Author Topic: Vox: 4 simple rules for retirement saving  (Read 10479 times)

dvschroeder

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Vox: 4 simple rules for retirement saving
« on: July 31, 2014, 12:53:27 PM »
HaHaHaHaHa

http://www.vox.com/2014/7/31/5882885/retirement-planning-saving-how-much-do-i-need

"Save 12 to 15 percent of your income"

"How well do you want to live in retirement?" Options: 60%, 80%, or 100% of pre-retirement income.

"At what age would you like to retire?" Options: 62, 63, 64, 65, 66, 67, 68, 69, 70.

HaHaHaHaHa
« Last Edit: July 31, 2014, 03:00:30 PM by dvschroeder »

odput

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Re: Vox: 4 simple rules for retirement saving
« Reply #1 on: July 31, 2014, 02:11:24 PM »
Is this an article?  Link?

I'd love to join in the fun


ThermionicScott

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Re: Vox: 4 simple rules for retirement saving
« Reply #3 on: July 31, 2014, 02:41:52 PM »
I'm totally on board with #2-4:

Quote
2. Diversify. Invest in mutual funds that give you exposure to a wide variety of stocks and bonds, both in the US and overseas.
3. Take a long-term perspective. Younger investors should invest mostly in stocks. Resist the urge to panic sell when the market falls. As you get older, gradually shift your investments into bonds.
4. Don't let mutual fund companies rip you off with high fees. Choose the most affordable mutual funds you can find, and don't be fooled by funds that claim they can beat the market. For novice investors, a Vanguard Target Retirement fund is a good option, though not all employers offer it in their 401(k) plans.

It's just the timeframe that's laughable to us, because we're so much more enlightened...

slugline

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Re: Vox: 4 simple rules for retirement saving
« Reply #4 on: July 31, 2014, 02:48:52 PM »
The most glaring omission is the one MMM has been discussing in his last couple blog posts:

Getting agreement with your spouse/significant-other on the retirement vision.

dvschroeder

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Re: Vox: 4 simple rules for retirement saving
« Reply #5 on: July 31, 2014, 02:59:13 PM »
Is this an article?  Link?

Oops! Sorry about that. Brad_H has now beaten me to it but I've also added the link to the original post.
« Last Edit: July 31, 2014, 03:01:50 PM by dvschroeder »

boarder42

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Re: Vox: 4 simple rules for retirement saving
« Reply #6 on: August 01, 2014, 10:10:46 PM »
Congrats on starting to save when you're under 30. You have a lot of time to save, so it will be easier than for people who start saving later in life. To retire at age 67, you'll need to save 7.7 percent of your income each year between now and then.

this is what it spit out when i entered my info in that calc.   yay... i only need to save 7.7% a year to work 40 more years  sounds awesome

Beric01

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Re: Vox: 4 simple rules for retirement saving
« Reply #7 on: August 01, 2014, 10:21:48 PM »
Congrats on starting to save when you're under 30. You have a lot of time to save, so it will be easier than for people who start saving later in life. To retire at age 67, you'll need to save 7.7 percent of your income each year between now and then.

this is what it spit out when i entered my info in that calc.   yay... i only need to save 7.7% a year to work 40 more years  sounds awesome

Most of these calculators (and people in general) are shocked when someone under 30 is thinking of saving for retirement. I always get called "wise beyond my age". Maybe I just don't want to work my whole life?

So yes, the most annoying thing is the articles and calculators that assume that people under 35 don't exist.

robotclown

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Re: Vox: 4 simple rules for retirement saving
« Reply #8 on: August 02, 2014, 03:46:46 AM »
Ha, that amused me a little bit.

What an awful calculator.  It forces you to add in social security, so the numbers are already useless.  And there's nowhere to put annual expenses, so what exactly is it calculating?  How much i need to save now in order to live like I don't save anything?

At least they tell you to ignore Jim Cramer.

brizna

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Re: Vox: 4 simple rules for retirement saving
« Reply #9 on: August 02, 2014, 10:27:27 PM »
You can edit all the values in the input form (it's a web developer thing) so I set it to retire at 40 with a much lower salary replacement rate:

"You would need to save more than 40 percent of your income between now and retirement to retire at age 40. You may need to delay retirement in order to give you more time to accumulate savings."

whoo

arebelspy

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Re: Vox: 4 simple rules for retirement saving
« Reply #10 on: August 26, 2014, 08:33:12 AM »
Hah. 

The calculator told me:
Quote
Congratulations! You've done all the saving you'll need to do to reach your goals. Just leave your current savings of $xxx,xxx in a diversified portfolio (as described below) until age 67 and you'll be able to retire in comfort.

Yeah, thanks.  What if I want to retire multiple decades before that?

I should wait until age 67 so I can end up with tens of millions in real dollars and have > $1MM/yr. real annual spending?  No thanks.
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dycker1978

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Re: Vox: 4 simple rules for retirement saving
« Reply #11 on: August 26, 2014, 08:54:40 AM »
I used to sell investments for Primerica finacial services(yes I know how a MLM work now... bad choice... the past is the past cant do nothing about that now) But when I would get a customer that wanted to invest more than 10-15% we would coach them not to... this would leave them too short on cash to enjoy their life.  This is also how I invested before MMM...  not great advise, but at least I started when I was 22.

golden1

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Re: Vox: 4 simple rules for retirement saving
« Reply #12 on: August 26, 2014, 12:55:10 PM »
Most of that info is spot on actually.  If everyone followed the simple advice of saving AT LEAST 12-15% beginning when they got their first job, they would be all set for life and could probably retire in their 50's without a problem.  It isn't FIRE by this sites standards, but it isn't bad advice, and better then a lot I have seen on other websites.

frugalnacho

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Re: Vox: 4 simple rules for retirement saving
« Reply #13 on: August 26, 2014, 01:27:13 PM »
I think the advice to save x% is total garbage, and I wish I had someone like MMM to mentor me when I was younger.  The entire premise behind conventional thinking is to work a fixed number of years and inflate your life style to match your earnings, which I think is fucked up and ass backwards.  I always saved more than conventional wisdom told me, but I didn't really know what to do with it, or that super early retirement was a real option.

Me: How much should I save? 10-15%? What if I up to 20% and then fritter away the rest of it because that's what i'm supposed to do? That would be good right, saving 20%?

MMM: *face punch* No, spend how much you need on your house and other necessities in your life to make you happy, then save the rest regardless of what % it is.  The less you need to spend means you save more, and the more you save means you can retire earlier.

arebelspy

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Re: Vox: 4 simple rules for retirement saving
« Reply #14 on: August 26, 2014, 02:36:17 PM »
Most of that info is spot on actually.  If everyone followed the simple advice of saving AT LEAST 12-15% beginning when they got their first job, they would be all set for life and could probably retire in their 50's without a problem.  It isn't FIRE by this sites standards, but it isn't bad advice, and better then a lot I have seen on other websites.

No.  The math says a 12% savings rate will take you 47.5 years to become FI at a 4% SWR (and that's if you start at 0 net worth, many people start negative).. assuming you begin work at 22, out of college, that puts you FI at age 70 or so.  15% puts you FI around age 65 given the same premises.

20% gives you age 59.  You have to go all the way up to 25% savings rate to ER at age 54.  So a 12-15% won't get you FI before you're done working and eligible for SSI.   One has to hit the 25% rate to FIRE in their 50s (and must do it year in and year out, and be starting at 0).  Once you ramp above that (50%, 70%) it really starts to accelerate, but the conventional wisdom will get you a nice nest egg at a normal retirement age, and that's it.  It won't let you FIRE in your 50s, as you say.

(Unless you assume other things not mentioned, like never inflating lifestyle/banking all raises, or something.. but just saying 12-15% consistently won't ever get you FIRE'd before your 60s.)

I think the advice to save x% is total garbage, and I wish I had someone like MMM to mentor me when I was younger.  The entire premise behind conventional thinking is to work a fixed number of years and inflate your life style to match your earnings, which I think is fucked up and ass backwards.

Agreed.  So much money is wasted because people just don't think about it, and don't know any better.
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MandyM

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Re: Vox: 4 simple rules for retirement saving
« Reply #15 on: August 26, 2014, 02:56:42 PM »
My favorite part was the selection under "How well do you want to live in retirement?": "I'm willing to tighten my belt and live on 60 percent of pre-retirement income."

Uhhh...60% of my pre-retirement income would basically double my current expenses. That would be pretty far from belt tightening in my book.

larmando

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Re: Vox: 4 simple rules for retirement saving
« Reply #16 on: August 26, 2014, 03:23:44 PM »
I suppose the non stated assumption is that you will retire on less than 85% of your income, plus SS, and will have paid out the mortgage by then.

notquitefrugal

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Re: Vox: 4 simple rules for retirement saving
« Reply #17 on: August 26, 2014, 08:42:11 PM »
I got this as well:
"Congratulations! You've done all the saving you'll need to do to reach your goals. Just leave your current savings of $Y in a diversified portfolio (as described below) until age 62 and you'll be able to retire in comfort."

I love getting compliments like that, it gives me a nice, false sense of accomplishment.

arebelspy

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Re: Vox: 4 simple rules for retirement saving
« Reply #18 on: August 26, 2014, 09:44:06 PM »
I got this as well:
"Congratulations! You've done all the saving you'll need to do to reach your goals. Just leave your current savings of $Y in a diversified portfolio (as described below) until age 62 and you'll be able to retire in comfort."

I love getting compliments like that, it gives me a nice, false sense of accomplishment.

Interesting that yours said 62 when mine said 67...
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

notquitefrugal

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Re: Vox: 4 simple rules for retirement saving
« Reply #19 on: August 28, 2014, 10:02:32 AM »
I picked 62 as the age when I wanted to retire. Obviously, I hope to retire way sooner than that!

teen persuasion

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Re: Vox: 4 simple rules for retirement saving
« Reply #20 on: September 02, 2014, 09:35:57 AM »
I like how it includes your home equity in your "diversified portfolio".  Net worth, yes, but not retirement investments.

It would be more fun if it gave actual numbers, rather than "Ok, you've saved enough now, just sit back and wait until 62-67."  It is including some assumption on SS income, based just on what I'm earning this year.  Never mind the fact that I was a SAHM with $0 earning for 20 years.  Just how much are they figuring my SS will be?

Chranstronaut

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Re: Vox: 4 simple rules for retirement saving
« Reply #21 on: September 02, 2014, 12:42:58 PM »
Most of these calculators (and people in general) are shocked when someone under 30 is thinking of saving for retirement. I always get called "wise beyond my age". Maybe I just don't want to work my whole life?

So yes, the most annoying thing is the articles and calculators that assume that people under 35 don't exist.

This is the way I found MMM in the first place.  I knew I could do much better than age 65, but I wanted to know how much better.  I didn't trust my own math that I would end up a multimillionaire if I worked that long.  I googled around for calculators and advice, but couldn't find anything directed at someone my age.  I was amazed that not only could I do better than age 40, I can almost swing it around age 30 even without going "Full Jacob".

Now when I hear the "wise beyond my years" comments I just reply that "I'm working on it."

Elderwood17

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Re: Vox: 4 simple rules for retirement saving
« Reply #22 on: September 08, 2014, 07:37:47 PM »
Why do these things always assume living on anything less than 80% of your current income is extreme belt tightening?

Jellyfish

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Re: Vox: 4 simple rules for retirement saving
« Reply #23 on: September 09, 2014, 11:26:16 AM »
Why do these things always assume living on anything less than 80% of your current income is extreme belt tightening?

Because for virtually everyone else out there, IT IS.  Mustachianism is logical to us, but is apparently revolutionary to the rest of the world. 

Bob W

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Re: Vox: 4 simple rules for retirement saving
« Reply #24 on: September 09, 2014, 01:04:25 PM »
Count me in.  80% of my current income would still be twice what my actual expenses are.  I'm living a pretty fantastic life (although still working) on that amount.  For me 80% with a paid off house would be like $150 per day, every single day, in discretionary income!   Wow,  talk about belt tightening!