Author Topic: Sad retirement advice  (Read 6623 times)

johnny847

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Sad retirement advice
« on: November 30, 2014, 07:50:19 AM »
Well, I think it's sad, considering I've seen plenty of people on this forum save 50%+ (although maybe I haven't seen a representative sample of this forum...)

http://lifehacker.com/how-much-you-should-have-saved-in-your-retirement-accou-1663712527

They say have 1x annual salary by age 35. I mean, even if you graduate with a lot of debt from college, as long as you have decent job prospects I'm pretty sure any Mustachian would be able to pay all of that off and have at least 1x salary well before 35. With an exception for doctors I guess, since they usually graduate with tons of debt and start their careers late.

And then they say 2x annual by age 40? It takes five years to save up an annual salary's worth?? And this chart is assuming smooth market returns of 5.5%!

MoneyCat

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Re: Sad retirement advice
« Reply #1 on: November 30, 2014, 07:53:23 AM »
I dunno.  It took me a long time to get a job that allowed me to save after college, because I didn't go into STEM.  Plus, many employers don't take men seriously until they are in their 30s, so it can be hard to advance from entry-level positions before then.  Just food for thought.

johnny847

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Re: Sad retirement advice
« Reply #2 on: November 30, 2014, 07:56:11 AM »
Yea my line of reasoning assumed being able to save 50%+ off the bat, which isn't possible depending on what kind of job you get in your younger years. But I'd think by age 35, you'd have at least started advancing from entry level positions? I don't know, I'm only 23 and in grad school.

MoneyCat

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Re: Sad retirement advice
« Reply #3 on: November 30, 2014, 08:07:49 AM »
Yea my line of reasoning assumed being able to save 50%+ off the bat, which isn't possible depending on what kind of job you get in your younger years. But I'd think by age 35, you'd have at least started advancing from entry level positions? I don't know, I'm only 23 and in grad school.

I entered the job market after grad school around age 24 and it took me until I was about 30 to be earning the kind of money that allowed me to really get things in order financially.  I would guess it might be a little easier in STEM fields, but I had some problems with employers thinking I needed to "pay my dues" for an extended time.  I don't know how widespread of a problem that might be for other people.

johnny847

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Re: Sad retirement advice
« Reply #4 on: November 30, 2014, 08:13:50 AM »
Yea my line of reasoning assumed being able to save 50%+ off the bat, which isn't possible depending on what kind of job you get in your younger years. But I'd think by age 35, you'd have at least started advancing from entry level positions? I don't know, I'm only 23 and in grad school.

I entered the job market after grad school around age 24 and it took me until I was about 30 to be earning the kind of money that allowed me to really get things in order financially.  I would guess it might be a little easier in STEM fields, but I had some problems with employers thinking I needed to "pay my dues" for an extended time.  I don't know how widespread of a problem that might be for other people.
So it sounds like in your case though, starting at 30 you had decent to good money coming in, which sounds like you could have 1x salary before age 35 by Fidelity's standards?

TheThirstyStag

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Re: Sad retirement advice
« Reply #5 on: November 30, 2014, 12:53:02 PM »
I want to echo what others have said here.  Having gone through many years of grad school and still tackling student loans, having the "1x current salary by age 35" advice in the article sounds entirely reasonable. 

Many mustachians here don't discover this level of awesome until later in life, and many others simply aren't established in their respective fields until their early 30s. 

The second and beyond milestones in the article, on the other hand, are conservative by mustachian standards.  If one of us hits the first milestone, I can't imagine any of us not exceeding the subsequent ones.   

Gin1984

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Re: Sad retirement advice
« Reply #6 on: November 30, 2014, 01:23:57 PM »
I don't think we will have 1X of our salaries by the time my husband hit 35.  He is 32 and we are on track to hit my salary by December, but my salary is the lower one.  My husband's salary is $41700 and I don't think we will make 20850 both years.  We should save $17000 per year.  Part of it is that my husband just started the better paying job after graduating from grad school.  But our income matters less than our expenses.  We live on my income (plus the cost of daycare/commuting expenses which should disappear once we stop working), but we need to account for insurance.  So, I expect to need $30K.  Eh, I think rules of thumb are good for the average person but not for all.

deborah

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Re: Sad retirement advice
« Reply #7 on: November 30, 2014, 01:29:32 PM »
I saved at least 50% even in my entry level job - makes it easier to get to ER earlier. If you haven't saved 1 x salary before 35, you have a bit of a problem being ER, because the late 30s (when you have a young family, and one of you is staying at home or you have enormous child care costs) tend to be the most difficult years to save because of your commitments. In your late teens and early 20s you have more disposable income than you do for most of the rest of your life (interesting fact a lecturer sprouted at me some years ago) because you have no commitments, even though you are in an entry level job.

MayDay

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Re: Sad retirement advice
« Reply #8 on: November 30, 2014, 01:58:47 PM »
I don't think it is bad advice if you want to retire at 65.  Of course it is bad advice if you want to retire at 35, lol.  But that is not exactly their target market. 

If you start out at 22-24, have student loans for a few years or it takes a few years to get full time work, then start saving 10-15% around 25-26, well, you are right in track to hit 100% of salary at 35 depending on how much that salary increases between 25 and 35.  For example if you are making 30k at 25, and 60k at 35, your first few years of a 10% contribution is only 5% of your income at 35.

randymarsh

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Re: Sad retirement advice
« Reply #9 on: November 30, 2014, 02:08:16 PM »
Plus, many employers don't take men seriously until they are in their 30s,

I used the excuse of "no shave November", but I really decided to grow my facial hair to look older at work. :/

TheThirstyStag

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Re: Sad retirement advice
« Reply #10 on: November 30, 2014, 03:35:37 PM »
Plus, many employers don't take men seriously until they are in their 30s,

I used the excuse of "no shave November", but I really decided to grow my facial hair to look older at work. :/

Here's to a robust Janu-hairy 2015 :D

johnny847

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Re: Sad retirement advice
« Reply #11 on: November 30, 2014, 03:58:19 PM »
then start saving 10-15% around 25-26
My point is that striving to save just 10-15% is pretty sad (well, if you actually have a job. If you're still in school, then certainly, saving anything is good).

EngineerMum

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Re: Sad retirement advice
« Reply #12 on: November 30, 2014, 04:48:55 PM »
In Aus, investing 9.5% is mandatory (superannuation), with a few exceptions like self employed people who may have a way out of it. It isn't enough, obviously, but it's a start.
At 34, that's pretty much all I've saved - long degree, big student debt by Aussie standards, a baby, and the really big factor, paying off a mortgage. So my savings so far are about 75% of my current salary, unless you count the equity in my house, which would equate to about 5 times my salary. If you do things the "normal" way, and buy a house with a mortgage (and the median house price here is currently 11 times the median household income) then you aren't going to save much by 35. Especially if you also do the "normal" thing of kids and time off work.

Primm

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Re: Sad retirement advice
« Reply #13 on: December 01, 2014, 05:26:44 AM »
I didn't hit 1x annual salary until I was 40. Of course I'm more than 2x now, 5 years later. I'm just a slow starter. :)

boarder42

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Re: Sad retirement advice
« Reply #14 on: December 01, 2014, 09:57:25 AM »
I should hit 2x by 28.5 years old. 

rocksinmyhead

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Re: Sad retirement advice
« Reply #15 on: December 01, 2014, 10:03:20 AM »
Plus, many employers don't take men seriously until they are in their 30s,

I used the excuse of "no shave November", but I really decided to grow my facial hair to look older at work. :/

Man, I wish I could grow a beard! (Except not really, I don't think bearded women do all that well in the workplace either.) One time a woman in the elevator in my building (but not a coworker) asked if I worked here, then told me I looked like I was in junior high! WTF, how rude is that?!?

Dezrah

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Re: Sad retirement advice
« Reply #16 on: December 01, 2014, 10:34:04 AM »
I actually found these guidelines back when I first started thinking about long term saving.  My ambition is to save up to the tax-advantaged limits but we're not there yet.  For now I use these numbers in my long term projections to know whether I'm saving enough for retirement versus down-payment on house/car/family vacations. 

If my current saving plan can reach 800% by 67 with less than a 7% growth rate, then I give us permission to save or spend on other things that are important to us.  I figure standard retirement is still perfectly acceptable as a worst case scenario.

MgoSam

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Re: Sad retirement advice
« Reply #17 on: December 01, 2014, 01:30:09 PM »
It's articles like that make me feel better about my investments.

In "The Millionaire Next Door," Stanley writes about a rule of thumb where take your age divide by ten and multiple it by your average salary (or maybe it was current salary) and that's the figure that you should have. If you are under, then you got some catching up to do. If you are over, you are a rock star!

ketchup

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Re: Sad retirement advice
« Reply #18 on: December 01, 2014, 01:30:45 PM »
Plus, many employers don't take men seriously until they are in their 30s,

I used the excuse of "no shave November", but I really decided to grow my facial hair to look older at work. :/
You could just start receding your hairline at 19 like me.  One nearly-bald man (stranger) about a month ago gave me this big inspiring speech about not letting my receding hairline get to me and embracing it and not trying to hide it.  He ended it with "And don't worry, I looked like this when I was 30!"  His face when I told him I'm only 23 was pretty priceless.  He felt awful but I just laughed.

MgoSam

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Re: Sad retirement advice
« Reply #19 on: December 01, 2014, 01:42:28 PM »
Plus, many employers don't take men seriously until they are in their 30s,

I used the excuse of "no shave November", but I really decided to grow my facial hair to look older at work. :/
You could just start receding your hairline at 19 like me.  One nearly-bald man (stranger) about a month ago gave me this big inspiring speech about not letting my receding hairline get to me and embracing it and not trying to hide it.  He ended it with "And don't worry, I looked like this when I was 30!"  His face when I told him I'm only 23 was pretty priceless.  He felt awful but I just laughed.

a. I have let my facial hair grow out in an attempt to look older. There's a trade show I'm at about every 8 weeks, and honestly most of the salesmen there are MUCH older than me, and the customers that come are MUCH older. I felt that while they treated me with respect, there was also a patronizing touch to it. That said, I do love being there so that I can ask them questions and get advice. BEST ADVICE EVER is from plenty of the old farts, which is "don't blow your money, invest it."

b. Yeah my hairline is receeding so I guess I won't need to let my facial grow out anymore

YIPPIE!!!

Sid Hoffman

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Re: Sad retirement advice
« Reply #20 on: December 01, 2014, 03:36:35 PM »
But our income matters less than our expenses. ... Eh, I think rules of thumb are good for the average person but not for all.

Bingo.  I'm getting close to 40 myself and have "only" 3X my income in retirement accounts.  However I have about 10x of my projected expenses even accounting for paying totally unsubsidized healthcare at a future age.  Then again, since most people spend 95% of their income, not 30%, the general rule of thumb still applies OK-ish.  But yeah, for accuracy you want to have a multiple of your expenses and/or projected spending saved up, not just a multiple of your income.

The final major variable is then factoring in programs like Social Security, since most people plan to retire only after they are well eligible for Social Security, whereas the MMM way is to retire well ahead of eligibility in Social Security, which means you'll need significantly more saved in order to carry you over the gap, plus you need to have it structured so some is accessible in accounts that do not have a withdrawal penalty, either with a Roth ladder or taxable accounts.

Yeah, general rules of thumb only get you so far, but they're still OK for the bulk of the bell curve.

Pooperman

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Re: Sad retirement advice
« Reply #21 on: December 01, 2014, 04:00:02 PM »
Referring hairline at 24 is one thing. Greying is another. I've got the second issues. At least it makes me look older even if I am the youngest person at my company. Everyone there is at least 25! In other news, I've got about 0.20x my income saved so far. I figure I'll get there by 27.