If you can read this, either the style sheet didn't load or you have an older browser that doesn't support style sheets. Try clearing your browser cache and refreshing the page.

(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  
•       •       •

4346 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»



111 Comments   (+0 »)
   
View Voting Results: Smartest and Funniest

Archived thread

First | « | 1 | 2 | 3 | » | Last | Show all
 
2012-07-06 02:34:59 PM  

Xetal: 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.


Ummm....you expect to have a mortgage until the day you retire? Wow, just wow, I'd think I'd just burn the farker to the ground and rent until death if I had a mortgage at retirement. Hell I don't have a mortgage now, I have not for the last seven years, and I'm only 39.
 
2012-07-06 02:44:29 PM  
that assumes what, that you'll live 11 years in retirement (maybe a little more, since presumably you were using part of your salary for expenses that will have been eliminated by then---house payments, saving for retirement, etc...)
 
2012-07-06 02:59:45 PM  

Xetal: 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.


Actually you're probably giving up more than that on your mortgage - if you're "living within your means" you could still be spending around 30% - in this case 21K/year - on housing costs. So now you're down to only needing 43K a year to live minus mortgage and 401K, which your math more than takes care of. Also figure buried in the "mortgage" part of the calculation are property taxes and house insurance, both of which don't magically go away when you retire. So in this case it would probably be close to a wash. Either way, you're good.
 
2012-07-06 03:12:26 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.


Hurr dee durrr dee derp to you to!
 
2012-07-06 03:15:02 PM  

H31N0US: 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 image 274x184]


Me too!

cdn.cosbysweaters.com

/don't you have to be at the gym?
 
2012-07-06 03:17:13 PM  
Here's what people forget. OLD PEOPLE VOTE

My retirement plan is to tax the CRAP out of the younger generations when me and my senior citizen biddies go the polls.
 
2012-07-06 03:27:38 PM  
These kinds of calculations always make absurdly conservative assumptions, like never drawing down the principle. Keep in mind that investment firms profit more the more you invest, so they have an interest in recommending that you vastly over-save. I don't plan on having children, so there is absolutely no reason I can't reverse mortgage my house and draw down on my 401k and plan it so I run out of money at the age of 90. If I live that long, I won't be doing anything except sitting in front of a tv waiting to die anyway. I can manage that on a measly SS check.
 
2012-07-06 03:41:41 PM  
No problem! I'll just put away 11% of my salary for 100 years!
 
2012-07-06 03:52:57 PM  

Tommy Moo: run out of money at the age of 90. If I live that long, I won't be doing anything except sitting in front of a tv waiting to die anyway. I can manage that on a measly SS check.


They certainly are conservative in their numbers. And do want to put the fear of God in people to save. Which is good (getting people to worry about retirement) until it isn't (people just stop trying since it doesn't seem possible).

Medical bills beyond Medicare and long-term-care-facility bills could kill any nest egg you've got. Sure.

But, if you're optimistic anyway, you should hope to get a number of years between mid-60s and "in the home". I know, you want cruises, Europe, and motorhomes. Get over it. If you still have a mortgage at retirement, do you at least have some equity if you sell? Lots of places in the US with houses of $50k or less. Property tax on those is often under $1000 a year. You have time to cook and clip coupons. Entertainment is cheap. You don't have to commute or buy work clothes.

Several million Americans live on nothing but a social security check. They don't die starving.

And, yeah, if I get to 90, I'll presumably go into whatever hole Medicare can put me in. Hopefully the shiat conditions finish me off faster.
 
2012-07-06 03:55:29 PM  

Slaves2Darkness:

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.


Why did you invest in socialism?

/because it pays off, obviously
 
2012-07-06 04:02:23 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.


Why would Walmart be open if we are "all" so poor we can't even afford real food?

You don't... you don't really know a lot of things, do you?
 
2012-07-06 04:03:25 PM  

Lawnchair: long-term-care-facility bills could kill any nest egg you've got


Na, what you do is come to about 65 you gift the max to your children each year with the stipulation that they hold onto it. If you get in a pinch but are still living on your own, you can have them gift it back. If you go to the home you already have passed on a good amount of wealth to your children and you can have medicare pick up your home bill.
 
2012-07-06 04:12:50 PM  
11*0=0
 
2012-07-06 04:13:32 PM  
Five acres and an orchard, and a .30/30 for those pesky deer.

/venison jerky anyone?
 
2012-07-06 04:14:28 PM  

Saiga410: Lawnchair: long-term-care-facility bills could kill any nest egg you've got

Na, what you do is come to about 65 you gift the max to your children each year with the stipulation that they hold onto it. If you get in a pinch but are still living on your own, you can have them gift it back. If you go to the home you already have passed on a good amount of wealth to your children and you can have medicare pick up your home bill.


Worked for my grandparents.
 
2012-07-06 04:16:49 PM  
Or you could just breed like a Duggar and prep at least a couple of the sprogs for senior-care duty later on.
 
2012-07-06 04:46:49 PM  
I look forward to eating Soylent Green in my retirement.
 
2012-07-06 04:48:58 PM  
When my investments generate enough interest and dividend income equal a year's salary, then I can retire.

Before then, not planning to.
 
2012-07-06 05:01:11 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.


Name brand? You wealthy bastard!

Xetal:

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.


One biggie you missed is the need to factor in health care costs, including long term care. That shiat is expensive and only continues to go up in price.
 
2012-07-06 05:58:54 PM  
I will probably die penniless having put in a full eight hours the day before.
 
2012-07-06 06:02:41 PM  
That's all? Why the hell have I been saving so much money then?!?
 
2012-07-06 06:13:34 PM  

CognaciousThunk: Or you could just breed like a Duggar and prep at least a couple of the sprogs for senior-care to win the lotto later on.


FTFM. I've been planning this for years...
 
2012-07-06 06:38:25 PM  
You need more than 11x your annual salary to retire, unless you made a decent enough amount that Social Security writes you the bigger checks, and you hold off retirement extra years.

Granted, 11x is far, far more than most people have when they finally retire, but we shouldn't be encouraging people to have that little, where possible. But, I don't really believe most people _can_ save that much nowadays, unless they start very early and have nothing go wrong. I know what one of my family members (who works full time) is able to save based on his wage, and short of cutting out food, he'd have to save for about 100 years with a normal return (read: not have ten years of no gains as has recently happened) to get anywhere near 11x his salary.

A lot of people are farked. I truly hope they manage to figure out a way to fix Social Security.
 
2012-07-06 06:54:13 PM  
*Kisses my actually-healthy government backed defined benefit pension plan*

/Living the 2nd Canadian dream.
//First is to have at least one of your kids drafted into the NHL.
 
2012-07-06 07:01:18 PM  
Well that does it.

Going to have to kill the parents and collect the insurance.
 
2012-07-06 07:49:34 PM  
Damn, that's a lot of cocksucking.
 
2012-07-06 08:14:05 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.


My mortgage will be paid off 5 years before I retire. On track for 15x my annual salary, plus my company has a defined benefit plan.
 
2012-07-06 08:15:11 PM  

Slaves2Darkness: 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.


My guess is they never learned to buy when everyone else panic sells.
 
2012-07-06 09:02:36 PM  

Katie98_KT: 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!!!


Got you beat! I have $1.20 and I've been working for 12 years. I only have to work another 85 million years. give or take.
 
2012-07-06 09:51:14 PM  

Mugato: I don't have any intention of retiring. Which is probably fortunate for me.


Same here.

Im in a profession where age/experience is still a real value. It takes 20 years to even be considered "seasoned". Hell, there isnt one award-level practitioner who doesnt have a head full of gray hair.
 
2012-07-06 10:55:11 PM  
my 32 year military pension is worth $1.1m in a 4% annuity the rest is just gravy and SS in six years
 
2012-07-06 11:02:52 PM  

pcwolf: my 32 year military pension is worth $1.1m in a 4% annuity the rest is just gravy and SS in six years


32 years eh? Thank you for your service Master Chief, and enjoy your retirement!
 
2012-07-06 11:05:57 PM  
Don't fret if you don't have exactly 11 times set aside. David Laibson, a Harvard University economics professor, says you should be able to get by with 10 times your salary.

Oh. Well, then.
 
2012-07-06 11:55:27 PM  
Hmm, I only spend about 1/4th of my annual salary per year. For argument sake, let's say this doubles (due to medical expenses related to old age and the like).

So, 11x my annual salary would give me 22 years of spending dough?
 
2012-07-07 12:37:03 AM  

H31N0US: 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 image 274x184]


That picture pisses me off!
 
2012-07-07 12:38:42 AM  
lordargent
So, 11x my annual salary would give me 22 years of spending dough?

The key is interest. Save 16x annual salary. Earn 9% on the investment. Subtract 3% inflation. Have 96% of annual salary for infinite number of years. Of course, if the numbers aren't so much in your favor, you eat into capital.

If you save 75% of your annual pay, you could retire forever after less than four years, three months of work.
 
2012-07-07 01:04:27 AM  
Retirement is wasted on the old.

Spend a little time on figuring out something you can do differently so you have more free time now. Sure, the world needs it's ditch diggers and accountants, but you don't have to be one of those mindless drones. Unless that's the lifestyle you want, something that looks like your parents. Remember to include the cost and time to drive to an office to deal with people you don't like on projects you hate.

I'm close to firing myself and keeping the income. I've already outsourced most of my job, now I just need an exclusive product to have my fulfillment house distribute.

/Slightly afraid I'll turn full recluse
 
2012-07-07 01:36:04 AM  

NateAsbestos: 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.

Why would Walmart be open if we are "all" so poor we can't even afford real food?

You don't... you don't really know a lot of things, do you?


It's worse than that...Walmart is phasing out the door greeters. He has to come up with a plan B for retirement.
 
2012-07-07 01:44:23 AM  
I can do what I do now until the day I die. I'd be fine doing that.
 
2012-07-07 02:06:27 AM  
static7.businessinsider.com
 
2012-07-07 03:25:13 AM  
By the time I'm 80 (when I'll be able to receive a $5 Social Security voucher good at Carl's Jr ["F*ck You, I'm Eating!"™]), I'm sure it will take 11 times my annual salary to re-tire my car. And by car, I mean bicycle or Hoverround.
 
2012-07-07 03:57:04 AM  
Wonder if that assumes you've paid off your home mortgage and only have low property taxes and maintenance for living expenses.

Old + renting = hosed
 
2012-07-07 04:32:20 AM  
I plan on a life of collective living in the desert with other freethinking and open-minded individuals. We will shun federal currency for something more common and accessible like... bottle caps.
 
2012-07-07 06:17:38 AM  

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.



Nobody cares about your fantasy world.
 
2012-07-07 06:21:12 AM  

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.



this is what I mean, you have no brains at all. If you think you need to keep up the same spending level when you retire as when you were working, with a mortgage, eating out at work, commuting to work daily, and all the other expenses you don't have anymore as a retired person, then you might just be a clueless idiot who thinks he's going to take over his dads business and spends most days watching that Cramer idiot on CNBC
 
2012-07-07 07:12:18 AM  
Ok... Let me see here. To put away 10x your salary requires 100 years of working and putting 10% away. Or... Putting 20% of your salary away for 50 years.

Now that's if you put it away in cash, and you ignore inflation.

Every other scheme relies on the stock market. Which is a bad idea because the boomers will be cashing out over the next 30 years. All of that market valuation will be withdrawn. Either by the boomers themselves or their heirs.

What drives the stready "growth" of the market was the fact there are more suckers putting money in than taking out. And if the boomers had more kids, the cycle would have continued. But they had this annoying complex that led them to have fewer kids. They outnumber generation x. And generation y, while larger that gen.x is still smaller than the boomers.

Not at a given age. But now. 50 somethings outnumber 20 somethings. Which means there will still be fewer 40 somethings when the boomers are 70 somethings.

P.S. this means you can count on generally negative returns on the stock market until the boomers die off and we start getting more young people than old people.
 
2012-07-07 07:13:23 AM  

Beerguy: Wrong.

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

/My real retirement plan


I was recommending we switch our 401k to a pool to buy lottery tickets.
 
2012-07-07 07:17:12 AM  

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.


Compound interest is gobbled up by the risk of loss and inflation. Unless of course you can find something with zero risk that gets better than a 4% return.
 
2012-07-07 10:53:54 AM  

EnviroDude: 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.


You sound tired E. Dude.
 
2012-07-07 11:40:14 AM  

The Homer Tax: Saving earlier pays later due to the magic of compound interest.


The only compounding I'm seeing is the pounding the stock market gives you. I've been saving for over a decade and have about a year's salary saved up. Savings/Money Market/CD interest doesn't pay anything anymore, and stocks just lose value.
 
Displayed 50 of 111 comments

First | « | 1 | 2 | 3 | » | Last | Show all

View Voting Results: Smartest and Funniest


This thread is archived, and closed to new comments.

Continue Farking
Submit a Link »
On Twitter





In Other Media


  1. Links are submitted by members of the Fark community.

  2. When community members submit a link, they also write a custom headline for the story.

  3. Other Farkers comment on the links. This is the number of comments. Click here to read them.

  4. Click here to submit a link.

Report