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(Marketwatch)   I hate to ruin your day, but you now need 11 times your annual salary to retire   (marketwatch.com) divider line 111
    More: Unlikely, retirement  
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4345 clicks; posted to Business » on 06 Jul 2012 at 12:44 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-07-06 10:31:32 AM
Wrong.

It won't take nearly that for me to live out my days as a homeless beach bum.

/My real retirement plan
 
2012-07-06 11:18:41 AM
I don't have any intention of retiring. Which is probably fortunate for me.
 
2012-07-06 11:23:51 AM
Silly subby, I'll be dead long before retirement age. Worked to death of course. Full of ulcers, tumors, and blown heart valves.
 
2012-07-06 11:42:48 AM
Okay.

That's doable.
 
2012-07-06 12:16:47 PM
After what Obama has done to us, we will all be greeters at Walmart eating canned cat food. Little Friskies seems to be the most appealing.
 
2012-07-06 12:19:57 PM
I'm shooting for 20x.
 
2012-07-06 12:41:33 PM
I don't plan on retiring...I'd be bored to death.
 
2012-07-06 12:47:14 PM
I can do that, at least on this current path I'm on. Bonus: no kids. I don't know how much that may factor into the 11x, but whatever is left after I go is either going to the wife or local animal rescues.
 
2012-07-06 12:48:17 PM
Why so low? I have always had a goal of 20X.
 
2012-07-06 12:51:35 PM
11X? That's, what, about $50 for me to retire?
 
2012-07-06 12:52:22 PM
11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.
 
2012-07-06 12:55:02 PM
You need to figure out how much money you want to live off of after retirement. Then you need to figure out a reasonable interest rate you can get on X amount of invested dollars. Then you need to figure out how much next egg you need where that interest is your new "Salary."

Say you want to live off of 50k annually in retirement. You can reasonably invest in I don't know bonds or something at 5% (I'm making this up). Therefore you need $1,000,000 invested in those bonds to live.

Saving earlier pays later due to the magic of compound interest.

It's not easy, but it's also not complicated.
 
2012-07-06 12:55:06 PM
As a member of generation y with social security likely gone by the time we reach what ever jacked up age retirement is set at. Our source of food is likely the delicious bone marrow of the boomers.
 
2012-07-06 12:55:14 PM
Great, I've been working for ten years, and I have about 1/5 of my annual salary saved. That means, I only need work another 540 years!!!
 
2012-07-06 12:58:48 PM

FishyFred: Okay.

That's doable.


Well, unless the whole system collapses in a manner that is totally conflicting with your timeframe, whereby you don't have time to recover prior to reaching an age at which work either becomes impossible or you can't find work due to age discrimination.

/we all like to think we are 100% in control...we are not
 
2012-07-06 12:59:23 PM
Guess ill be an 80 yr old gigilo then, dropping dead getting ready for work with a viagra and redbull cocktail with a cialis and beer chaser.
 
2012-07-06 01:00:37 PM

MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.


Came here to say THIS. That's less than half of what we were planning on saving...curious.
 
2012-07-06 01:01:22 PM

EnviroDude: After what Obama has done to us, we will all be greeters at Walmart eating canned cat food. Little Friskies seems to be the most appealing.


That would be the result of an ineffectual safety net program and rampant outsourcing of middle class jobs.

Newsflash: that's not Obama policy.
 
2012-07-06 01:06:25 PM
I hate to ruin your day, but you now need 11 times your annual salary to retire

And I hate to ruin anyone else's, but I'm already there, and then some.
 
2012-07-06 01:06:44 PM
There's no need to save money, that's what Social Security is for.
 
2012-07-06 01:08:26 PM
My father's retirement plan is to get one of those camper shells that fits over the back of a pickup and drive around America doing odd jobs until he dies. He's got his cell phone for talking and internet access, and his Kindle for reading. His words: "I'm buying the yacht that I can afford."

My goal is to get my doctorate and teach until I die.
 
2012-07-06 01:09:03 PM

SacriliciousBeerSwiller: EnviroDude: After what Obama has done to us, we will all be greeters at Walmart eating canned cat food. Little Friskies seems to be the most appealing.

That would be the result of an ineffectual safety net program and rampant outsourcing of middle class jobs.

Newsflash: that's not Obama policy.


Obama policy is to hope we get sick, have his citizens panel review our proposed medical procedures and give us pain killers for them.
 
2012-07-06 01:10:20 PM

jjorsett: I hate to ruin your day, but you now need 11 times your annual salary to retire

And I hate to ruin anyone else's, but I'm already there, and then some.


Not too hard to save $100k
 
2012-07-06 01:10:37 PM

jjorsett: I hate to ruin your day, but you now need 11 times your annual salary to retire

And I hate to ruin anyone else's, but I'm already there, and then some.


t2.gstatic.com
 
2012-07-06 01:13:40 PM

LittleKidLover: MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.

Came here to say THIS. That's less than half of what we were planning on saving...curious.


If you go by what financial planners recommend, you can draw down your savings at 4% per year indefinitely. That would translate into 25X your annual salary, assuming you wanted the same level of spending as when you were working. 11X must come from an assumption that you'd be willing to spend down to your last dollar, and that you could spend less in retirement without a significant drop in standard of living.
 
2012-07-06 01:13:50 PM
Why worry? Another 4 years of Obama and we'll all be suckling at the government teet. We won't have to worry about money, only running out of unicorns.
 
2012-07-06 01:14:40 PM
Probably also going to have to leave the US at some point, unless your "retirement" plan is dying from an easily preventable illness.
 
2012-07-06 01:15:50 PM

MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.


It's 11x what your salary will be at retirement age. E.g., if you're making $50K now, and retiring in 25 years, you need 11x $105K... or about $1.1M to keep a similar life-style.

Personally, I'm shooting for total savings of around 25x my current salary, because I want to retire early and not worry about paying for things.
 
2012-07-06 01:18:10 PM

MugzyBrown: jjorsett: I hate to ruin your day, but you now need 11 times your annual salary to retire

And I hate to ruin anyone else's, but I'm already there, and then some.

Not too hard to save $100k


Now now, let's not get catty.

i47.tinypic.com
 
2012-07-06 01:26:21 PM
11X ? covered.
 
2012-07-06 01:26:37 PM

Franco: As a member of generation y with social security likely gone by the time we reach what ever jacked up age retirement is set at. Our source of food is likely the delicious bone marrow of the boomers.


Delicious leukemia.
 
2012-07-06 01:28:04 PM

The Homer Tax: You need to figure out how much money you want to live off of after retirement. Then you need to figure out a reasonable interest rate you can get on X amount of invested dollars. Then you need to figure out how much next egg you need where that interest is your new "Salary."

Say you want to live off of 50k annually in retirement. You can reasonably invest in I don't know bonds or something at 5% (I'm making this up). Therefore you need $1,000,000 invested in those bonds to live.

Saving earlier pays later due to the magic of compound interest.

It's not easy, but it's also not complicated.


Wrong thread buddy. That was yesterday.
 
2012-07-06 01:30:16 PM

jjorsett: 11X must come from an assumption that you'd be willing to spend down to your last dollar, and that you could spend less in retirement without a significant drop in standard of living.


The key assumption being that you are no longer paying a mortgage at that time.
 
2012-07-06 01:30:43 PM

LittleKidLover: MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.

Came here to say THIS. That's less than half of what we were planning on saving...curious.


Inflation halves the purchasing power every 20ish years. 1.035^20=2 3.5% inflation is expected.

Or it could halve in a decade like the 70's.
 
2012-07-06 01:33:16 PM
Bullet(s) have have gone up how much!?!
 
2012-07-06 01:33:43 PM

H31N0US: jjorsett: 11X must come from an assumption that you'd be willing to spend down to your last dollar, and that you could spend less in retirement without a significant drop in standard of living.

The key assumption being that you are no longer paying a mortgage at that time.


Also most assume that you will not be out commuting costs and other costs associated with work. I know I am spending about 6% of my income in commuting costs.
 
2012-07-06 01:35:55 PM

jjorsett: LittleKidLover: MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.

Came here to say THIS. That's less than half of what we were planning on saving...curious.

If you go by what financial planners recommend, you can draw down your savings at 4% per year indefinitely. That would translate into 25X your annual salary, assuming you wanted the same level of spending as when you were working. 11X must come from an assumption that you'd be willing to spend down to your last dollar, and that you could spend less in retirement without a significant drop in standard of living.


I guess that would translate into 25X your annual salary, if you a) Don't know how to do math, and b) Don't realize that by not having to save for retirement during retirement, you can keep your spending level the same even though your income is lower.
 
2012-07-06 01:36:35 PM

jjorsett: LittleKidLover: MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.

Came here to say THIS. That's less than half of what we were planning on saving...curious.

If you go by what financial planners recommend, you can draw down your savings at 4% per year indefinitely. That would translate into 25X your annual salary, assuming you wanted the same level of spending as when you were working. 11X must come from an assumption that you'd be willing to spend down to your last dollar, and that you could spend less in retirement without a significant drop in standard of living.


That was always my goal 4% of 2 milllion $80,000 a year. (It doesn't look like I will make half that). Unless you are quite fortunate though, It is ok to spend down to your last dollar. Probably a smarter goal since a major illness or need for home care and all that extra money goes to the hospital or nursing home.

In the 90's when I started looking at retirement 4% was what you would expect out of a CD or garunteed investment. I don't think that 4% is a conservative return anymore.
 
2012-07-06 01:44:24 PM
FTA: You need to set aside at least 11 times your final year's salary in your nest egg to maintain your pre-retirement standard of living in retirement,

Age 61, quit job, become part-time Walmart greeter for final year, beat system.
 
2012-07-06 01:44:53 PM

TheGogmagog: jjorsett: LittleKidLover: MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.

Came here to say THIS. That's less than half of what we were planning on saving...curious.

If you go by what financial planners recommend, you can draw down your savings at 4% per year indefinitely. That would translate into 25X your annual salary, assuming you wanted the same level of spending as when you were working. 11X must come from an assumption that you'd be willing to spend down to your last dollar, and that you could spend less in retirement without a significant drop in standard of living.

That was always my goal 4% of 2 milllion $80,000 a year. (It doesn't look like I will make half that). Unless you are quite fortunate though, It is ok to spend down to your last dollar. Probably a smarter goal since a major illness or need for home care and all that extra money goes to the hospital or nursing home.

In the 90's when I started looking at retirement 4% was what you would expect out of a CD or garunteed investment. I don't think that 4% is a conservative return anymore.


The 4% rule does not come from the idea that you will conserve all of your capital during retirement; it comes from the idea that you will spend money, but make a certain amount back on your assets, and hopefully not go broke over the next 30 years or whatever. It's more about not leaving the kids an inheritance than it is about living off your income.
 
2012-07-06 01:49:35 PM
16x is a more accepted number.
And here's the trick. Subtract what you save from your annual salary.Because you're not used to spending that money anyway.
Say you make 50 and save 10%, or 5. You want to end up with 16 x 45. with interest, that is doable in your working life.
But say you make 50 and save 25%, or 12.5. Now you need 16 x 37.5, and you're getting there 2.5 times faster, and that's before it gets turbocharged by interest.
-If you have average investments, your savings should double in about 8 years - Not counting what you add to it.
 
2012-07-06 01:51:51 PM
At my current rating of saving for retirement, the following things will happen first:

1) global warming will stop after the fossil fuels run out and the climate will snap back into ice age state;
2) a cheap effective cure for male pattern baldness will allow the Captain of the Federation Star Ship Enterprise to grow a full head of wavy hair;
3) Israel and Palestine will resolve their differences by flipping a coin, with the loser colonizing Mars.

And then there's always death--the retirement plan that is within almost everybody's budget (provided you stick to the basics such as a cardboard coffin and late night dumping in an empty lot).

While adding several hundred people to my family tree over the last three or four days, I discovered one family member who lived to 101 years old and several who lived into their 90s. Things are not looking good for my savings lasting out my life expectancy. Here's hoping that a cure for mortality isn't discovered before I have enough money to live forever, like the Koch Brothers and the Sultan of Brunei.
 
2012-07-06 01:52:54 PM
I like how the other guy said you could get by on only 10x your salary.

Fortunately for me, I'm planning on the Buffet plan.

Wasted away again in Margaritaville
Searching for my lost shaker of salt....
 
2012-07-06 01:53:21 PM
My retirement plan is ubasute.
 
2012-07-06 01:57:41 PM
That is probably true if nothing changes... but the reality is you need to have enough to live at whatever percentile you're at now, income wise. If everyone started saving double what they are, and you remained on the 11x plan, you'd be screwed.
 
2012-07-06 02:08:41 PM
I don't intend to retire. My last years will be running a distillery and riding the fence line daily with the pedros and riding herd on the juvenile deliquients working the farm to feed their sorry asses.

/future grumpy old man with a shotgun
 
2012-07-06 02:14:03 PM
taylorbrooks.org

"You don't need a million dollars to do nothing, man. Take a look at my cousin: he's broke, don't do shiat."
 
2012-07-06 02:30:50 PM
I plan to move to a country with a favorable exchange rate and low costs of living.
 
2012-07-06 02:32:30 PM

jjorsett: LittleKidLover: MugzyBrown: 11x's seems awfully low... or is it 11x's my inflation adjusted salary? I don't think I can live off 11xs my salary for 25 years.

Came here to say THIS. That's less than half of what we were planning on saving...curious.

If you go by what financial planners recommend, you can draw down your savings at 4% per year indefinitely. That would translate into 25X your annual salary, assuming you wanted the same level of spending as when you were working. 11X must come from an assumption that you'd be willing to spend down to your last dollar, and that you could spend less in retirement without a significant drop in standard of living.


But you shouldn't need as much year-to-year when you are retired as when you're working.

One of the conditions is to have stuff paid off (house, credit cards, cars, etc...), which will decrease your income needs. Another thing is that you are not saving up money for retirement any more, which decreases your income needs.

Example:

You make 70,000 a year your last year working. Out of that 70,000, you are giving up 6,000/year towards retirement and 10,200/year towards your house mortgage. If you had 11x your salary in savings (770k) then you could draw 4% off of that every year (30,800) and combine it with social security (~14,000/year) you would end up with about 45,000 a year... which isn't that much different than the 55,000/year you made while working after you subtract that house and 401k payments.

The gap is expected to be made up because you will need less new cars, new work clothes, cooking more at home, etc...

My napkin math is kind of silly, but hopefully it illustrates what they're trying to say.
 
2012-07-06 02:32:49 PM

EnviroDude: After what Obama has done to us, we will all be greeters at Walmart eating canned cat food. Little Friskies seems to be the most appealing.


??????????

I'm sorry you sold into the stock market crash, but those of us who held on and/or doubled down have seen our retirement accounts triple or even quadruple in value.

DubyaHater: Why worry? Another 4 years of Obama and we'll all be suckling at the government teet. We won't have to worry about money, only running out of unicorns.


Ever consider that you just suck at investing?

I don't know what you two are biatching about, the Obama presidency has been spectacularly good for my investments, the Bush presidency on the other hand was spectacularly bad for my investments.
 
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