Fidelity came out with new guidelines for retirement. Previously, they suggested that you save 1x, 3x, 5x, and 8x of income at ages 35, 45, 55, and 67, respectively. Assumptions are that 15% of salary goes into retirement (3% from employer) from ages 25 to 67, salary climbs at 1.5% real, savings grow at 5.5% (arithmetic or geometric mean, nominal or real, IDK), 50/50 portfolio, and the retiree had earned 70K. Using the 4% rule (not sure what they used), means a withdrawal of $28K ann. Workable with SS, but I think many folks would be disappointed. If only it were that easy.

Now Fidelity says at age 67, you need 10x. Assumptions are similar except a 3% return, retirement lasted for 25 yr, and a withdrawal rate of 4.5% (or $31.5K ann. using our 70k income). They say this plan should lead to more desirable results for a broader income range (50K+).

Using the old rules, I could never get around to how saving just 8x income was workable for the average person. Let's say a household made the median income (call it 55K), so they save $440,000. They'd have to adjust spending from 48K before retirement to 18K using the 4% rule, less taxes. They now say that this 10x plan has a 90% success rate backtested.

I'm happy that now they are very upfront that this means a 45% income replacement rate, and that they are playing it more conservatively now.

As for me, I'll ignoring the retirement guidelines they constantly email me about and keep shooting for 25x expenses by retirement, though I assume a 5% real CAGR.