I'm watching an "expert" talk about how much you need to retire on the Today Show. She's saying you need 7x annual income to retire, so someone making $50,000 is $350,000. That's a SWR of 14%.
Why the ridiculously low number? I assume some tax fudging and cost cutting is involved, plus SSI contributions were mentioned. I thought this was interesting; I remember back in 2006-2007 I was hearing much higher numbers. Is this a different Wall Street marketing tactic--trying to lower the bar to make investing seem less impossible and lure more people into the market?
The new buzzword: 7x annual income
Probably....so many people in their 40's and up have so little saved that even making $50k the idea of saving the $1M by 65 they used to bandy about makes retirement seem impossible to them so they don't save at all.
I think is really a mix.... Wall Street trying to get people to invest and Washington for people to just save period.
After all....deficit or not...if people have nothing saved they are going to demand that SS payments be increased so they can live like they have been all their lives.
And nothing prods people to be voters than their own self interest.
I think is really a mix.... Wall Street trying to get people to invest and Washington for people to just save period.
After all....deficit or not...if people have nothing saved they are going to demand that SS payments be increased so they can live like they have been all their lives.
And nothing prods people to be voters than their own self interest.
Probably....so many people in their 40's and up have so little saved that even making $50k the idea of saving the $1M by 65 they used to bandy about makes retirement seem impossible to them so they don't save at all.
I think is really a mix.... Wall Street trying to get people to invest and Washington for people to just save period.
After all....deficit or not...if people have nothing saved they are going to demand that SS payments be increased so they can live like they have been all their lives.
And nothing prods people to be voters than their own self interest.
I think is really a mix.... Wall Street trying to get people to invest and Washington for people to just save period.
After all....deficit or not...if people have nothing saved they are going to demand that SS payments be increased so they can live like they have been all their lives.
And nothing prods people to be voters than their own self interest.
People are obsessed with finding the magic number lately. You're probably right about them lowering the number so they don't scare people into throwing up their hands. This is the first time I've heard something as low as 7x. I've heard everything from 8x to 13x in the last month or so. IIRC, AARP's official number is 9x.
This is my favorite recent "how much" article:
http://www.freemoneyfinance.com/2012/11 ... urity.html
This is my favorite recent "how much" article:
http://www.freemoneyfinance.com/2012/11 ... urity.html
Yes, it's a Wall Street response to the disappearance of the retail retirement investor. Wells Fargo has taken a different approach, doing a study (survey) to show that people who have $250,000 in retirement savings are "confident" in retirement.
https://www.wellsfargo.com/press/2012/2 ... Retirement
https://www.wellsfargo.com/press/2012/2 ... Retirement
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secretwealth
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Christopherjart
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I think this might be based on a recent Fidelity report that tried to tell you how much money you need to retire. Here are two links that discuss it (just top results on Google):
http://portfolioist.com/2012/09/24/savi ... -part-two/
http://www.marketwatch.com/story/retire ... ry_popular
To answer secretwealth's original question, I can sort-of make the numbers work like this:
First, assume that the person in retirement will only need 80% of pre-retirement income, so we're looking at $40,000. (this 80% figure is a common adjustment)
Second, they must be expecting Social Security. My number for that is about $23,000 per year, even taking it at 62. (Includes spouse at 50%. I think my numbers are slightly higher than average for SS, so maybe take 10% off this)
If you did a 5% SWR of $350,000, that would be $17,500, so you would roughly have the $40,000 income.
I'm pretty sure the Social Security wouldn't be taxed, neither would there be Fed taxes on the $17,500. (sound right?)
http://portfolioist.com/2012/09/24/savi ... -part-two/
http://www.marketwatch.com/story/retire ... ry_popular
To answer secretwealth's original question, I can sort-of make the numbers work like this:
First, assume that the person in retirement will only need 80% of pre-retirement income, so we're looking at $40,000. (this 80% figure is a common adjustment)
Second, they must be expecting Social Security. My number for that is about $23,000 per year, even taking it at 62. (Includes spouse at 50%. I think my numbers are slightly higher than average for SS, so maybe take 10% off this)
If you did a 5% SWR of $350,000, that would be $17,500, so you would roughly have the $40,000 income.
I'm pretty sure the Social Security wouldn't be taxed, neither would there be Fed taxes on the $17,500. (sound right?)