Author Topic: Vanguard Article, have 15x income by retirement  (Read 2862 times)


kpd905

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Re: Vanguard Article, have 15x income by retirement
« Reply #1 on: October 09, 2014, 10:22:37 AM »
It always seems weird to me to see recommendations like this in terms of income.  Let's say you have two people with a $100k income per year.

Person A spends $50k per year and saves the rest.
Person B spends $99k per year and saves the rest.

Both of them are advised here to save the same amount of money to be able to retire.

Philociraptor

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Re: Vanguard Article, have 15x income by retirement
« Reply #2 on: October 09, 2014, 10:29:10 AM »
There are a lot of assumptions, both spoken and not.

"If you want to maintain your lifestyle once you retire, you will need to match a large percentage of your pre-retirement income. For a retiree used to an income of $100,000, for example, the goal should be to generate $85,000 in income from Social Security and savings."

Based on that, they are assuming a 15% savings rate. They are also assuming social security, which means typical retirement age and a typical retirement length (<30 years).  For the majority of folks who will read the article, they are not far off.

arebelspy

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Re: Vanguard Article, have 15x income by retirement
« Reply #3 on: October 09, 2014, 10:30:09 AM »
It always seems weird to me to see recommendations like this in terms of income.

Typically when someone is doing a recommendation like this, they base it on the average person.  Every individual's situation will be different.
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Travis

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Re: Vanguard Article, have 15x income by retirement
« Reply #4 on: October 09, 2014, 12:35:17 PM »
There are a lot of assumptions, both spoken and not.

"If you want to maintain your lifestyle once you retire, you will need to match a large percentage of your pre-retirement income. For a retiree used to an income of $100,000, for example, the goal should be to generate $85,000 in income from Social Security and savings."

Based on that, they are assuming a 15% savings rate. They are also assuming social security, which means typical retirement age and a typical retirement length (<30 years).  For the majority of folks who will read the article, they are not far off.

Most of the conventional "retirement calculators" use this scenario as their formula.  The only 4% SWR calculators or anything like them I've seen are the indie apps like the ones shown here on MMM.