Savings %

[Big A]

wow

edit: I have a little under 2 years salary saved, but holy fuck I can't imagine saving 30k a year at my current rate. (which took me close to 7 years to save)

That $60k a year for retirement is relative on your lifestyle as well though. Retirees that did any planning would likely be debt free and own their home, so to be spending $5k a month would take a little extravagance. If that's what they want to do with it though, that's their perogative, and the fruits of planning and working hard earlier in life.

[347Mike]

I don't know the percentage. I throw chunks at it every check along with my 401k. A certain percentage doesn't bother me. I have other things such as investments that pad my savings. One month it could be 10% the next it could be 60%.

I plan on retiring young, hopefully no later than 50.

x2 on what Jody and the guy who mentioned increases in your pay should go to savings. Just about everytime I get a promotion or raise I put that towards savings or 401k (mostly 401k).

x2 on most people don't know how or even know what it takes to save or retire. I have mixed feelings when I tell people that their retired parents have a million, more, or close to it and they look at me like I have no idea what I am talking about or don't believe it.

[Hobie]

slow99, what about tapping principal in retirement? Life expectancy? Your calculations are missing some significant variables.

Have you seen the posts on this board? He's not each board member's personal CFP. Chillax homey, (overly?) broad overview.

[quikag]

slow99, what about tapping principal in retirement? Life expectancy? Your calculations are missing some significant variables.

[jakesford]

Sound advice. Couple other good posts in here as well. I've edited my post...wasn't my objective to come across like a douche - but an unintended consequence.

Going forward, it's very true that most people don't have any clue how much they should be saving to reach their goals. What disturbs me is that many people don't have an idea how to even think about it. I posted this on the old board, maybe it's appropriate for this thread as well:

Here's something to get you thinking about retirement goals and how to get there (and why it's appropriate to think in $/cash flow terms instead of %).

These calculations can be done pretty easily on any financial calculator that performs time value of money calculations.

A. Calculate your retirement needs in first year of retirement (present dollars).

Use an annual inflation adjustment of 2.5% (or 3.5 or 5, just using 2.5% to show the math). Let's say you are currently 30 years old and plan to retire at age 60. You estimate that you will earn 10% a year on your investments until retirement. During retirement, you expect to earn 6% annually on your investments. You anticipate a 25% tax rate during retirement.

1. Say your annual need post-retirement is $60,000 in today's dollars.
2. $60,000 with a 2.5% inflation rate for 30 years will be $125,854.
3. Considering taxes, $125,854/(1-.25) = $167,805.

B. Calculate how much you need at retirement.

1. $167,805/(.06 - .025) = $4,794,429

C. Annual contribution to get you there.

1. $4,794,429(.10)/ (1.10)^30 -1 = $29,147 annual contribution for the next 30 years.

I know you are dumbing down the calculation to prove a point, but you're assuming that you aren't touching the principal once you retire. I'm not leaving my kids $5m when I croak lol.

[roliath]

Use an annual inflation adjustment of 2.5% (or 3.5 or 5, just using 2.5% to show the math). Let's say you are currently 30 years old and plan to retire at age 60. You estimate that you will earn 10% a year on your investments until retirement. During retirement, you expect to earn 6% annually on your investments. You anticipate a 25% tax rate during retirement.

1. Say your annual need post-retirement is $60,000 in today's dollars.
2. $60,000 with a 2.5% inflation rate for 30 years will be $125,854.
3. Considering taxes, $125,854/(1-.25) = $167,805.

B. Calculate how much you need at retirement.

1. $167,805/(.06 - .025) = $4,794,429

C. Annual contribution to get you there.

1. $4,794,429(.10)/ (1.10)^30 -1 = $29,147 annual contribution for the next 30 years.

wow

edit: I have a little under 2 years salary saved, but holy fuck I can't imagine saving 30k a year at my current rate. (which took me close to 7 years to save)

[Rreemo]

I'm in agreement with BroncoJohnny on this one...I take full advantage of employer options through 401K and matching, and our ESPP, but I don't stuff everything else into a savings acct. like the older generations swore by. I do put some in there, but I also keep a decent amount of cash available that is used to buy & sell....I'm always looking for something to buy and flip for a profit, and generally have a number owned assets (not financed) on-hand at any given time....things that will sell quick if the need were to arise.

[mustangguy289]

I am unsubscribing to this thread.

[FreightTrain]

With both my wife and my pension plans if we where 60 today and retired we would collect right at 9k a month in benefits. I also contribute to a non matching 401k and save every extra penny I can scrap up which adds up to about $2,500 a month on average.

[stangin4lyfe]

Max($16,500) into retirement account and I probably save about 40-50% of what I net and been debt free for years.
Food is my biggest cost factor!

[ozzeran]

My savings is negative, but I roll clean. The weekly payments on the Escalade and monthly payments to rent-a-tire are killin' me though!

LOL that's awesome.

[Hobie]

I'm fucked... I started WAY too late, but I'm trying to catch up. I guess it also depends on your age at the time of retirement too since someone might be burning through it longer (not to mention those that live longer). It's thoughts like that, that make me think there will never be enough to put me in a comfort zone. I will never feel caught up, let alone ahead.

That's an awesome breakdown, though. Thanks Jody!

I put myself through college starting at age 23 - when I was 25/26 I started taking personal finance classes and calculating what I will need to retire how I want.

People in my family who make it to a natural death tend to live into their 90's. With advances in modern medicine I might live to be 100+. It's going to take me a stupid amount of money to retire properly.

I'm going to be a crotchety old slum-lord when I "retire."

[Hobie]

My savings is negative, but I roll clean. The weekly payments on the Escalade and monthly payments to rent-a-tire are killin' me though!

[Ruffdaddy]

Sound advice. Couple other good posts in here as well. I've edited my post...wasn't my objective to come across like a douche - but an unintended consequence.

Going forward, it's very true that most people don't have any clue how much they should be saving to reach their goals. What disturbs me is that many people don't have an idea how to even think about it. I posted this on the old board, maybe it's appropriate for this thread as well:

Here's something to get you thinking about retirement goals and how to get there (and why it's appropriate to think in $/cash flow terms instead of %).

These calculations can be done pretty easily on any financial calculator that performs time value of money calculations.

A. Calculate your retirement needs in first year of retirement (present dollars).

Use an annual inflation adjustment of 2.5% (or 3.5 or 5, just using 2.5% to show the math). Let's say you are currently 30 years old and plan to retire at age 60. You estimate that you will earn 10% a year on your investments until retirement. During retirement, you expect to earn 6% annually on your investments. You anticipate a 25% tax rate during retirement.

1. Say your annual need post-retirement is $60,000 in today's dollars.
2. $60,000 with a 2.5% inflation rate for 30 years will be $125,854.
3. Considering taxes, $125,854/(1-.25) = $167,805.

B. Calculate how much you need at retirement.

1. $167,805/(.06 - .025) = $4,794,429

C. Annual contribution to get you there.

1. $4,794,429(.10)/ (1.10)^30 -1 = $29,147 annual contribution for the next 30 years.

By deducting the tax rate, you are essentially saying that you plan for 60K post tax, or over 80k pre tax dollars correct? Something that should go into calculating you needed income post retirement.

[Cooter]

Max 401K contributions and about 40% net household income goes into savings.

For a two person household, getting into a position to live off one (the lower) income makes it very easy to accomplish.

once we are 100% debt-free, our goal is to save 100% of the wife's income