Author Topic: Retirement is 75% of current salary  (Read 8217 times)

ms

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Retirement is 75% of current salary
« on: April 23, 2014, 09:31:45 AM »
http://www.thestar.com/business/personal_finance/investing/2014/04/23/a_retirement_planner_69_lays_out_her_own_exit_strategy.html

This 69 year old retirement planner is still talking about percentage of current salary and not talking about expenses.

Quote
We hit “our number” about seven years ago, where projected Social Security plus an initial 4-per-cent portfolio withdrawal rate would equal something in the neighborhood of 75 per cent of current salary.

What advice does she have for people not actually spending 75% of their current salary?

kyleaaa

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Re: Retirement is 75% of current salary
« Reply #1 on: April 23, 2014, 09:46:06 AM »
Why don't you ask? Percentage of current salary is perfectly appropriate for the vast majority of people.

ms

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Re: Retirement is 75% of current salary
« Reply #2 on: April 23, 2014, 10:03:48 AM »
I've worked with three different financial advisors over the years and only one ever did mention my expenses.  Looking back, it was actually a pretty smart thing as he was telling me to cut down my expenses or I would never retire but at the time I was not ready for such advice.

libertarian4321

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Re: Retirement is 75% of current salary
« Reply #3 on: May 13, 2014, 04:11:13 AM »
It's annoying to see them say you need "X% of your current salary" to retire, but it's understandable.

Most Americans live at, or beyond, their means.  They spend all of their salary.  So the expectation is that they will need 80% or so of their salary in retirement.

These "advisers" are not geared to deal with people who live on 20% of their income- but thankfully, most of us who live on a tiny fraction of our income really have no need of "financial advisers" (who, btw, may be broke and even in debt even as they dole out financial advice).

rocksinmyhead

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Re: Retirement is 75% of current salary
« Reply #4 on: May 13, 2014, 07:59:12 AM »
It's annoying to see them say you need "X% of your current salary" to retire, but it's understandable.

Most Americans live at, or beyond, their means.  They spend all of their salary.  So the expectation is that they will need 80% or so of their salary in retirement.

but if that's the logic then why don't they say "you will need to replace 100% of your salary"? it seems like they just choose an arbitrary percentage.

pachnik

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Re: Retirement is 75% of current salary
« Reply #5 on: May 13, 2014, 08:07:57 AM »
I am currently living on 70% of my salary and saving about a third.  (And I am going to work on my savings rate to get it higher than a third).

Yes, my financial planner who I've been seeing for about a year has never mentioned expenses and spending.  I am in my late 40's and asked her if I could retire at 60 and she said yes.  She manages my non-registered account so doesn't see the growth in my RRSP.  I haven't told her about MMM and that I am socking away money in my retirement account.  So I think it will be before 60.

Davids

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Re: Retirement is 75% of current salary
« Reply #6 on: May 13, 2014, 08:18:36 AM »
I am currently living on 70% of my salary and saving about a third.  (And I am going to work on my savings rate to get it higher than a third).

Yes, my financial planner who I've been seeing for about a year has never mentioned expenses and spending.  I am in my late 40's and asked her if I could retire at 60 and she said yes.  She manages my non-registered account so doesn't see the growth in my RRSP.  I haven't told her about MMM and that I am socking away money in my retirement account.  So I think it will be before 60.
Without knowing more about your financial planner may I suggest dumping your financial planner. I imagine there are fees he or she is taking that you could save by using another source.

sirdoug007

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Re: Retirement is 75% of current salary
« Reply #7 on: May 15, 2014, 02:39:29 PM »
You would think that someone who thinks about retirement for a living for 18 years could do better than retiring at 70 and needing social security to make retirement work.

But then again, maybe living in a world of average american retirement means you get an average american retirement.

Mortgage Free Mike

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Re: Retirement is 75% of current salary
« Reply #8 on: May 15, 2014, 02:42:00 PM »
Look, there really is no magic number. There are so many things that can happen in retirement, just health-related for instance, that can totally throw off the percentages. That's why this is a topic that will be debated forever.
Each of us just has to come to terms with our own circumstances in determining when "enough is enough" as MMM says.

MrsPete

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Re: Retirement is 75% of current salary
« Reply #9 on: May 19, 2014, 07:54:36 AM »
I totally agree no magic number exists, but for the person who's just starting to think about retirement, I suspect it's better to have SOME NUMBER -- even if it's rather arbitrary -- rather than just the vague instruction, "You should save". 

Gin1984

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Re: Retirement is 75% of current salary
« Reply #10 on: May 19, 2014, 12:37:16 PM »
It's annoying to see them say you need "X% of your current salary" to retire, but it's understandable.

Most Americans live at, or beyond, their means.  They spend all of their salary.  So the expectation is that they will need 80% or so of their salary in retirement.

but if that's the logic then why don't they say "you will need to replace 100% of your salary"? it seems like they just choose an arbitrary percentage.
Because they assume your taxes will go down, your work expenses gone and you won't need to save for retirement.

warfreak2

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Re: Retirement is 75% of current salary
« Reply #11 on: May 19, 2014, 04:01:31 PM »
If you are saving anything at all, then you already aren't using 100% of your salary to support your lifestyle. 75% may be arbitrary, but 100% is contradictory.

rocksinmyhead

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Re: Retirement is 75% of current salary
« Reply #12 on: May 20, 2014, 07:38:29 AM »
If you are saving anything at all, then you already aren't using 100% of your salary to support your lifestyle. 75% may be arbitrary, but 100% is contradictory.

ah, good point.

libertarian4321

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Re: Retirement is 75% of current salary
« Reply #13 on: May 24, 2014, 04:53:18 AM »
It's annoying to see them say you need "X% of your current salary" to retire, but it's understandable.

Most Americans live at, or beyond, their means.  They spend all of their salary.  So the expectation is that they will need 80% or so of their salary in retirement.

but if that's the logic then why don't they say "you will need to replace 100% of your salary"? it seems like they just choose an arbitrary percentage.

They come about that "80% of salary" number by assuming you spend everything you make, or more (like most Americans), then reducing the amount by the savings of retirement (no commuting, etc).

It's utterly idiotic for people who save, but perfectly reasonable for the average American (who tends to spend every penny he gets).
 
If some idiot "financial planner (salesman)" (and remember, these people who call themselves "financial planners" can be utterly clueless and have a NET WORTH OF $0 or less) ever told us we'd need "$80%"  of our pre-retirement earnings in retirement, I'd have to ask him "okay, genius, so what am I supposed to spend the extra $120k/per year on?"  On average, we spend about 20% of our income.