Author Topic: "Can't Save Over 40% of Income"  (Read 5047 times)

Mgmny

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"Can't Save Over 40% of Income"
« on: June 06, 2017, 07:33:06 PM »
I read some article on Market Watch the other day, and at the bottom was embedded a Retirement Calculator. I just started putting in some numbers to play around with it, but apparently we are not allowed to save over 40% of our income!!


JoeBlow

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Re: "Can't Save Over 40% of Income"
« Reply #1 on: June 06, 2017, 07:47:27 PM »
Too funny.  I guess you have to lie about your income to get the correct savings.

Sarah Saverdink

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Re: "Can't Save Over 40% of Income"
« Reply #2 on: June 06, 2017, 07:58:22 PM »
Ha! I guess the app developer never visits this forum :)

Rife

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Re: "Can't Save Over 40% of Income"
« Reply #3 on: June 06, 2017, 08:01:24 PM »
Are you going to listen to the app and spend more?

Mgmny

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Re: "Can't Save Over 40% of Income"
« Reply #4 on: June 06, 2017, 08:18:57 PM »
Are you going to listen to the app and spend more?

I guess I better... I'm just 1 dude - that app has all the power of the internet behind it!!!

marty998

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Re: "Can't Save Over 40% of Income"
« Reply #5 on: June 07, 2017, 03:18:20 AM »
I'm surprised it went up to 40%.

If you were the one designing this calculator you'd want it to be used by the widest possible audience. Some people using it might get irritated by the fact "some people" save 80/90%, otherwise why would the option be there? In fact... I'd hazard a guess substantially all people would look at 80% with some perturbation.

Therefore the developer may just cut the scale at 40% to avoid negative reactions and upsetting the masses.

Villanelle

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Re: "Can't Save Over 40% of Income"
« Reply #6 on: June 07, 2017, 03:26:41 AM »
I'm surprised it went up to 40%.

If you were the one designing this calculator you'd want it to be used by the widest possible audience. Some people using it might get irritated by the fact "some people" save 80/90%, otherwise why would the option be there? In fact... I'd hazard a guess substantially all people would look at 80% with some perturbation.

Therefore the developer may just cut the scale at 40% to avoid negative reactions and upsetting the masses.

It doesn't look like the user selects a % from a drop down.  It appears the user enters dollar amounts and the app does the math, so this wouldn't actually be a concern. 

Mgmny

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Re: "Can't Save Over 40% of Income"
« Reply #7 on: June 07, 2017, 04:22:32 AM »
I'm surprised it went up to 40%.

If you were the one designing this calculator you'd want it to be used by the widest possible audience. Some people using it might get irritated by the fact "some people" save 80/90%, otherwise why would the option be there? In fact... I'd hazard a guess substantially all people would look at 80% with some perturbation.

Therefore the developer may just cut the scale at 40% to avoid negative reactions and upsetting the masses.

It doesn't look like the user selects a % from a drop down.  It appears the user enters dollar amounts and the app does the math, so this wouldn't actually be a concern.

Yeah you can enter the amount OR use a sliding scale. If the developer didn't want to alienate people, he could have at least gone to 50% or 60%. Realistically, I would have had mine go to 100% so people could see, "what if I saved "X%" more..."  Not to mention those of us who ACTUALLY save over 40%.

Furthermore, the message is sort of aggressive or matter of fact. To the uninitiated, it would appear as though there is something financially wrong with saving that much.

BTDretire

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Re: "Can't Save Over 40% of Income"
« Reply #8 on: June 07, 2017, 06:21:40 AM »
It should be designed to allow no less than a 20% savings rate, just as a hint to people.

NESailor

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Re: "Can't Save Over 40% of Income"
« Reply #9 on: June 07, 2017, 06:54:44 AM »
hahaha, I've had a run in with this thing.  Or others that don't let you estimate your retirement expenses and instead assume you'll need 80% of your pre-retirement income.  No offense, but that's a shitton of money for us.  If that was our goal we'd have to live on less than that now and then work for a ridiculously long time.  Doesn't really make sense.

Mgmny

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Re: "Can't Save Over 40% of Income"
« Reply #10 on: June 07, 2017, 06:59:34 AM »
It should be designed to allow no less than a 20% savings rate, just as a hint to people.

Haha so true.

Playing with Fire UK

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Re: "Can't Save Over 40% of Income"
« Reply #11 on: June 07, 2017, 07:09:33 AM »
The ones that allow you to save 40% of income and then force your retirement spend to be 80% of income. Why would I ever need that?

wienerdog

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Re: "Can't Save Over 40% of Income"
« Reply #12 on: June 07, 2017, 02:28:38 PM »
futureadvisor.com is the same way.  Their drop down box only lets you select up to 33%.  I like the free service and they have a suggestion button so I decided to use it a couple weeks ago.  I explained how there are people that save more than 33% and the way I am getting around it so their model is accurate is that I have to increase my salary to match my real savings rate at 33%.  They actually responded a few days later and said they save more than 33% also and that is what they do to get the model correct but that is not the norm so they didn't act like they were going to change it.

ysette9

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Re: "Can't Save Over 40% of Income"
« Reply #13 on: June 07, 2017, 03:10:13 PM »
We are USAA people and I have used their retirement calculator a number of times. I have also called and talked to a financial advisor who essentially walked us through their advanced retirement calculator online over the phone. In the previous incarnation you could only select from three options of how much your spending in retirement would be: same as now, more, or less than, which was around 80% of current income. Obviously that sort of option doesn't work at all for someone saving 50% of income.

We danced around this a bit and finally finagled a funky workaround by artificially lowering our income so that the spending option would align with my best estimates. I gave the feedback that they needed to fix this tool, and low and behold, a couple of months later there is now a "custom" option where you can input exactly what your retirement spending is expected to be.

Motto of the story is: if there is a way to provide feedback then you should do it. You never know when someone on the other end may actually listen.

CheapScholar

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Re: "Can't Save Over 40% of Income"
« Reply #14 on: June 07, 2017, 03:15:40 PM »
CNN Money has retirement and savings calculators that are similar.  You can increase the percentage of 401k/403b from your annual salary.  But you can't plug in, just taking a number at random, $18,000 as a value.

Guess that's all good and well for those working til 70.  Increase your contribution from 4% to 5 or 6%.  Yeah, that oughta do it!

Playing with Fire UK

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Re: "Can't Save Over 40% of Income"
« Reply #15 on: June 08, 2017, 12:32:37 AM »
futureadvisor.com is the same way.  Their drop down box only lets you select up to 33%.  I like the free service and they have a suggestion button so I decided to use it a couple weeks ago.  I explained how there are people that save more than 33% and the way I am getting around it so their model is accurate is that I have to increase my salary to match my real savings rate at 33%.  They actually responded a few days later and said they save more than 33% also and that is what they do to get the model correct but that is not the norm so they didn't act like they were going to change it.

It sounds like they are asking themselves the wrong question. I would bet they've done/read a study and figured that ~99% of people save less than 33% so consider that a win. But the question they should have asked is what savings% do 99% of people who are using a retirement calculator save less than? I'd guess that most people who have a zero or negative savings rate aren't spending a vast amount of time on retirement websites. Or even, what is the downside of increasing the calculator so that you can save any amount?

On the flip side, once I was saving more than 20%, I was interested enough that I had to build my own spreadsheets to account for all the variables I was thinking about.