CNN Money article: Save 33x salary to retire at 50?!

[AliInKY]

Check this out, folks:  http://money.cnn.com/2017/09/14/pf/early-retirement-savings-penalty/index.html?iid=SF_LN

This article focuses on recommendations if one wants to retire early.  Some of the statements in the article that stands out as crazypants to me.  In particular:

"If you're following the standard retirement route, you should aim to save six times your annual income by age 50 and ten times your income by age 60. When you retire at age 65, you should have about 13-15 times your income stashed away, says Ulin.

In other words, someone earning $100,000 a year would need to save between $1.3 and $1.5 million by age 65.

But in order to retire by age 55, you may need to save 33 times your annual salary. That means someone earning $100,000 would need to save around $3.3 million, says Ulin."

What the what?!

[retireatbirth]

Argh, annual income has nothing to do with how much you need saved. And, that's just the tip of the iceberg in this guy's insane recommendations.

[jim555]

I guess I have to go back to work.  FIRE cancelled.

[simonsez]

Yeah, big disconnect between what you make and you spend.  The article would be better if it stated to save 33x expenses to retire at 50 - then it just becomes a risk averse retirement plan.  Also a large difference between whittling a nest egg down as you age (15x expenses at 65, the "6.7% rule") and something that has excellent odds (3% rule at any age) to last in perpetuity and actually grow.

[jlcnuke]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

[TheAnonOne]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

3% is extremely conservative. Hell 4% fails basically never already.

That being said, someone making $100,000 is never going to save 3.3M by 50 if they spend it all either so the entire discussion is moot.

Let them keep working, fuel my returns!

[fattest_foot]

Thought this sounded familiar. There's a thread about it in the Anti-Mustachian forum.

https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/cnn-money-says-you-need-20x-your-annual-salary-for-10-years-of-expenses/

[jlcnuke]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

3% is extremely conservative. Hell 4% fails basically never already.

That being said, someone making $100,000 is never going to save 3.3M by 50 if they spend it all either so the entire discussion is moot.

Let them keep working, fuel my returns!

I don't know that I'd agree with "4% basically never fails", especially when talking about retiring early and not specifying what type of allocation is used.  At 75% stocks, 4% WR fails ~12% of the time over a 50 year period. ~15% of the time it fails in a 50/50 portfolio. A 3% withdrawal rate fails 15% of the time in a 25/75 portfolio in a 50 year retirement window using historic data. What is "safe" depends a lot upon the time period and the risk level of the portfolio, not to mention desire to leave a legacy for heirs/charity etc can influence desired withdrawal rate downward as well.

https://earlyretirementnow.com/2016/12/07/the-ultimate-guide-to-safe-withdrawal-rates-part-1-intro/




As for spending all their money, no one who does so is ever going to retire early, but trying to add in a discussion of what to count when totalling up spending, and how to adjust that for expected changes in taxes so that it's remotely accurate, etc seems a bit over the top for such a simple article.. hence me not having a problem with it just talking income. Sure, it'd be nice if they'd specified that it's more about what goes out than gross pay, but in the grand scheme of things it still likely served the authors purpose as is (which I'm guessing was to provide information on "general" guidelines for how much people "generally" should try to save up if they're considering retiring somewhat early).  I mean, sure, it could have gotten into asset allocation (here and abroad, by sector, subsector, asset class, etc etc) and how that could impact returns and thus necessary savings, and tax implications on how much you need based on what income tax bracket you anticipate being in based on what type of investment returns your generating in retirement, implications from what type of tax advantaged accounts your using and non-tax advantaged accounts, as well as RMD tax implications, and then discuss the difference between bills and other expenses vs total expenses (being sure to account for infrequent expenses like major home improvement/repairs and the like) etc etc etc

But then it would have been a few hundred page book on early retirement, not a short news article.

For a short news article, it was informative to those who don't routinely study/think about such things and general enough that an "average" reader could gain some knowledge/understanding from it (even if that is a very basic amount of knowledge). As such, I can't fault it for not being written as if it were a Master's thesis on the finances of retiring early.


Edit to add:
The latest reported average personal savings rate in the US was 3.5%. So 96.5% of the "average" income is "going out" and not being saved. Rounding that up to 100% for a CNN money article seems just fine to me.

https://fred.stlouisfed.org/series/PSAVERT

[acroy]

One more reason to avoid Mainstream Media money advice.

In fact - face-punch may be in order for spending your precious irreplaceable time reading it! ;)

[SecretSquirrel]

One more reason to avoid Mainstream Media money advice.

Fixed that for you.

[ixtap]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

3% is extremely conservative. Hell 4% fails basically never already.

That being said, someone making $100,000 is never going to save 3.3M by 50 if they spend it all either so the entire discussion is moot.

Let them keep working, fuel my returns!

I don't know that I'd agree with "4% basically never fails", especially when talking about retiring early and not specifying what type of allocation is used.  At 75% stocks, 4% WR fails ~12% of the time over a 50 year period. ~15% of the time it fails in a 50/50 portfolio. A 3% withdrawal rate fails 15% of the time in a 25/75 portfolio in a 50 year retirement window using historic data. What is "safe" depends a lot upon the time period and the risk level of the portfolio, not to mention desire to leave a legacy for heirs/charity etc can influence desired withdrawal rate downward as well.

https://earlyretirementnow.com/2016/12/07/the-ultimate-guide-to-safe-withdrawal-rates-part-1-intro/




As for spending all their money, no one who does so is ever going to retire early, but trying to add in a discussion of what to count when totalling up spending, and how to adjust that for expected changes in taxes so that it's remotely accurate, etc seems a bit over the top for such a simple article.. hence me not having a problem with it just talking income. Sure, it'd be nice if they'd specified that it's more about what goes out than gross pay, but in the grand scheme of things it still likely served the authors purpose as is (which I'm guessing was to provide information on "general" guidelines for how much people "generally" should try to save up if they're considering retiring somewhat early).  I mean, sure, it could have gotten into asset allocation (here and abroad, by sector, subsector, asset class, etc etc) and how that could impact returns and thus necessary savings, and tax implications on how much you need based on what income tax bracket you anticipate being in based on what type of investment returns your generating in retirement, implications from what type of tax advantaged accounts your using and non-tax advantaged accounts, as well as RMD tax implications, and then discuss the difference between bills and other expenses vs total expenses (being sure to account for infrequent expenses like major home improvement/repairs and the like) etc etc etc

But then it would have been a few hundred page book on early retirement, not a short news article.

For a short news article, it was informative to those who don't routinely study/think about such things and general enough that an "average" reader could gain some knowledge/understanding from it (even if that is a very basic amount of knowledge). As such, I can't fault it for not being written as if it were a Master's thesis on the finances of retiring early.


Edit to add:
The latest reported average personal savings rate in the US was 3.5%. So 96.5% of the "average" income is "going out" and not being saved. Rounding that up to 100% for a CNN money article seems just fine to me.

https://fred.stlouisfed.org/series/PSAVERT

Especially since most focus on take home, rather than gross, when thinking about income. Heck, after taxes, 401k, stock options, HSA...our monthly take home isn't much higher than our spending. Of course, when we cash in stock options and receive bonuses, we squirrel that away, as well, so our savings rate ends up looking like 100% or more if we only count monthly take home pay versus long term account deposits....

[Davnasty]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

But this just means they're reinforcing the idea that spending your whole salary is ok.

Not to mention, it makes no sense conceptually. If you're spending your whole salary, how exactly are you going to save up 33x? At a 50% savings rate you would take a little over 20 years to reach 33x, at a savings rate of 0% it would take...longer?

[jlcnuke]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

But this just means they're reinforcing the idea that spending your whole salary is ok.

Not to mention, it makes no sense conceptually. If you're spending your whole salary, how exactly are you going to save up 33x? At a 50% savings rate you would take a little over 20 years to reach 33x, at a savings rate of 0% it would take...longer?

At a savings rate of 4%, you're spending practically your whole salary, but with company matching etc you can save up a good amount in a 40 year career.  Making a "basic" article about "basic" retirement savings rates does not mean the author is "reinforcing the idea that spending your whole salary is ok". It means they wrote the article for "normal" people who act in an "average way" currently.

Dave Ramsey's advice is "bad" financially in many cases (causes a decrease in net worth relative to better financial advice). However, he still "helps" lots of people because it "works" for those wanting to go from "average" to "getting better" (his audience).  Mainstream articles on personal finance need to be looked at the same way (as in, they have to be written for the people the author wants to read the whole thing and/or help).

An article that says "hey Mr and Mrs. Keepingupwiththejoneses - sell your house and your cars and live a minimalist lifestyle and invest the savings so you can retire early" will be read/considered as a viable path by almost no people reading it on a website like CNN who hadn't already decided to do so (a small minority of readers). If you expect to see that from the media, your expectations are wrong since it's not their job to write for "the small minority of potential readers". A "good" writer tailors their writing to the audience they're presenting information to. The financial advice I'd give on a forum like this is often NOT the same financial advice I'd give to an "average" person/couple because the advice would likely be immediately ignored by that audience (as too much of a change, too hard, too complicated, outside of their comfort zone, etc), even if 95% of posters here, on bogleheads, etc would agree that it's great advice. For a similar reason, expecting a mainstream finance writer to be providing "Advice" that you'd expect for/from a Mustachian is ridiculous because 99% of their audience would ignore it if they made it past the first paragraph before deciding it was "ridiculous". Putting out "pretty good" info for "average people", is more productive/helpful than putting out info that is "in line" with more detailed understandings/knowledge of the topic if the latter is ignored but the former is read.

[Retire-Canada]

One more reason to avoid Mainstream Media money advice clickbait.

Fixed that for you.

I fixed it more better.

[HawkeyeNFO]

CNN = crap.  Nobody believes any of their lazy and repeatedly wrong reporting anymore.

[Retire-Canada]

CNN = crap.  Nobody believes any of their lazy and repeatedly wrong reporting anymore.

Yet we post links to it here on the forums driving traffic to their site and making them $$$.

[Tyson]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

If they spend all their income, how in the world will they ever save anything at all, let alone 33x their salary?

[jlcnuke]

Since the "average" reader of CNN Money articles likely spends all of their income (if not more than all of), not delineating between expenses and income doesn't bother me in articles like this that are published for "the masses".  As a SWR of 3% is generally considered reasonable (to slightly conservative) for a 40-50 year retirement period (by the industry standard research), extrapolating that to mean 33x annual salary (for those spending it all) is a pretty decent "rule of thumb". As "rule of thumb" is pretty much all you can perpetuate in a short news article, I see no problem with providing such a general (if conservative) rule of thumb for those "masses" or "average" people reading such an article.

If they spend all their income, how in the world will they ever save anything at all, let alone 33x their salary?

As stated already, the "average" is saving 3.5% right now, so many are saving but the average is still practically spending all of their salary. Rounding up to needing "X" times 100% of their salary isn't that much of a stretch from needing "X" times 96.5% of their salary is it??

[Tyson]

So at a rate of 3.5% savings, how long would it take to get to 33x salary?  Let's do the math.  Assume $100k salary for easier math.

OK, 3.5% of $100k is $3500 saved per year.

33x salary is $100k times 33 equals $3.3 million.

By saving $3500 per year, getting to $3.3 million saved will only take you 942 years!!!  Hahahahahahaha!

[jlcnuke]

So at a rate of 3.5% savings, how long would it take to get to 33x salary?  Let's do the math.  Assume $100k salary for easier math.

OK, 3.5% of $100k is $3500 saved per year.

33x salary is $100k times 33 equals $3.3 million.

By saving $3500 per year, getting to $3.3 million saved will only take you 942 years!!!  Hahahahahahaha!

Well, to start with, I'm pretty sure the article mentioned something about "investing" money, not just stuffing it under your mattress so that throws your 942 years out the window. With historic return levels at 100% stocks, they won't hit 33x by normal retirement age, but they'll be in a hell of a lot better shape come retirement than most people seem to be lately. Since it wasn't an article stating that people should save only 3.5% of their income, perhaps we can assume that the author (when suggesting how much to have by what age) was trying to let people know they should save MORE... are you against advising the masses that they should be saving more for retirement? Is that an idea to be mocked in your esteemed opinion?



Since you seem to think it was so bad, how about you show us the ~750 word article you'd write to explain to average people who know nothing about financial independence, investing, etc, how much to save in order to be able to retire at various retirement ages from 50 through 65, where and how to invest that savings to accomplish that (including a basics of the pros and cons of various account types), and ways to 'find' additional money for savings/investments to try and make the first goal possible. Don't forget to include quotes from industry experts you identify and provide credentials for so the 750 word article maintains credibility in the eyes of the readers...

Then submit your 750 words to mainstream media so that the world can revel in how much better you can write such an article than the hundreds of reporters who've done the same or similar article along the way.... don't forget to keep everything generic enough that no one could possibly think you were giving actual financial advice for them in particular though (wouldn't want to get sued if it didn't turn out well for them).

[stachestache]

Mainstream media keeping up the guard rails of fear along the road to conformity yet again.

Here it is interesting though. I have been thinking lately that the media is used to keep "us" afraid  and also to consume. Last night I was wondering if there are any studies on the relationship between reports of terror threats/attacks and consumer spending. My hypothesis being that when a "normal" person feels anxious/worried/afraid that they might spend more on consumer items as a way of comfort. I haven't looked into it yet...

This seems interesting, though, because the media might be, here, trying to show people what is an unrealistic number for most to reach and in doing so make them afraid to retire. Most people are already not financially aware enough to save what is a safe amount to retire and are also led by the powerful consumer culture in the US to not even be able to see the choice to do something different...

..didnt mean to preach to the choir here..

PS. I didn't read the article

[Tyson]

So at a rate of 3.5% savings, how long would it take to get to 33x salary?  Let's do the math.  Assume $100k salary for easier math.

OK, 3.5% of $100k is $3500 saved per year.

33x salary is $100k times 33 equals $3.3 million.

By saving $3500 per year, getting to $3.3 million saved will only take you 942 years!!!  Hahahahahahaha!

Well, to start with, I'm pretty sure the article mentioned something about "investing" money, not just stuffing it under your mattress so that throws your 942 years out the window. With historic return levels at 100% stocks, they won't hit 33x by normal retirement age, but they'll be in a hell of a lot better shape come retirement than most people seem to be lately. Since it wasn't an article stating that people should save only 3.5% of their income, perhaps we can assume that the author (when suggesting how much to have by what age) was trying to let people know they should save MORE... are you against advising the masses that they should be saving more for retirement? Is that an idea to be mocked in your esteemed opinion?



Since you seem to think it was so bad, how about you show us the ~750 word article you'd write to explain to average people who know nothing about financial independence, investing, etc, how much to save in order to be able to retire at various retirement ages from 50 through 65, where and how to invest that savings to accomplish that (including a basics of the pros and cons of various account types), and ways to 'find' additional money for savings/investments to try and make the first goal possible. Don't forget to include quotes from industry experts you identify and provide credentials for so the 750 word article maintains credibility in the eyes of the readers...

Then submit your 750 words to mainstream media so that the world can revel in how much better you can write such an article than the hundreds of reporters who've done the same or similar article along the way.... don't forget to keep everything generic enough that no one could possibly think you were giving actual financial advice for them in particular though (wouldn't want to get sued if it didn't turn out well for them).

My point was that basing the savings needed on income instead of expenses is discouraging because it's unattainable. 

A better approach would be to state that you need to save 33x your expenses to retire at 50 (or any age, really).  Personally I think 33x of expenses is too much, but whatevs.  Still more realistic and attainable than 33x salary.

[jlcnuke]

So at a rate of 3.5% savings, how long would it take to get to 33x salary?  Let's do the math.  Assume $100k salary for easier math.

OK, 3.5% of $100k is $3500 saved per year.

33x salary is $100k times 33 equals $3.3 million.

By saving $3500 per year, getting to $3.3 million saved will only take you 942 years!!!  Hahahahahahaha!

Well, to start with, I'm pretty sure the article mentioned something about "investing" money, not just stuffing it under your mattress so that throws your 942 years out the window. With historic return levels at 100% stocks, they won't hit 33x by normal retirement age, but they'll be in a hell of a lot better shape come retirement than most people seem to be lately. Since it wasn't an article stating that people should save only 3.5% of their income, perhaps we can assume that the author (when suggesting how much to have by what age) was trying to let people know they should save MORE... are you against advising the masses that they should be saving more for retirement? Is that an idea to be mocked in your esteemed opinion?



Since you seem to think it was so bad, how about you show us the ~750 word article you'd write to explain to average people who know nothing about financial independence, investing, etc, how much to save in order to be able to retire at various retirement ages from 50 through 65, where and how to invest that savings to accomplish that (including a basics of the pros and cons of various account types), and ways to 'find' additional money for savings/investments to try and make the first goal possible. Don't forget to include quotes from industry experts you identify and provide credentials for so the 750 word article maintains credibility in the eyes of the readers...

Then submit your 750 words to mainstream media so that the world can revel in how much better you can write such an article than the hundreds of reporters who've done the same or similar article along the way.... don't forget to keep everything generic enough that no one could possibly think you were giving actual financial advice for them in particular though (wouldn't want to get sued if it didn't turn out well for them).

My point was that basing the savings needed on income instead of expenses is discouraging because it's unattainable. 

A better approach would be to state that you need to save 33x your expenses to retire at 50 (or any age, really).  Personally I think 33x of expenses is too much, but whatevs.  Still more realistic and attainable than 33x salary.

Ah yes, the psychological effect of only needing $3,184,500 instead of $3,300,000... so much more attainable lol.

[ixtap]

So at a rate of 3.5% savings, how long would it take to get to 33x salary?  Let's do the math.  Assume $100k salary for easier math.

OK, 3.5% of $100k is $3500 saved per year.

33x salary is $100k times 33 equals $3.3 million.

By saving $3500 per year, getting to $3.3 million saved will only take you 942 years!!!  Hahahahahahaha!

Well, to start with, I'm pretty sure the article mentioned something about "investing" money, not just stuffing it under your mattress so that throws your 942 years out the window. With historic return levels at 100% stocks, they won't hit 33x by normal retirement age, but they'll be in a hell of a lot better shape come retirement than most people seem to be lately. Since it wasn't an article stating that people should save only 3.5% of their income, perhaps we can assume that the author (when suggesting how much to have by what age) was trying to let people know they should save MORE... are you against advising the masses that they should be saving more for retirement? Is that an idea to be mocked in your esteemed opinion?



Since you seem to think it was so bad, how about you show us the ~750 word article you'd write to explain to average people who know nothing about financial independence, investing, etc, how much to save in order to be able to retire at various retirement ages from 50 through 65, where and how to invest that savings to accomplish that (including a basics of the pros and cons of various account types), and ways to 'find' additional money for savings/investments to try and make the first goal possible. Don't forget to include quotes from industry experts you identify and provide credentials for so the 750 word article maintains credibility in the eyes of the readers...

Then submit your 750 words to mainstream media so that the world can revel in how much better you can write such an article than the hundreds of reporters who've done the same or similar article along the way.... don't forget to keep everything generic enough that no one could possibly think you were giving actual financial advice for them in particular though (wouldn't want to get sued if it didn't turn out well for them).

My point was that basing the savings needed on income instead of expenses is discouraging because it's unattainable. 

A better approach would be to state that you need to save 33x your expenses to retire at 50 (or any age, really).  Personally I think 33x of expenses is too much, but whatevs.  Still more realistic and attainable than 33x salary.

How many of the people in the target audience know their annual expenses? Now, if you could write an engaging article explaining the various reasons one needs to know their annual expenses...

[Telecaster]

Since you seem to think it was so bad, how about you show us the ~750 word article you'd write to explain to average people who know nothing about financial independence, investing, etc, how much to save in order to be able to retire at various retirement ages from 50 through 65, where and how to invest that savings to accomplish that (including a basics of the pros and cons of various account types), and ways to 'find' additional money for savings/investments to try and make the first goal possible. Don't forget to include quotes from industry experts you identify and provide credentials for so the 750 word article maintains credibility in the eyes of the readers...

Then submit your 750 words to mainstream media so that the world can revel in how much better you can write such an article than the hundreds of reporters who've done the same or similar article along the way.... don't forget to keep everything generic enough that no one could possibly think you were giving actual financial advice for them in particular though (wouldn't want to get sued if it didn't turn out well for them).

Okay, here is my article:

I want to retire at age 55. I contribute to several retirement savings plans but worry I'll be penalized for withdrawing my savings early. I want to invest additional money somewhere else. Where should I invest? --Dave

Great question Dave!  Here is what you need to do:

1.  You can safely retire when you have about 25 times your annual expenses saved up.  So that's your goal.

2.  You didn't say your age or how much you have already saved, but I assume you are in your mid-30s and don't have much saved yet.  In that case, you need to save a lot over the next 20 years.  Probably about 40% of your income. 

3.  You definitely need to max out your 401(K), and traditional IRA as well.  Also your HSA if that is available.  Since your probably can't meet your savings goal with tax advantaged accounts, you'll need to save up in a regular brokerage account as well. 

4.  Early withdrawals are no problem!   The IRS has what they call the 72t rule, also known as Substantially Equal Periodic Payments, or SEPP.  There are a couple hoops to jump through so you need to study the details, but lots of people do it and it is no big deal.  And of course, you can make withdrawals from a regular brokerage account at any age. 

5.  As far as what specifically to invest it?  Invest in broad market index funds from Vanguard or Fidelity.  Make sure the expenses are no more than 0.04%. 

If you do those things you will be gold when you are 55.  Enjoy a Mai Tai on the beach for me Dave! 

Word count:  277

[Tyson]

How many of the people in the target audience know their annual expenses? Now, if you could write an engaging article explaining the various reasons one needs to know their annual expenses...

Well it's a disservice to say "our target audience is stupid/ignorant so we're going to pander to that by providing misinformation". 

What they should be emphasizing is that it's expenses that need to be focused on, not income.  And if their target audience doesn't understand that, then that's PRECISELY why the content producers should be writing about it.  I know the idea of educating your readership is old fashioned, but it's a much better approach.

[jlcnuke]

Since you seem to think it was so bad, how about you show us the ~750 word article you'd write to explain to average people who know nothing about financial independence, investing, etc, how much to save in order to be able to retire at various retirement ages from 50 through 65, where and how to invest that savings to accomplish that (including a basics of the pros and cons of various account types), and ways to 'find' additional money for savings/investments to try and make the first goal possible. Don't forget to include quotes from industry experts you identify and provide credentials for so the 750 word article maintains credibility in the eyes of the readers...

Then submit your 750 words to mainstream media so that the world can revel in how much better you can write such an article than the hundreds of reporters who've done the same or similar article along the way.... don't forget to keep everything generic enough that no one could possibly think you were giving actual financial advice for them in particular though (wouldn't want to get sued if it didn't turn out well for them).

Okay, here is my article:

I want to retire at age 55. I contribute to several retirement savings plans but worry I'll be penalized for withdrawing my savings early. I want to invest additional money somewhere else. Where should I invest? --Dave

Great question Dave!  Here is what you need to do:

1.  You can safely retire when you have about 25 times your annual expenses saved up.  So that's your goal.

2.  You didn't say your age or how much you have already saved, but I assume you are in your mid-30s and don't have much saved yet.  In that case, you need to save a lot over the next 20 years.  Probably about 40% of your income. 

3.  You definitely need to max out your 401(K), and traditional IRA as well.  Also your HSA if that is available.  Since your probably can't meet your savings goal with tax advantaged accounts, you'll need to save up in a regular brokerage account as well. 

4.  Early withdrawals are no problem!   The IRS has what they call the 72t rule, also known as Substantially Equal Periodic Payments, or SEPP.  There are a couple hoops to jump through so you need to study the details, but lots of people do it and it is no big deal.  And of course, you can make withdrawals from a regular brokerage account at any age. 

5.  As far as what specifically to invest it?  Invest in broad market index funds from Vanguard or Fidelity.  Make sure the expenses are no more than 0.04%. 

If you do those things you will be gold when you are 55.  Enjoy a Mai Tai on the beach for me Dave! 

Word count:  277

Comment writer #1 - What kind of hack is this?. The only annual expenses I have are my $1,000 property taxes and my $100 car registration? How the hell am I supposed to retire on less than $30,000?? Wow, this guy doesn't know what the hell he's talking about...

Comment writer #2 - I have a B.S. in finance and am a registered CFP. Every major study to date has said that 25x annual spending is "likely" to last 30 years, and the chances it will last long than that drop off relatively quickly. I don't know this writer or where they got their information but they apparently didn't talk to anyone studying the subject.

Comment writer #3 - what the heck is this 72p thing this guy mentions and then never explained? Everyone says I will take a penalty and this guy says I won't because of some acronym I should study on my own? And what the hell is this HSA retirement thing? I thought HSA was some healthcare crap?? I thought these articles were supposed to explain stuff to us, not make us readers even more confused. Thanks for nothing CNN!

Comment writer #4 - How the hell am I supposed to max out all these accounts. HR at work said that my 401k can get $18,000!! What kind of 1%er can put away that much money and worry about all these other accounts this guy is talking about? Hey buddy, how about writing an article for REAL PEOPLE for a change??

etc etc etc

See, anyone can rip apart articles pretty easy if that's the only goal they have. The primary difference I see in your article vs. the linked article is that you assume that the readers either have, or will take the time to get, the same knowledge about the same financial subjects as people here commonly use. Having spoken to people who get lost and move off into "nevermind, it's too complicated" when asset allocation more complex than "just put your money in this one fund and it'll do everything for you" is discussed I can confidently say that most people DON'T know or care to learn what people here take as "base knowledge". The author of the original piece recognizes that her target audience is, probably like her, mostly financially illiterate and writes to that level of simplicity.

[Tyson]

The primary difference I see in your article vs. the linked article is that you assume that the readers either have, or will take the time to get, the same knowledge about the same financial subjects as people here commonly use. Having spoken to people who get lost and move off into "nevermind, it's too complicated" when asset allocation more complex than "just put your money in this one fund and it'll do everything for you" is discussed I can confidently say that most people DON'T know or care to learn what people here take as "base knowledge". The author of the original piece recognizes that her target audience is, probably like her, mostly financially illiterate and writes to that level of simplicity.

How can anyone ever learn about these concepts, if no one ever writes/talks about them?

[jlcnuke]

The primary difference I see in your article vs. the linked article is that you assume that the readers either have, or will take the time to get, the same knowledge about the same financial subjects as people here commonly use. Having spoken to people who get lost and move off into "nevermind, it's too complicated" when asset allocation more complex than "just put your money in this one fund and it'll do everything for you" is discussed I can confidently say that most people DON'T know or care to learn what people here take as "base knowledge". The author of the original piece recognizes that her target audience is, probably like her, mostly financially illiterate and writes to that level of simplicity.

How can anyone ever learn about these concepts, if no one ever writes/talks about them?

Most never will. Most won't ever care that they don't know either. Those who do care, will seek out more information. Articles like the one linked provide a "teaser" into the "possibility" that such a thing as "early retirement" actually exists. It can get "the few" to start thinking about it and seeking out more information. From there, some will still be overwhelmed (even the "simple" presentations of the "basics" of FIRE can be overwhelming for those not very enthusiastic about the idea if they don't have some sort of background in finance (beyond paying their bills and balancing a paycheck) or similar related field/area.

When dealing with communities like this regularly, it's easy to forget that "most" people don't even have a budget. Their budget is "how much is left in the checking account and do we have to pay any bills before payday?". For some, even that's more of a budget than they use. This goes across all income brackets too, it isn't just "the poor" living like that. I have a friend with a wife and 1 kid, making close to 6 figures at his day job PLUS a military retirement with benefits who struggles to pay their bills living in a double-wide trailer. He's not "dumb" either, he's actually very intelligent (intelligent enough to learn the theory and operation of nuclear power plants and excel in that field for instance). Yet he still has money problems.

We have an education problem in this country with regard to personal finance, and it's exacerbated by the fact that "most" people manage to get by with little or no retirement savings in their lives and thus fixing that problem hasn't been a priority. As a result, we've got a bunch of people who rely on a bank to tell them how much car they can afford to buy or how much of a home they can afford to buy, and salesman to tell them how "low" the monthly payment for "XYZ" will be if they just put it on the store credit card with 0% interest for 12 months. Hell, a woman I was friends with in high school had problems paying her electric bill and asked her friends on Facebook for help, I thought about transferring her some money to help out and found out she had NEVER had a bank account... she'd never had money long enough to do more than put it into and take it out of her purse...

Until the "average" person understands where their spending is going, how they should keep track of such things, and why they need to know it; trying to get them to think about the difference between their income and their expenses is like asking people taking algebra to start thinking about how to solve differential equations - it's a leap they're just not ready for. Most people are very aware of how much they make however... so when trying to "shock" them into caring about saving/investing, or trying to give them "rules of thumb" they can maybe try to "somewhat" strive for, going with what they probably do know is a safe alternative to getting into the "details". Who knows, maybe a few of those "paycheck to paycheck" people will read an article showing that there is "some guideline" on a way they can stop slaving away at a job they hate and use that as inspiration to move onto more knowledge about finances so they can one day be a thriving member of sites like this.

I just don't think that tearing down the few "journalists" trying to put such thoughts/ideas out there in simple terms for the masses is a positive thing for anyone. Sorry if I came across as a d(*& trying to explain my thoughts on that though.

[SecretSquirrel]

One more reason to avoid Mainstream Media money advice clickbait.

Fixed that for you.

I fixed it more better.

Well done, sir. You are the fixingest.

[Telecaster]

Comment writer #1 - What kind of hack is this?. The only annual expenses I have are my $1,000 property taxes and my $100 car registration? How the hell am I supposed to retire on less than $30,000?? Wow, this guy doesn't know what the hell he's talking about...

Comment writer #2 - I have a B.S. in finance and am a registered CFP. Every major study to date has said that 25x annual spending is "likely" to last 30 years, and the chances it will last long than that drop off relatively quickly. I don't know this writer or where they got their information but they apparently didn't talk to anyone studying the subject.

Comment writer #3 - what the heck is this 72p thing this guy mentions and then never explained? Everyone says I will take a penalty and this guy says I won't because of some acronym I should study on my own? And what the hell is this HSA retirement thing? I thought HSA was some healthcare crap?? I thought these articles were supposed to explain stuff to us, not make us readers even more confused. Thanks for nothing CNN!

Comment writer #4 - How the hell am I supposed to max out all these accounts. HR at work said that my 401k can get $18,000!! What kind of 1%er can put away that much money and worry about all these other accounts this guy is talking about? Hey buddy, how about writing an article for REAL PEOPLE for a change??

etc etc etc

See, anyone can rip apart articles pretty easy if that's the only goal they have. The primary difference I see in your article vs. the linked article is that you assume that the readers either have, or will take the time to get, the same knowledge about the same financial subjects as people here commonly use. Having spoken to people who get lost and move off into "nevermind, it's too complicated" when asset allocation more complex than "just put your money in this one fund and it'll do everything for you" is discussed I can confidently say that most people DON'T know or care to learn what people here take as "base knowledge". The author of the original piece recognizes that her target audience is, probably like her, mostly financially illiterate and writes to that level of simplicity.

What if the goal is to communicate information accurately? 

The primary differences between my article and the linked article is that I didn't say anything misleading or factually incorrect.  I also didn't get paid. 

The broad concepts of FIRE are shockingly simple.  Shockingly simple. Max out your tax-advantaged accounts first.  Invest in the broad market index.  Minimize fees.  Target goal is 25 times expenses.  That takes about 20 years saving 40% of income. 

Once you get that far, you can drill down as far as you want.  Payoff vs. never payoff the mortgage, mega-backdoor Roth, international vs. domestic stocks, the whole thing.  But those things are just the gravy.  If you do the first, basic things, then you are gold. 

I agree. The author of the original is financially illiterate.  But repeating things that are false doesn't help anyone.  Saying things that are true do help.  And in this case, the truth isn't hard to understand.  It is really simple.  It might be hard to implement, but the concepts are easy.  The fact the author can't understand easy concepts is not an excuse for bad journalism.  It was just a bad article. 

[Tyson]

How can anyone ever learn about these concepts, if no one ever writes/talks about them?

Most never will. Most won't ever care that they don't know either. Those who do care, will seek out more information. Articles like the one linked provide a "teaser" into the "possibility" that such a thing as "early retirement" actually exists. It can get "the few" to start thinking about it and seeking out more information. From there, some will still be overwhelmed (even the "simple" presentations of the "basics" of FIRE can be overwhelming for those not very enthusiastic about the idea if they don't have some sort of background in finance (beyond paying their bills and balancing a paycheck) or similar related field/area.

I would worry that the enormously huge numbers talked about in the article are more likely to turn away the audience saying, "yup, knew it was impossible" instead of spark interest.

33x our household income to retire in our 50s?  You mean we only need $7,500,000 - sure no prob!

Bingo.

[jlcnuke]

How can anyone ever learn about these concepts, if no one ever writes/talks about them?

Most never will. Most won't ever care that they don't know either. Those who do care, will seek out more information. Articles like the one linked provide a "teaser" into the "possibility" that such a thing as "early retirement" actually exists. It can get "the few" to start thinking about it and seeking out more information. From there, some will still be overwhelmed (even the "simple" presentations of the "basics" of FIRE can be overwhelming for those not very enthusiastic about the idea if they don't have some sort of background in finance (beyond paying their bills and balancing a paycheck) or similar related field/area.

I would worry that the enormously huge numbers talked about in the article are more likely to turn away the audience saying, "yup, knew it was impossible" instead of spark interest.

33x our household income to retire in our 50s?  You mean we only need $7,500,000 - sure no prob!

do you think 25x, or $5,681,818 would be a "calming" number instead?? Or 25x an average "after savings of the average 3.5%) would be so much better ($5,482,954)??

[Tyson]

How can anyone ever learn about these concepts, if no one ever writes/talks about them?

Most never will. Most won't ever care that they don't know either. Those who do care, will seek out more information. Articles like the one linked provide a "teaser" into the "possibility" that such a thing as "early retirement" actually exists. It can get "the few" to start thinking about it and seeking out more information. From there, some will still be overwhelmed (even the "simple" presentations of the "basics" of FIRE can be overwhelming for those not very enthusiastic about the idea if they don't have some sort of background in finance (beyond paying their bills and balancing a paycheck) or similar related field/area.

I would worry that the enormously huge numbers talked about in the article are more likely to turn away the audience saying, "yup, knew it was impossible" instead of spark interest.

33x our household income to retire in our 50s?  You mean we only need $7,500,000 - sure no prob!

do you think 25x, or $5,681,818 would be a "calming" number instead?? Or 25x an average "after savings of the average 3.5%) would be so much better ($5,482,954)??

It's not the 25x or 33x, it's about expenses vs income.  25x or 33x income is way too high and ends up being discouraging.  Plus, every time you get a raise, your number just gets higher and higher, which is even more discouraging.

OR, the journalist could state that the # needed to be saved is based on costs instead of income, which would have the advantage of being both true and a lower overall number.

[jlcnuke]

How can anyone ever learn about these concepts, if no one ever writes/talks about them?

Most never will. Most won't ever care that they don't know either. Those who do care, will seek out more information. Articles like the one linked provide a "teaser" into the "possibility" that such a thing as "early retirement" actually exists. It can get "the few" to start thinking about it and seeking out more information. From there, some will still be overwhelmed (even the "simple" presentations of the "basics" of FIRE can be overwhelming for those not very enthusiastic about the idea if they don't have some sort of background in finance (beyond paying their bills and balancing a paycheck) or similar related field/area.

I would worry that the enormously huge numbers talked about in the article are more likely to turn away the audience saying, "yup, knew it was impossible" instead of spark interest.

33x our household income to retire in our 50s?  You mean we only need $7,500,000 - sure no prob!

do you think 25x, or $5,681,818 would be a "calming" number instead?? Or 25x an average "after savings of the average 3.5%) would be so much better ($5,482,954)??

It's not the 25x or 33x, it's about expenses vs income.  25x or 33x income is way too high and ends up being discouraging.  Plus, every time you get a raise, your number just gets higher and higher, which is even more discouraging.

OR, the journalist could state that the # needed to be saved is based on costs instead of income, which would have the advantage of being both true and a lower overall number.

Yes, the journalist could have written an article for you or others that have and/or understand that there can be significant differences between "income" and "spending". With the "normal" person spending next to nothing, the "differences" are so miniscule for them as to be meaningless. You're obsessed with the fact that she talked about "income" instead of "expenses" and yet are seeming to fail to grasp that there is little difference between the two for the vast majority of her audience.

Sure, I save 40% of my "income" so my expenses are quite different than my income. For the "average" person saving 3.5% of their income, the difference is pretty much negligible. As such, your argument against the article seems pretty pedantic to be honest. Spending 100% of income vs 96.5% of income... ooooh, big difference! errr.. no, it's really not.

[Tyson]

With the "normal" person spending next to nothing, the "differences" are so miniscule for them as to be meaningless. You're obsessed with the fact that she talked about "income" instead of "expenses" and yet are seeming to fail to grasp that there is little difference between the two for the vast majority of her audience.

The fact that most people don't understand this is precisely why it needs to be written about by knowledgeable journalists.  I'm not obsessed, I just like accurate info to be made available.  Even if many (or even most) don't understand it immediately.

[jlcnuke]

With the "normal" person spending next to nothing, the "differences" are so miniscule for them as to be meaningless. You're obsessed with the fact that she talked about "income" instead of "expenses" and yet are seeming to fail to grasp that there is little difference between the two for the vast majority of her audience.

The fact that most people don't understand this is precisely why it needs to be written about by knowledgeable journalists.  I'm not obsessed, I just like accurate info to be made available.  Even if many (or even most) don't understand it immediately.

So, appeal to you instead of the ignorant and pray that "more accurate" is better than "more engaging"?

Tell me, what are your opinions on nuclear power safety? I'm guessing they range from "ignorant" to "completely clueless". So, if I were to present you with a 20 page paper on the safety of nuclear power (with my extensive expertise on the subject), and the media gave you a 750 word essay on the dangers, which would you be more likely to read and follow up on?

You wish to be accurate, and want others to do the same. What you seem to not grasp is that "complete accuracy" required "extensive time", while "pretty close" can be communicated effectively quite quickly. I can give a 700 word "close enough" article on why nuclear power plants are really, really, really safe. Reporters can give a "kinda close" 700 word article that is "mostly true" on why they aren't. They can't give a 200 page paper on why they aren't and I can give a 200 page paper on why they are. You aren't going to read either though in all likelihood. Just like the readers of CNN Money aren't going to read a 200 page article that's "correct" enough to satisfy you. Expecting the blanket media to cover ANY subject "correctly" that can impact the masses but isn't so basic in nature that everyone already understands it completely is asking for a miracle. It's just not going to happen.

[Telecaster]

Yes, the journalist could have written an article for you or others that have and/or understand that there can be significant differences between "income" and "spending". With the "normal" person spending next to nothing, the "differences" are so miniscule for them as to be meaningless. You're obsessed with the fact that she talked about "income" instead of "expenses" and yet are seeming to fail to grasp that there is little difference between the two for the vast majority of her audience.

Sure, I save 40% of my "income" so my expenses are quite different than my income. For the "average" person saving 3.5% of their income, the difference is pretty much negligible. As such, your argument against the article seems pretty pedantic to be honest. Spending 100% of income vs 96.5% of income... ooooh, big difference! errr.. no, it's really not.

The central question of the article was a person asking how to retire in their 50s.

A key component to the answer is understanding the difference between income and expense.  Just because lots of people don't understand, or haven't thought about that concept, is not a reason to ignore that concept.  It isn't difficult to understand. It really isn't.   The notion journalists should ignore concepts that people haven't thought about is an anathema to journalism.  The purpose of journalism is to explain things.  Your idea that journalists should shy away from things people don't know it to be...I don't even know how to describe it. 

The practice of actually saving 30% or whatever percent of your income  is required is hard for most people to do.  And most people don't.  But the question wasn't what things are easy for people.  The question was how do you retire in your 50s?  If you do want to retire in your 50s there is a pretty clear roadmap that lots of people have used successfully. 

That roadmap doesn't include being afraid to discuss things that are true. 

[jlcnuke]

Yes, the journalist could have written an article for you or others that have and/or understand that there can be significant differences between "income" and "spending". With the "normal" person spending next to nothing, the "differences" are so miniscule for them as to be meaningless. You're obsessed with the fact that she talked about "income" instead of "expenses" and yet are seeming to fail to grasp that there is little difference between the two for the vast majority of her audience.

Sure, I save 40% of my "income" so my expenses are quite different than my income. For the "average" person saving 3.5% of their income, the difference is pretty much negligible. As such, your argument against the article seems pretty pedantic to be honest. Spending 100% of income vs 96.5% of income... ooooh, big difference! errr.. no, it's really not.

Absolutely, so please, tell me what is true? Will 20x expenses last for all of a person's life if they retire at 30? Will 25x? Will 30x? Will 35x? WIll 15x their income last a lifetime? 20x? 30x? 33x?

Give me a 100% guarantee on what will "absolutely work" and back it with your own money (and that of your family) for a person you don't know how much they spend vs how much they earn? Can you do that? Will it be more or less than what that journalist said? I'm guessing you won't and can't since we're all dealing with "probabilities" based on the information we decide to use. If we choose to use Japan's stocks over the last 30 years as our guide, 33x times income is a MASSIVE shortfall for retirement at 55, right? So, can you guarantee the journalist's general rules are too conservative for someone?

The central question of the article was a person asking how to retire in their 50s.

A key component to the answer is understanding the difference between income and expense.  Just because lots of people don't understand, or haven't thought about that concept, is not a reason to ignore that concept.  It isn't difficult to understand. It really isn't.   The notion journalists should ignore concepts that people haven't thought about is an anathema to journalism.  The purpose of journalism is to explain things.  Your idea that journalists should shy away from things people don't know it to be...I don't even know how to describe it. 

The practice of actually saving 30% or whatever percent of your income  is required is hard for most people to do.  And most people don't.  But the question wasn't what things are easy for people.  The question was how do you retire in your 50s?  If you do want to retire in your 50s there is a pretty clear roadmap that lots of people have used successfully. 

That roadmap doesn't include being afraid to discuss things that are true.

[Tyson]

How does one save money?  Control your expenses.

How does one get enough saved to retire?  Control your expenses.

How do you lower the total amount of money needed in retirement?  Control your expenses.

See, that didn't even require 700 words :P

[EscapeVelocity2020]

Obviously the author of the article is completely clueless on many levels.  Maybe they went by some conservative advice that 4% SWR wasn't good enough so 3% means 33x expenses, but then thinking expenses = salary is just wrong.  For one obvious thing, your salary is reduced by taxes, OASDI, and Medicare.  These things are reduced or non-existent in most middle class and middle-upper class retirements.  The 33x probably also assumes covering big recurring things like mortgage and car loan that you shouldn't have in retirement (unless you are FI and have sufficient reserves to leverage these things through arbitrage, but now I'm talking advanced Mustachianism).

Healthcare, of course, is a wildcard, as is forward inflation.  I'm not going to say they were right in the article, but things could be headed in a slightly more difficult direction than what we've experienced these last ~10 bull market, low inflation, ACA-introduced and supported years....  Shoot, things could get really difficult really quickly and could make this article look laughably generous if WWIII breaks out and America is deemed to be a bully and loses a war.  Weimar Germany had a 0.5% SWR.  Trump is certainly more along the lines of a polarizing Napoleon / Hitler (and prides himself on his Twitter and rally-speech prowess) than a status quo politician.

That's what makes the future interesting; you can never know.  And typically, when you think you know, things work out so differently than you could've ever imagined (hence the 'plans are what you make while life happens' trope).  That's why I enjoy FI but maybe not yet RE.  Waiting for the world to work out the way you think it should is a fool's errand.  And when retired people thank workers doing OMY, I'm glad to do it TBH.  They are writing interesting things in the forum and on their blogs reminding me that I can be part of that group anytime I want.

All I hope, in life, is that I'm living my best life - and that I leave the world better off than how I found it.