Author Topic: Live to 100? You'll need FIVE TIMES as much saved to retire at 60.  (Read 2444 times)

Butterfingers

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http://www.bbc.co.uk/news/business-38652359
Quote
"If we live 30 years longer, then in order to retire at 60 we would have to save five times as much during our working lives. It's the end of retirement as we know it," says Lynda Gratton, who hosted a session on the topic in Davos.
What the actual?

Maybe she's excluding any kind of state pension/social security, but even so, has she heard of investment returns or safe withdrawal rates?

jinga nation

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Re: Live to 100? You'll need FIVE TIMES as much saved to retire at 60.
« Reply #1 on: January 18, 2017, 05:59:43 AM »
<rant>
I'm a long time Beeb reader and radio listener. They've gone to shite. No different from the US MSM (mainstream media). Nothing is written thoughtfully anymore, just a brain dump. Like Gawker and Buzzfeed and others.
</rant>
How can she forget UK pensions? I mean, that's a birthright, innit?

LalsConstant

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Re: Live to 100? You'll need FIVE TIMES as much saved to retire at 60.
« Reply #2 on: January 18, 2017, 06:58:56 AM »
Well if you use a pretty low allowance for portfolio failure when doing your forecasting, then yes you'll need a bit more money but mathematically you should still have a much better ratio of retirement to career.

That's a head shaker for sure.

Playing with Fire UK

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Re: Live to 100? You'll need FIVE TIMES as much saved to retire at 60.
« Reply #3 on: January 18, 2017, 07:18:50 AM »
There was a Beeb news story a couple of days ago on pensions where they'd modelled growth as 0.5% above inflation.

If it's the same idiot running the calcs I'd believe that you could need five times as much.

financialfreedomsloth

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Re: Live to 100? You'll need FIVE TIMES as much saved to retire at 60.
« Reply #4 on: January 18, 2017, 07:56:40 AM »
http://www.bbc.co.uk/news/business-38652359
Quote
"If we live 30 years longer, then in order to retire at 60 we would have to save five times as much during our working lives. It's the end of retirement as we know it," says Lynda Gratton, who hosted a session on the topic in Davos.
What the actual?

Maybe she's excluding any kind of state pension/social security, but even so, has she heard of investment returns or safe withdrawal rates?

Well the source for the article is Lynda Gratton who is a psychologist, and professor of management practice at the London Business School. Math is probably not her strongest point. She also is 55 years old and still working (even though she had an above average paying job) so personal finance isn't her strongest point either ...

But yes people are going to live longer and society will need to adapt. But working longer and having a few gap years in between isn't going to do the trick. My dad changed careers when he was 45 and then continued to keep up with the ever evolving new technology he had to master to stay relevant at his job. But the older he got, the more he started to struggle. He retired at 58 and now 63 he is still pretty active in his hobby. He might, might be able to do a part time job in his hobby field but full time work? In a demanding field? That just would not be possible. Our government passed legislation that requires people to work till 67. It was 65 in theory but around 58 in reality. And now they would like people to work till 67 in reality also (and not just on paper). All this in a -futile- attempt to keep our social system intact. I foresee a lot of problems when they start pushing this. The sad reality is that as you get older you have less energy but you also have less mental capacity. I know plenty of 65 year olds leading still active lifes and engaging in hobbies. But that doesn't mean they are still able to keep up with the (higher and higher) demands of a full time job. Thinking people will all be able to work till 67 is a pipedream. It's a very nice excel model that shows if everybody works and pays taxes till 67 and then collects pension for 2 years less the system is fixed. Reality is going to be a bitch for that model.

cerat0n1a

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Re: Live to 100? You'll need FIVE TIMES as much saved to retire at 60.
« Reply #5 on: January 18, 2017, 01:37:16 PM »
Well the source for the article is Lynda Gratton who is a psychologist, and professor of management practice at the London Business School. Math is probably not her strongest point. She also is 55 years old and still working (even though she had an above average paying job) so personal finance isn't her strongest point either ...

She's in her 60s and pretty well known as a top business management/HR thinker - hence presenting to world leaders at Davos and the BBC plugging her latest book. Haven't read it and don't plan to, but I have no doubt it will be well researched and the maths will all be correct. One of her big things is getting big multi-nationals to understand the implications of having potentially 3-4 generations in the workforce, implications of technology in terms of people working remotely, multiple changes of career etc etc. I wouldn't dismiss her so readily. She can earn more for a speaking engagement than most people will earn in a year, so "above average paying job" doesn't really cover it. Doubtless she likes her work and has no wish to FIRE.

Playing with Fire UK

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Re: Live to 100? You'll need FIVE TIMES as much saved to retire at 60.
« Reply #6 on: January 19, 2017, 12:10:44 AM »
Having reread it, I think its a measure of the difference between [what people are saving now] and [what they should save if they are going to live to 100]. Part of the gap is that people aren't saving enough for retirement with any longevity.

It could also be the difference between how much [the average person needs to save with a sustainable state pension based on current longevity] and [the average person needs to save with a sustainable state pension based on average longevity of 100].

Also, if the editor decides that they want a spectacular story, "safe withdrawal rate means longevity is broadly irrelevant" doesn't really cut it.