement savings guidelines by age

Post by MathWizard » Mon Jan 13, 2020 8:30 pm

KlangFool wrote:
Mon Jan 13, 2020 5:46 pm
MathWizard wrote:
Mon Jan 13, 2020 5:41 pm
1) The rules of thumb can be way off for those in professional fields.
Investing in yourself on your twenties to increase you future income
is one of the best choices you can make.

2) Income should be replaced by expenses. Doubling your salary does not
make you poorer, but doubling your expenses can.
MathWizard,

FYI. OP is in the mid-30s.

<< I'm a bit late to the retirement savings game (mid 30s currently, didn't save in my 20s)>>

KlangFool
Yes, I caught that.

If you have spent your 20's spending on getting more income means you have more income in your 30's but less accumulated wealth. The loss of a decade may mean it may take you 20 years to catch up.

Thereafter you will surge ahead.

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Re: Retirement savings guidelines by age

Post by Sandi_k » Tue Jan 14, 2020 2:05 pm

Age isn't useful to me. My rule of thumb was to start by saving 15% of gross, and increasing by .50% every time I got a raise. Painless. And effective.

I also work for a university, and we have a defined benefit plan that is surprisingly well-funded. So by saving 25% of gross income, plus employer match to the DB plan, we will have a great retirement income. (We are assuming 75% of Social Security in our projections, which is just gravy if it happens).

In our late 30's, we bought a business for DH, which paid a salary for him plus corporate payouts for ~ 20 years.

We have also been smart with real estate: buying ugly houses, and transforming them over 15-20 years. We did not move up in house from our starter home until 20 years, which saved enormously in transaction costs and property taxes.

So I'd say in addition to saving, diversify your future sources of income: paycheck + investments + self-employment + pension + Social Security + real estate.

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Re: Retirement savings guidelines by age

Post by danielc » Tue Jan 14, 2020 3:28 pm

longinvest wrote:
Sun Jan 12, 2020 4:22 pm
You could consider the approach described in this post, instead: viewtopic.php?p=4946841#p4946841.
That looks incredibly complicated.

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Re: Retirement savings guidelines by age

Post by danielc » Tue Jan 14, 2020 3:37 pm

KlangFool wrote:
Sun Jan 12, 2020 4:37 pm
rule low,

It is very simple.

1) Use your current annual expense.

2) There is a slim to zero chance that you will retire at 67 years old.

KlangFool
That is depressing. I am now 41. For various reasons, I have only around 1.5x yearly expenses saved in retirement accounts (I traded my savings for a career change). But that value is up 1x from what it was a year ago. If I manage to keep this up, I will save 26x expenses by the time I turn 67, before taking into account market returns.

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Re: Retirement savings guidelines by age

Post by LiterallyIronic » Tue Jan 14, 2020 3:44 pm

rule low wrote:
Sun Jan 12, 2020 4:15 pm
The one I see referenced the most often is Fidelity's rule of thumb on the subject: 1x income @ 30, 2x @ 35, 3x @ 40, 3x @ 45, 6x @ 50, 7x @ 55, 8x @ 60, 10x @ 67.

Clearly, this should be tweaked according to one's own situation and spending habits.
Welcome to the forum! I, for one, hate that particular chart because it makes me depressed. I didn't finish university until 32, so I missed the 1x by 30 and the 2x by 35. And I can't figure out how to tweak the chart to make up for that, especially since I want to retire at 50. I cannot come up with any way at all to make that chart helpful for me.

So, instead, I just calculated how much I want to have at 50 ($600,000) to retire. Then I did simple subtraction from my age to figure out how many years I had until then. Then I assumed a 4% annual return. And I used those figure to calculate how much I should save every month in order to reach $600,000 by then. Then I started saving that much.

I guess what I could do is make my own chart for how much I "should" have per age along my way to 50 to see if I'm on track.

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Re: Retirement savings guidelines by age

Post by KlangFool » Tue Jan 14, 2020 3:47 pm

danielc wrote:
Tue Jan 14, 2020 3:37 pm
KlangFool wrote:
Sun Jan 12, 2020 4:37 pm
rule low,

It is very simple.

1) Use your current annual expense.

2) There is a slim to zero chance that you will retire at 67 years old.

KlangFool
That is depressing. I am now 41. For various reasons, I have only around 1.5x yearly expenses saved in retirement accounts (I traded my savings for a career change). But that value is up 1x from what it was a year ago. If I manage to keep this up, I will save 26x expenses by the time I turn 67, before taking into account market returns.
danielc,

<<There is a slim to zero chance that you will retire exactly at 67 years old.>>

I missed one word in my statement.

<<That is depressing. >>

Why? The number is exactly what it is. It is up to you to decide whether it is half empty or half full.

<<For various reasons, I have only around 1.5x yearly expenses saved in retirement accounts >>

And, you are much better than those with nothing in their retirement accounts.

<<I will save 26x expenses by the time I turn 67, >>

I think you are wrong in your assessment. If you reach 67, social security benefits will cover a significant part of your expense. You would not need 26x expenses.

KlangFool

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Re: Retirement savings guidelines by age

Post by danielc » Tue Jan 14, 2020 3:49 pm

KlangFool wrote:
Mon Jan 13, 2020 7:19 pm
OP,

Don't feel so bad about starting late. I save 1 year of expense every year. But, 10+ years ago, I lost 50% of my portfolio by gambling on Telecom stocks. So, I was about the same situation as you are now.

KlangFool
This is something I think about a lot too. I first got interested in finance in my late 20s and I started saving what I could (it wasn't a lot back then). After a few years I felt quite miserable with my job and decided to become a scientist. My DW and I lived off of our savings for a few years while I got a masters degree and a PhD. All in all, this cost me all my savings plus 6 years of income. I don't regret my choice and I like my work, but I can really see the financial cost of effectively losing more than a decade.

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Re: Retirement savings guidelines by age

Post by KlangFool » Tue Jan 14, 2020 3:52 pm

LiterallyIronic wrote:
Tue Jan 14, 2020 3:44 pm
rule low wrote:
Sun Jan 12, 2020 4:15 pm
The one I see referenced the most often is Fidelity's rule of thumb on the subject: 1x income @ 30, 2x @ 35, 3x @ 40, 3x @ 45, 6x @ 50, 7x @ 55, 8x @ 60, 10x @ 67.

Clearly, this should be tweaked according to one's own situation and spending habits.
Welcome to the forum! I, for one, hate that particular chart because it makes me depressed.
LiterallyIronic,

Comparison Is the Thief of Joy!
- Theodore Roosevelt

Focus on your own journey. Ignore the noise of others as to what you should or should not do.

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Re: Retirement savings guidelines by age

Post by longinvest » Tue Jan 14, 2020 4:13 pm

KlangFool wrote:
Tue Jan 14, 2020 3:47 pm
<<I will save 26x expenses by the time I turn 67, >>

I think you are wrong in your assessment. If you reach 67, social security benefits will cover a significant part of your expense. You would not need 26x expenses.
Effectively.
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Re: Retirement savings guidelines by age

Post by longinvest » Tue Jan 14, 2020 4:13 pm

danielc wrote:
Tue Jan 14, 2020 3:28 pm
longinvest wrote:
Sun Jan 12, 2020 4:22 pm
You could consider the approach described in this post, instead: viewtopic.php?p=4946841#p4946841.
That looks incredibly complicated.
Dear Danielc,

How difficult is it to fill in the following information:

Image

That's your current age, your current salary, your current portfolio balance, your current asset allocation, and your target retirement age (or target financial independence age).

I would have thought that this is pretty obvious information. Don't you think so?

As for Social Security information, it should be pretty easy, again, to fill in the information:

Image

You have to provide the amount you currently contribute annually into Social Security, and provide the start age and estimated monthly amount you'll get.

The monthly Social Security benefit is easy to estimate using the Social Security Administration Online Calculator or with forum member Neurosphere's Downloadable Social Security Benefit Estimator.


Once this information provided, the spreadsheet suggests a monthly portfolio contribution amount for the current year:

Image

Why do you find that this is incredibly complicated? Please explain.

Best regards,

longinvest
Last edited by longinvest on Tue Jan 14, 2020 5:11 pm, edited 1 time in total.
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Re: Retirement savings guidelines by age

Post by watchnerd » Tue Jan 14, 2020 4:47 pm

We base it off annual cost of living.

We currently save 200% of our annual COL. Basing the calculations off 'income' would imply a spending level we don't have.
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Re: Retirement savings guidelines by age

Post by danielc » Tue Jan 14, 2020 5:16 pm

longinvest wrote:
Tue Jan 14, 2020 4:13 pm
danielc wrote:
Tue Jan 14, 2020 3:28 pm
longinvest wrote:
Sun Jan 12, 2020 4:22 pm
You could consider the approach described in this post, instead: viewtopic.php?p=4946841#p4946841.
That looks incredibly complicated.
Dear Danielc,

How difficult is it to fill in the following information:
Typing those numbers is easy. But I want to understand what the spreadsheet is doing. I have read the wiki page Variable percentage withdrawal and I don't understand what it does. Also, I don't understand the "required flexibility" part of the spreadsheet. This is the problem with black boxes: The people who make them think that the black box is extremely simple --- all you have to do is pull a lever. But for someone else, it is not at all simple because I don't know what the lever does or why I should trust it. For someone like me, the idea of trusting my life's savings to an automated wizard made by a stranger on the internet is terrifying. I might have incorrectly assumed that other people feel the same way. So if someone offers me that spreadsheet, to me it is a given that I have to find out how it works, reverse engineer anything that is not explained, and understand the backtests that presumably prove that it works.

longinvest
Posts: 4092
Joined: Sat Aug 11, 2012 8:44 am

Re: Retirement savings guidelines by age

Post by longinvest » Tue Jan 14, 2020 5:23 pm

danielc wrote:
Tue Jan 14, 2020 5:16 pm
longinvest wrote:
Tue Jan 14, 2020 4:13 pm
danielc wrote:
Tue Jan 14, 2020 3:28 pm
longinvest wrote:
Sun Jan 12, 2020 4:22 pm
You could consider the approach described in this post, instead: viewtopic.php?p=4946841#p4946841.
That looks incredibly complicated.
Dear Danielc,

How difficult is it to fill in the following information:
Typing those numbers is easy. But I want to understand what the spreadsheet is doing. I have read the wiki page Variable percentage withdrawal and I don't understand what it does. Also, I don't understand the "required flexibility" part of the spreadsheet. This is the problem with black boxes: The people who make them think that the black box is extremely simple --- all you have to do is pull a lever. But for someone else, it is not at all simple because I don't know what the lever does or why I should trust it. For someone like me, the idea of trusting my life's savings to an automated wizard made by a stranger on the internet is terrifying. I might have incorrectly assumed that other people feel the same way. So if someone offers me that spreadsheet, to me it is a given that I have to find out how it works, reverse engineer anything that is not explained, and understand the backtests that presumably prove that it works.
Dear Danielc,

It's all explained in details in the thread The Variable Savings Rate (VSR) -- an accumulation-time prelude to VPW.

The spreadsheet is fully open. You can view all of its formulas. There's nothing hidden.

If you want additional clarifications, you can ask on that thread or on the main VPW thread, as the spreadsheet has been merged with VPW on a suggestion of forum member One Ping.

Best regards,

longinvest
Bogleheads investment philosophy | One-ETF global balanced index portfolio | VPW

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