Comments on: Estimating Our Needed Retirement Nest Egg http://www.mymoneyblog.com/estimating_our.html Personal Finance and Investing Blog Sat, 11 Feb 2012 21:29:12 +0000 hourly 1 By: cs http://www.mymoneyblog.com/estimating_our.html#comment-3159 cs Tue, 14 Mar 2006 22:55:06 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3159 Simple, just ask your parents how much they need/use per year after they retired, and factor in inflation /interest rate to get the future value you will need when you retire, assuming you follow your parents' spending habit :) Simple, just ask your parents how much they need/use per year after they retired, and factor in inflation /interest rate to get the future value you will need when you retire, assuming you follow your parents’ spending habit :)

]]> By: Todd http://www.mymoneyblog.com/estimating_our.html#comment-3158 Todd Fri, 20 Jan 2006 18:16:48 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3158 The new conventional thinking is, you will need 100% of your income to retire. Also, 40 years from now, inflation will cause things to cost about 3 times more than they do now so I predict I will need about 3 times what we make now (I feel fairly confident our lifestyle have about topped out). I use 8% return which changes to 5% 5 years to retirement to forcast how much we will have. Remember, being old and without a job can be expensive. You have lots of medications, expensive health insurance, hopefully long-term care insurance, and prob. some traveling and/or hobbies to fill the time with. The new conventional thinking is, you will need 100% of your income to retire. Also, 40 years from now, inflation will cause things to cost about 3 times more than they do now so I predict I will need about 3 times what we make now (I feel fairly confident our lifestyle have about topped out). I use 8% return which changes to 5% 5 years to retirement to forcast how much we will have. Remember, being old and without a job can be expensive. You have lots of medications, expensive health insurance, hopefully long-term care insurance, and prob. some traveling and/or hobbies to fill the time with.

]]> By: Jonathan http://www.mymoneyblog.com/estimating_our.html#comment-3157 Jonathan Fri, 20 Jan 2006 17:58:02 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3157 First, remember that this is from the book, not me. That said, I used to think the expenses thing too. Many expenses will go down when you retire - saving for retirement, work expenses, etc. But many expenses will go UP - namely healthcare. That's the big variable. Paying for your own healthcare at 60+ is going to be expensive. Non-medicare nursing home? Nurses aide? Crazy. Of course maybe travel and greens fees too =) There's just so many variables, I think 100k a year is pretty conservative. First, remember that this is from the book, not me. That said, I used to think the expenses thing too. Many expenses will go down when you retire – saving for retirement, work expenses, etc.

But many expenses will go UP – namely healthcare. That’s the big variable. Paying for your own healthcare at 60+ is going to be expensive. Non-medicare nursing home? Nurses aide? Crazy. Of course maybe travel and greens fees too =)

There’s just so many variables, I think 100k a year is pretty conservative.

]]> By: Miller http://www.mymoneyblog.com/estimating_our.html#comment-3156 Miller Fri, 20 Jan 2006 16:51:05 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3156 I've heard that 80% thing also... but I doubt it highly. Here's what I'm thinking. 20% of 75k is 15k. So if you need to put away 15k a year, than if you are making ~75k, you are putting 20% into retirement. We can fudge those numbers some, but basically, that ~20% is close to what I hear you should save for retirement. Roughly. So, I think when "they" say you need 80% of your final salary when you retire, they are basically just taking into account that you don't save for retirement once you are in retirement (duh!). So if you want the same amount of money to live on once you are retired, you need to plan on 80%. Now all that is good. My problem is that (in most situations), you don't need the same amount of money to live on anymore! For example, your house is probably paid off. Your kids are on their own. Etc etc. Now, as they state things, they are correct. I just think the point should be made that sometime just before before retirement, a lot of expenses will start dropping away. And unless your lifestyle takes all that money and starts living it up big time, you'll have more and more money to put INTO retirement. You won't really *need* that 80% since once those expenses go away, you should have some extra montly cash to put away or do whatever with... I’ve heard that 80% thing also… but I doubt it highly. Here’s what I’m thinking. 20% of 75k is 15k. So if you need to put away 15k a year, than if you are making ~75k, you are putting 20% into retirement. We can fudge those numbers some, but basically, that ~20% is close to what I hear you should save for retirement. Roughly. So, I think when “they” say you need 80% of your final salary when you retire, they are basically just taking into account that you don’t save for retirement once you are in retirement (duh!). So if you want the same amount of money to live on once you are retired, you need to plan on 80%. Now all that is good.

My problem is that (in most situations), you don’t need the same amount of money to live on anymore! For example, your house is probably paid off. Your kids are on their own. Etc etc. Now, as they state things, they are correct. I just think the point should be made that sometime just before before retirement, a lot of expenses will start dropping away. And unless your lifestyle takes all that money and starts living it up big time, you’ll have more and more money to put INTO retirement. You won’t really *need* that 80% since once those expenses go away, you should have some extra montly cash to put away or do whatever with…

]]> By: nyc money http://www.mymoneyblog.com/estimating_our.html#comment-3155 nyc money Thu, 19 Jan 2006 22:54:03 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3155 Yeah social security is racist, retirement only works for asian woman, since they seem to live forever. Yeah social security is racist, retirement only works for asian woman, since they seem to live forever.

]]> By: Jonathan http://www.mymoneyblog.com/estimating_our.html#comment-3154 Jonathan Thu, 19 Jan 2006 18:02:48 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3154 Retirement at 65 is a relatively recent invention. I think most people used to work on the farm or whatever until they dropped dead. Then golf was invented =) Retirement at 65 is a relatively recent invention. I think most people used to work on the farm or whatever until they dropped dead.

Then golf was invented =)

]]> By: nyc money http://www.mymoneyblog.com/estimating_our.html#comment-3153 nyc money Thu, 19 Jan 2006 16:23:21 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3153 This sounds weird, but I actually know very few people that ever retired, usually one person continues working in the family, or they just die before than. Kind of morbid. This sounds weird, but I actually know very few people that ever retired, usually one person continues working in the family, or they just die before than. Kind of morbid.

]]> By: Jesse http://www.mymoneyblog.com/estimating_our.html#comment-3152 Jesse Thu, 19 Jan 2006 16:09:08 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3152 Whenever I'm doing retirement calcs, I always error on the conservative side: -You'll need to save more money than you think -The market will not perform as well as you think -Inflation will be higher than you think -Your expenses will be higher than you think -Your income will be lower than you think -You'll live until you're 130... etc. :) Whenever I’m doing retirement calcs, I always error on the conservative side:

-You’ll need to save more money than you think
-The market will not perform as well as you think
-Inflation will be higher than you think
-Your expenses will be higher than you think
-Your income will be lower than you think
-You’ll live until you’re 130…

etc. :)

]]> By: A http://www.mymoneyblog.com/estimating_our.html#comment-3151 A Thu, 19 Jan 2006 14:38:04 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3151 who can estimate the final salary when you retire? it should use the current salary in the formula... who can estimate the final salary when you retire? it should use the current salary in the formula…

]]> By: Justanotherblogger http://www.mymoneyblog.com/estimating_our.html#comment-3150 Justanotherblogger Thu, 19 Jan 2006 13:53:03 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3150 A better estimate would be a % of your <b>expenses</b>, not your salary. Ultimately, you want to have enough to cover your expenses! A better estimate would be a % of your expenses, not your salary. Ultimately, you want to have enough to cover your expenses!

]]> By: Lauren http://www.mymoneyblog.com/estimating_our.html#comment-3149 Lauren Thu, 19 Jan 2006 13:49:53 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3149 I don't know about you, but over the course of decades I definitely expect my income to be hugely different than it is now...I couldn't even start to guess, but I'd definitely be thinking higher than low 6 figures. (Even taking inflation out of the picture). However, instead of trying to guess what I'll be making in 40-something years, I've been calculating off a number that seems to be a safe amount of money--triple our current expenses--because it's a little less arbitrary. I don’t know about you, but over the course of decades I definitely expect my income to be hugely different than it is now…I couldn’t even start to guess, but I’d definitely be thinking higher than low 6 figures. (Even taking inflation out of the picture). However, instead of trying to guess what I’ll be making in 40-something years, I’ve been calculating off a number that seems to be a safe amount of money–triple our current expenses–because it’s a little less arbitrary.

]]> By: Jonathan http://www.mymoneyblog.com/estimating_our.html#comment-3148 Jonathan Thu, 19 Jan 2006 05:21:46 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3148 "...A suggested estimate is 80% of your <strong>final salary when you retire</strong>..." “…A suggested estimate is 80% of your final salary when you retire…”

]]> By: Sri http://www.mymoneyblog.com/estimating_our.html#comment-3147 Sri Thu, 19 Jan 2006 05:12:48 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3147 That's why you must love your kids and hopefully that they will take care of you when you are old :) Well thats how it works in Asian countries. That’s why you must love your kids and hopefully that they will take care of you when you are old :)

Well thats how it works in Asian countries.

]]> By: A http://www.mymoneyblog.com/estimating_our.html#comment-3146 A Thu, 19 Jan 2006 05:11:11 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3146 no, don't count on social security. I put a $0 on that, too. Who knows what happens 30+ years from now with the deficit the country has. no, don’t count on social security. I put a $0 on that, too. Who knows what happens 30+ years from now with the deficit the country has.

]]> By: A http://www.mymoneyblog.com/estimating_our.html#comment-3145 A Thu, 19 Jan 2006 05:06:55 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3145 you're in school but still have a household income of $120,000 annually. You have a rich wife!!! you’re in school but still have a household income of $120,000 annually. You have a rich wife!!!

]]> By: Jonathan http://www.mymoneyblog.com/estimating_our.html#comment-3144 Jonathan Thu, 19 Jan 2006 05:01:43 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3144 The $15k number is at present-value, which I think is what's more important I think as that's the easier way to visualize the amount of money we're talking about. Thanks for reminding me that I forgot to add that the $15k must be adjusted for inflation (+3%) every year as well. The $15k number is at present-value, which I think is what’s more important I think as that’s the easier way to visualize the amount of money we’re talking about.

Thanks for reminding me that I forgot to add that the $15k must be adjusted for inflation (+3%) every year as well.

]]> By: MP http://www.mymoneyblog.com/estimating_our.html#comment-3143 MP Thu, 19 Jan 2006 04:51:38 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3143 Shouldn't you dumb down that number (2.044m) to present value? Shouldn’t you dumb down that number (2.044m) to present value?

]]> By: Bill http://www.mymoneyblog.com/estimating_our.html#comment-3142 Bill Thu, 19 Jan 2006 04:43:16 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3142 Any money that happens to come my way from Social Security is definetly going to be a bonus. I'm positive there will be something provided in 30 years when I retire, but, like you, I refuse to plan for it. If I can make it without, and I will, it becomes a slush fund or even a source for charitable contributions. Any money that happens to come my way from Social Security is definetly going to be a bonus. I’m positive there will be something provided in 30 years when I retire, but, like you, I refuse to plan for it. If I can make it without, and I will, it becomes a slush fund or even a source for charitable contributions.

]]> By: Will Kirby http://www.mymoneyblog.com/estimating_our.html#comment-3141 Will Kirby Thu, 19 Jan 2006 04:31:15 +0000 http://www.mymoneyblog.com/wordpress/archives/2006/01/estimating-our-needed-retirement-nest-egg.html#comment-3141 It's hard to imagine generating that type of wealth. It only goes to show how you've got to let time and dedication be on your side! It’s hard to imagine generating that type of wealth. It only goes to show how you’ve got to let time and dedication be on your side!

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