Author Topic: Saving too much for Retirement?  (Read 9011 times)

Eurotexan

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Saving too much for Retirement?
« on: June 18, 2014, 12:20:12 PM »
Disclaimer, came across this article on Yahoo..

http://finance.yahoo.com/news/why-shouldnt-save-every-penny-150447947.html

I agree with some of it but when I think that most Americans are so far from saving for an adequate retirement, never mind over saving, I think it's kind of ridiculous.

I also think us Mustachians would find an excellent counter argument for each point.

Gotta love the main stream retirement advice!

sirdoug007

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Re: Saving too much for Retirement?
« Reply #1 on: June 18, 2014, 12:27:08 PM »
I almost spit out my drink when I read this bullshit!

"Some spending once in a while can help motivate you to try harder at work. Some people would quit working immediately if there was no need for additional income, but there are perks of having a job too. The need to get up in the morning to accomplish a task can give life purpose, and the daily stimulation can be healthy for the brain. There's a certain satisfaction that comes with meeting deadlines, and the relationships at work can sometimes turn into lifelong friendships."

Because you know that only in a cubicle farm can you find stimulation and tasks that give your life purpose.  Please!

tooqk4u22

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Re: Saving too much for Retirement?
« Reply #2 on: June 18, 2014, 12:30:03 PM »
I almost spit out my drink when I read this bullshit!

"Some spending once in a while can help motivate you to try harder at work. Some people would quit working immediately if there was no need for additional income, but there are perks of having a job too. The need to get up in the morning to accomplish a task can give life purpose, and the daily stimulation can be healthy for the brain. There's a certain satisfaction that comes with meeting deadlines, and the relationships at work can sometimes turn into lifelong friendships."

Because you know that only in a cubicle farm can you find stimulation and tasks that give your life purpose.  Please!

That is the precise profile of a Salesperson - chasing the next shiny object keeps them running on the wheel even faster.

Pegasus

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Re: Saving too much for Retirement?
« Reply #3 on: June 18, 2014, 12:43:08 PM »
Yeah, had same reaction.  In fact, when reading the assumptions, they are exactly what I aim at or less stringent: 25x budget, budgeted to age 120 (versus their thinking 95 is excessive) and assume no social security, etc.  Of course we don't think all those things will happen, but planning should address both impact and likelihood of a risk.  Impact of running out of money at age 99 seems pretty severe to me.

dude

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Re: Saving too much for Retirement?
« Reply #4 on: June 18, 2014, 01:13:27 PM »
Yeah, had same reaction.  In fact, when reading the assumptions, they are exactly what I aim at or less stringent: 25x budget, budgeted to age 120 (versus their thinking 95 is excessive) and assume no social security, etc.  Of course we don't think all those things will happen, but planning should address both impact and likelihood of a risk.  Impact of running out of money at age 99 seems pretty severe to me.

no offense, bro, but I think that's overkill.  The odds of you living to be 99 are very, very small.  the odds of you being healthy and able to enjoy spending your money are likely even smaller.  If you run out of money at 99, you'll probably be drooling into your bowl of soup and not even aware that you've run out of money.

sirdoug007

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Re: Saving too much for Retirement?
« Reply #5 on: June 18, 2014, 01:20:04 PM »
For most of us, our age at death is completely irrelevant.  The 4% rule was based on a 30 year period, but you get pretty much the same answer when planning for eternity.  If you take out less than your portfolio makes nearly every year, it will GROW not shrink over time. 

Cromacster

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Re: Saving too much for Retirement?
« Reply #6 on: June 18, 2014, 01:21:20 PM »
Yeah, had same reaction.  In fact, when reading the assumptions, they are exactly what I aim at or less stringent: 25x budget, budgeted to age 120 (versus their thinking 95 is excessive) and assume no social security, etc.  Of course we don't think all those things will happen, but planning should address both impact and likelihood of a risk.  Impact of running out of money at age 99 seems pretty severe to me.

I too am a bit puzzled.  You aim for the 25x or 4% rule...but budget to 125?  How do you budget for living to 125?

Update:
For most of us, our age at death is completely irrelevant.  The 4% rule was based on a 30 year period, but you get pretty much the same answer when planning for eternity.  If you take out less than your portfolio makes nearly every year, it will GROW not shrink over time. 

Sir doug asked my question a bit more intelligently.

dude

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Re: Saving too much for Retirement?
« Reply #7 on: June 18, 2014, 01:22:22 PM »
I almost spit out my drink when I read this bullshit!

"Some spending once in a while can help motivate you to try harder at work. Some people would quit working immediately if there was no need for additional income, but there are perks of having a job too. The need to get up in the morning to accomplish a task can give life purpose, and the daily stimulation can be healthy for the brain. There's a certain satisfaction that comes with meeting deadlines, and the relationships at work can sometimes turn into lifelong friendships."

Because you know that only in a cubicle farm can you find stimulation and tasks that give your life purpose.  Please!

But honestly, these people exist.  A lot of them.  Just because you or I don't find that satisfaction doesn't mean others don't.  It's all subjective.  There are many FI people who simply do not want to quit work -- they like it, hard as that is for many of us to comprehend.  So who are we to judge what brings others happiness?  Isn't it enough that it makes them happy?\

I don't really see anything unconscionable about this article.  The author makes the point that it's only about a small percentage of people.  Somewhere in this forum someone posted a story about a really frugal, tightwad guy who died with, unbeknownst to even his family, like $4 million in assets. Yet most agreed that his was no way to live.

It is definitely possible to over-save and to forego too much present enjoyment for future enjoyment.  As many in the MMM sphere have noted time and time again -- it's about balance.
« Last Edit: June 18, 2014, 01:24:21 PM by dude »

Cromacster

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Re: Saving too much for Retirement?
« Reply #8 on: June 18, 2014, 01:32:14 PM »
I almost spit out my drink when I read this bullshit!

"Some spending once in a while can help motivate you to try harder at work. Some people would quit working immediately if there was no need for additional income, but there are perks of having a job too. The need to get up in the morning to accomplish a task can give life purpose, and the daily stimulation can be healthy for the brain. There's a certain satisfaction that comes with meeting deadlines, and the relationships at work can sometimes turn into lifelong friendships."

Because you know that only in a cubicle farm can you find stimulation and tasks that give your life purpose.  Please!

But honestly, these people exist.  A lot of them.  Just because you or I don't find that satisfaction doesn't mean others don't.  It's all subjective.  There are many FI people who simply do not want to quit work -- they like it, hard as that is for many of us to comprehend.  So who are we to judge what brings others happiness?  Isn't it enough that it makes them happy?\

I don't really see anything unconscionable about this article.  The author makes the point that it's only about a small percentage of people.  Somewhere in this forum someone posted a story about a really frugal, tightwad guy who died with, unbeknownst to even his family, like $4 million in assets. Yet most agreed that his was no way to live.

It is definitely possible to over-save and to forego too much present enjoyment for furture enjoyment.  As many in the MMM sphere have noted time and time again -- it's about balance.

There are many issues with this article when looking at it from a MMM perspective.  The top two being spending equals happiness and the article stereotypes retirement.  See the post about the retirement police as I feel they are loosely related.  I'd guess this author would not consider MMM to be retired.

http://www.mrmoneymustache.com/2013/02/13/mr-money-mustache-vs-the-internet-retirement-police/

Just because you are retired doesn't mean you need to stop and do nothing, which sense I got from reading this article.  Although, early retirement isn't anywhere in the authors viewpoint either.

Update:  But I do agree there are people among us who are FI, but still choose to work.  This work would typically be for someone else and not self employed, but to each their own definition.  SWAMI gets thrown around on the boards every now and then. (Satisfied Working Advanced Mustachian Indivdual)
« Last Edit: June 18, 2014, 01:46:29 PM by Cromacster »

dude

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Re: Saving too much for Retirement?
« Reply #9 on: June 18, 2014, 01:46:25 PM »
I have yet to meet the person who can spend nothing.  Actually, I have, and they are homeless walking the streets.  They don't look too happy to me.

Spending is, for better or for worse, in a capitalist society, related to happiness, or at least a condition precedent for it.  MMM himself reportedly spends $25k/year (not including travel, and I suspect not including his home improvement spending).  Indeed, he spent about $7 buying apply cider and yeast and making hard cider, which by his account, made him quite happy.

I think a growing number of MMM'ers are becoming Tea Party radical in their views on what is "anti-Mustachian" these days.

I really can't find any fault with the article.

lisahi

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Re: Saving too much for Retirement?
« Reply #10 on: June 18, 2014, 02:55:17 PM »
My father could retire today and be set for the rest of his life (and my mom would be set for the rest of hers with what she would get if my father passed). But he still works. He can't sit still and his only real hobby is shopping (and high-quality watches, which is just another kind of shopping). He's anti-Mustachian (big house, large electricity/cable bill, two financed cars, etc.), but he's in a position such that his income can handle his spending. And his income after retirement could handle it as well. He needs his brain to be active and his job provides that.

My mother, on the other hand, couldn't wait to retire. She got to retire when my parents moved to a much cheaper city than the one in which I grew up. My mother is an active retiree. She took up gardening, she's on the board of a local non-profit, and she generally knows how to keep herself busy. She would be the first to say that my Dad is at his best when he has a job to go to every weekday.

Pegasus

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Re: Saving too much for Retirement?
« Reply #11 on: June 18, 2014, 02:59:23 PM »
Yeah, had same reaction.  In fact, when reading the assumptions, they are exactly what I aim at or less stringent: 25x budget, budgeted to age 120 (versus their thinking 95 is excessive) and assume no social security, etc.  Of course we don't think all those things will happen, but planning should address both impact and likelihood of a risk.  Impact of running out of money at age 99 seems pretty severe to me.

no offense, bro, but I think that's overkill.  The odds of you living to be 99 are very, very small.  the odds of you being healthy and able to enjoy spending your money are likely even smaller.  If you run out of money at 99, you'll probably be drooling into your bowl of soup and not even aware that you've run out of money.

I use 125 to determine an amount where I can pretty much live indefinitely off the proceeds, as some posters have mentioned, but it allows for some dwindling of capital.  Although I appreciate the perspective you all are sharing!  I'm actually not very Mustachian in my spending.
« Last Edit: June 18, 2014, 03:22:50 PM by Pegasus »

cbgg

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Re: Saving too much for Retirement?
« Reply #12 on: June 18, 2014, 04:05:09 PM »
I almost spit out my drink when I read this bullshit!

"Some spending once in a while can help motivate you to try harder at work. Some people would quit working immediately if there was no need for additional income, but there are perks of having a job too. The need to get up in the morning to accomplish a task can give life purpose, and the daily stimulation can be healthy for the brain. There's a certain satisfaction that comes with meeting deadlines, and the relationships at work can sometimes turn into lifelong friendships."

Because you know that only in a cubicle farm can you find stimulation and tasks that give your life purpose.  Please!

Preach! 

I find it SO SAD when people say "I'd never quit working, I'd be so bored!" as if it's some sort of badge of honour.  It's rad that you love your job and everything, but seriously, you must be one boring son of a gun if you can't think of useful, stimulating, rewarding things to do outside of the corporate context. 

Eric

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Re: Saving too much for Retirement?
« Reply #13 on: June 18, 2014, 05:00:22 PM »
I'll tackle this part, since no one has.
Quote
Imagine no longer needing to wake up at a certain time and being able to schedule every day as you please. You could play golf all day, every day or hang out with friends for lunch all the time. This life sounds amazing if you can make it work
Yes, this DOES sound amazing.  Are there any drawbacks?
Quote
but those who don't proactively set it up often end up sitting at home.
Actually, that sounds pretty good to me too.  I spend little awake time at home as it is.  Some more would be very nice.  You know, like a never ending weekend.
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If all your friends are still working full time, they may be too busy to meet up on a regular basis
So I should keep working full time so that I'm also too busy to meet up with anyone on a regular basis?
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and it could take a considerable amount of effort to meet new friends.
Great.  I'll have all the time in the world to work on that.  What I already don't have now, as a working stiff, is the time or energy to make new friends.  How would having more time or energy make that harder?
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The lack of daily activities can be depressing for those who lack the initiative to set up regular social events.
If I get so depressed by being outside, setting my own schedule, and not being locked inside in a cubicle all day then by George, I can solve that problem too!  I'll go back to work!  But of course, then I'll be saving too much for retirement again.  Hmmmm, quite the paradox here...

sleepyguy

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Re: Saving too much for Retirement?
« Reply #14 on: June 20, 2014, 08:09:07 AM »
OMG, in all harshness... get a fucking life.  I'm not sure if some of these folks (and there are quite a few of these loser where I work), ever get out of the office.  They stay until 9pm everyday for no reason but to "catch up on email" (I have to work late doing server upgrades once a month), have nothing to look forward to except the next 9-9 day.  It's just really really sad to be honest.  You could argue that their job aligns with their life values and blah blah blah... but no they complain about work, lol.

It's not a surprise it's usually crazy cat ladies in their 40s :)

I almost spit out my drink when I read this bullshit!

"Some spending once in a while can help motivate you to try harder at work. Some people would quit working immediately if there was no need for additional income, but there are perks of having a job too. The need to get up in the morning to accomplish a task can give life purpose, and the daily stimulation can be healthy for the brain. There's a certain satisfaction that comes with meeting deadlines, and the relationships at work can sometimes turn into lifelong friendships."

Because you know that only in a cubicle farm can you find stimulation and tasks that give your life purpose.  Please!

Preach! 

I find it SO SAD when people say "I'd never quit working, I'd be so bored!" as if it's some sort of badge of honour.  It's rad that you love your job and everything, but seriously, you must be one boring son of a gun if you can't think of useful, stimulating, rewarding things to do outside of the corporate context.
« Last Edit: June 20, 2014, 08:11:32 AM by sleepyguy »

lisahi

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Re: Saving too much for Retirement?
« Reply #15 on: June 20, 2014, 09:44:59 AM »
OMG, in all harshness... get a fucking life.  I'm not sure if some of these folks (and there are quite a few of these loser where I work), ever get out of the office.  They stay until 9pm everyday for no reason but to "catch up on email" (I have to work late doing server upgrades once a month), have nothing to look forward to except the next 9-9 day.  It's just really really sad to be honest.  You could argue that their job aligns with their life values and blah blah blah... but no they complain about work, lol.

It's not a surprise it's usually crazy cat ladies in their 40s :)

Is it so hard to believe that some people actually like their work? Sure, I bet there are some folks that simply stay in the office because they don't want to go home for some reason or they're working to get overtime to get more money. But some folks who work a lot actually do it because they like it. It stimulates their brain, or their sense of pride, or their sense of accomplishment. Maybe the thing they like to do isn't woodworking or knitting or gardening or traveling the globe, but is interacting with customers or coding software or finding solutions to complex problems.

As for the "crazy cat ladies in their 40s" comment -- I know it's supposed to be a joke, but it comes off to me as judgmental towards the innocuous choices some people make for their lives. Laugh at the guy that spends $6 on a coffee every day and then complains about being broke? Sure, he's not being sensible or smart. Laugh at and call crazy the 40-something-year-old woman who doesn't live her life the way you think is personally fulfilling? Pretty harsh.

dragoncar

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Re: Saving too much for Retirement?
« Reply #16 on: June 20, 2014, 10:03:16 AM »
OMG, in all harshness... get a fucking life.  I'm not sure if some of these folks (and there are quite a few of these loser where I work), ever get out of the office.  They stay until 9pm everyday for no reason but to "catch up on email" (I have to work late doing server upgrades once a month), have nothing to look forward to except the next 9-9 day.  It's just really really sad to be honest.  You could argue that their job aligns with their life values and blah blah blah... but no they complain about work, lol.

It's not a surprise it's usually crazy cat ladies in their 40s :)

Is it so hard to believe that some people actually like their work? Sure, I bet there are some folks that simply stay in the office because they don't want to go home for some reason or they're working to get overtime to get more money. But some folks who work a lot actually do it because they like it. It stimulates their brain, or their sense of pride, or their sense of accomplishment. Maybe the thing they like to do isn't woodworking or knitting or gardening or traveling the globe, but is interacting with customers or coding software or finding solutions to complex problems.

As for the "crazy cat ladies in their 40s" comment -- I know it's supposed to be a joke, but it comes off to me as judgmental towards the innocuous choices some people make for their lives. Laugh at the guy that spends $6 on a coffee every day and then complains about being broke? Sure, he's not being sensible or smart. Laugh at and call crazy the 40-something-year-old woman who doesn't live her life the way you think is personally fulfilling? Pretty harsh.

Yeah, that was a bit harsh.  Sometimes I stay late to "catch up on email" because I can browse my favorite sites with four large monitors instead of my 12" laptop display at home.

sleepyguy

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Re: Saving too much for Retirement?
« Reply #17 on: June 20, 2014, 10:14:07 AM »
Maybe a bit harsh, I agree if they "LOVE" their job I guess it's okay... maybe.  But they don't.  They complain to me constantly about everything and are generally negative.  Not sure if it happens to other IT support around here but I seem to be the 'crying" shoulder :).  I could understand a couple times a week maybe, but every frigging day you are staying late for no reason at all?  There is no overtime pay... they are giving up their life to a private shareholders for NOTHING.

I recall one lady saying something that caught me off guard and I kinda felt sorry for her.  Her laptop encryption was bad or something and whatever reason the replacement was on backorder so it had to wait a week or two.  Her exact words were, "well this is not good at all, what am I going to do on the weekends now?"... OMG.

Anyway, I'm too OT so I'll end it at that.

OMG, in all harshness... get a fucking life.  I'm not sure if some of these folks (and there are quite a few of these loser where I work), ever get out of the office.  They stay until 9pm everyday for no reason but to "catch up on email" (I have to work late doing server upgrades once a month), have nothing to look forward to except the next 9-9 day.  It's just really really sad to be honest.  You could argue that their job aligns with their life values and blah blah blah... but no they complain about work, lol.

It's not a surprise it's usually crazy cat ladies in their 40s :)

Is it so hard to believe that some people actually like their work? Sure, I bet there are some folks that simply stay in the office because they don't want to go home for some reason or they're working to get overtime to get more money. But some folks who work a lot actually do it because they like it. It stimulates their brain, or their sense of pride, or their sense of accomplishment. Maybe the thing they like to do isn't woodworking or knitting or gardening or traveling the globe, but is interacting with customers or coding software or finding solutions to complex problems.

As for the "crazy cat ladies in their 40s" comment -- I know it's supposed to be a joke, but it comes off to me as judgmental towards the innocuous choices some people make for their lives. Laugh at the guy that spends $6 on a coffee every day and then complains about being broke? Sure, he's not being sensible or smart. Laugh at and call crazy the 40-something-year-old woman who doesn't live her life the way you think is personally fulfilling? Pretty harsh.

Yeah, that was a bit harsh.  Sometimes I stay late to "catch up on email" because I can browse my favorite sites with four large monitors instead of my 12" laptop display at home.

Davids

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Re: Saving too much for Retirement?
« Reply #18 on: June 20, 2014, 11:00:31 AM »
When I achieve FI I may still continue to work. Main reasons are there is nothing wrong with continuing to grow the stache and also working  while knowing you have FI might make work more enjoyable knowing you basically control the situation and not the other way around. I like my job and when I achieve FI I will probably not quit right away.

Jamesqf

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Re: Saving too much for Retirement?
« Reply #19 on: June 20, 2014, 01:09:25 PM »
Because you know that only in a cubicle farm can you find stimulation and tasks that give your life purpose.  Please!

Err...  You do know that not all work is done in a cubicle farm, don't you?

I'll tackle this part, since no one has.
Quote
Imagine no longer needing to wake up at a certain time and being able to schedule every day as you please. You could play golf all day...
Yes, this DOES sound amazing.  Are there any drawbacks?
Quote

Yeah.  Playing golf all day, or FTM at all, seems like living death to me.

FWIW, I woke up when I wanted to today (about 7:30-ish), did some early morning gardening, ate breakfast, did a couple hours of actual work on the computer, checked up on MMM.  Now I'll go out for a bit more gardening, eat lunch under the shade tree, work a few more hours, take the dogs for a hike, maybe put in a couple more hours of work before bed...  Sure sounds like I'm slaving away in a cubicle farm, doesn't it?

robotclown

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Re: Saving too much for Retirement?
« Reply #20 on: June 20, 2014, 09:12:20 PM »
As long as you have food, shelter, and clothing, you aren't oversaving.  If you start eating food of of garbage cans simply to save money, then you're oversaving.  Otherwise, you're just on track to retire earlier.  What a bizarre article, although I completely understand the reason someone decided to write it.

zolotiyeruki

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Re: Saving too much for Retirement?
« Reply #21 on: June 20, 2014, 10:55:52 PM »
When I achieve FI I may still continue to work. Main reasons are there is nothing wrong with continuing to grow the stache and also working  while knowing you have FI might make work more enjoyable knowing you basically control the situation and not the other way around. I like my job and when I achieve FI I will probably not quit right away.
That's what I look forward to, personally.  Like a certain comedian said, "money is the fuel for choices."  When I reach that point, I will have more freedom to choose.  I'll be able to look at my job and decide if it's worth my time.  I may be enjoying the heck out of it, and want to continue.  I may want to quit, buy some farmland, and build a treehouse for the eventual grandkids (no way I'm going to retire while my own kids are young enough to enjoy a treehouse!).  But the choice will be on *my* terms.

Icecreamarsenal

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Re: Saving too much for Retirement?
« Reply #22 on: June 23, 2014, 09:17:34 AM »

I have yet to meet the person who can spend nothing.  Actually, I have, and they are homeless walking the streets.  They don't look too happy to me.

Spending is, for better or for worse, in a capitalist society, related to happiness, or at least a condition precedent for it.  MMM himself reportedly spends $25k/year (not including travel, and I suspect not including his home improvement spending).  Indeed, he spent about $7 buying apply cider and yeast and making hard cider, which by his account, made him quite happy.

I think a growing number of MMM'ers are becoming Tea Party radical in their views on what is "anti-Mustachian" these days.

I really can't find any fault with the article.

This got derailed pretty quickly.  Well put. I agree with you.


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