http://www.foxbusiness.com/markets/2017/04/21/average-cost-retirement-is-738400-will-have-enough.htmlI love how arbitrary the article seems to make it. Like, ehhh, who knows, it's not really in your control, so let's throw some numbers out there and see what happens.
Their premise is that an average retirement costs $738,400.
They say, and I quote, "If you plan to settle down in your (paid off) home, living simply, then 70% of your current income is
probably enough." (emphasis mine) And "most retirees can expect to see their expenses drop when they retire, hence the standard recommendation that retirees will need 70% to 80% of their pre-retirement income."
They then go on to give some examples I guess to show why their approach is totally like safe. They say a 30 year old who makes $50,000/year can get to their $738,400 amount by they time they are 70 by saving 11%/year assuming a return of 7%/year.
If the 30 year old making $50,000/year the article references "tucks away" 11% like they recommend into a tax-deferred account to get to their magic $738,400 (AT 70 YEARS OLD!!!!), that means they will be spending $44,500/year (pre tax). Using the widely accepted (though often debated) 4% rule, they should be drawing $29,536/year (pre-tax) at most. BUT, 70% of $50,000 is $35,000, and 70% of the pre-tax pay less retirement "tuckings" is $31,150.
It is crazy how this passes as financial advice. Math exists and can be used to figure out what you need within a reasonable range of estimation. We don't need to just kind of wing it and hope it works out sometime in the future maybe if we cross our fingers and pray.
