At Suburban Dollar, Kyle reminds us that Base Salary Isn’t Everything. Between, 401(k) match, pension (perhaps), and a nice list of other benefits, we can see that salary is just one component of our compensation.
Debt Hawk takes another crack at the Flat Tax. I’m always interested in reading about this when the topic is raised, unfortunately, I think it’s very unlikely for it to ever pass. No flat tax in my future.
On My Super-Charged Life I read A Debt Free Manifesto – 10 Common Sense Reasons To Live Debt Free. Just when I think I’ve heard every spin on why one should avoid debt, another post comes along with a new twist. Good reading.
I saw an article at Bankrate asking Could you be saving too much? It quotes Harvard University economist David Laibson as saying, “About 10 percent of the population is accumulating too much retirement savings in the sense that they could have saved significantly less and still retired with enough resources to continue in the lifestyle they enjoyed during their working life.” I tried to find other citations from Prof Laibson, with no success. I find such unsubstantiated generalities with no link to any data to be curious. I’d bet that in any given group 3/4 believe themselves to be above average. Are this many people really over-saving? I doubt it.
In a view that’s the exact opposite of the above, Free Money Finance is convinced that Americans [are] Not Ready for Retirement. I agree that most of us are not going to be ready, the risk of over-saving is one that few need to worry about.
Adam Baker now staff writing at Get Rich Slowly, wrote about The Curse of a Big-Win Mentality. As I’ve come to appreciate, Adam once again offers an interesting spin on the the idea that one needs to take advantage of small wins as well as the big. He suggests that balance is key, not ignoring one for other.
And last, for today, 7 Tips to Achieve Retirement Success from Redeeming Riches. The post starts by reminding us that retirement is a marathon race, not a sprint, and the post continues with advice to help keep you on a path toward long term success.
Have a great week ahead.
Joe
Hey Thanks for the link Joe! I appreciate it as always!
I think there are a lot more people saving too much than you think Joe.
Just ask the readers. You are probably very financially fit right? Well, I think so am I. More people have much more money than we all think, and that’s why the US economy is strong like bull.
FS
FS- At 47, I have about 10X annual income saved for retirement. The goal is 20 or so, so I am on track. Curious how “too much” gets defined. If I hit my goal early, I can choose to retire or work to have a buffer. After the recent crash, someone who was all set may no long be so well off. So where do you draw that line?
Yup, I think I remember you saying that you have about 10X in a previous comment. I guess your ratio depends on your income as well, b/c 10X on $100,000 is different from 10X on $500,000/yr in income. I would argue saving 10X on a bigger salary is much harder.
Too much is when the actuary says the likelihood of you living past your normalized draw is greater than 90%.
I firmly believe anybody who has a job, who understands pf basics will likely retire with too much.
On this topic I’ll always have more questions than answers.
At the peak of ’07 I was closer to 13X. The effort is easier (in my opinion) if one doesn’t keep up with Joneses and throws all that extra money away. $100,000 provides a very nice lifestyle. At $200K, you should be able to sock away quite a bit, no?
90%? I don’t find a 10% chance of my money running out to be very comforting. I’m looking to add another 9 or two there.
But, let’s look at right now. Assume my goal is to retire at 62. 15 years to go. 6%/yr return (plus deposits) will get me there. Seems reasonable. But look at the last decade. In March, the 10 yr return was flat to negative. So how exactly does one walk that fine line? I’d rather err on the ‘too much’ side that too little.
Actually, the temptations become very great once you make in the $500,000 range. You start looking at $2mil+ houses, paying cash for turbo Porsche 911s and Range Rover Super Chargers etc. It’s exactly b/c you can live comfortably off of $150,000, that the other $350,000 gross becomes “in danger.”
A question here for you though… in a post i wrote for Wise Bread entitled “Knowing When To Walk Away”, I talk about choosing an age to retire instead of a monetary figure since we never know when we’ll pass away.
Have you ever thought about choosing an age i.e 50 to retire, and hanging it all up so you can do everything you’ve always wanted to do?
I always planned to retire when we hit the 20X number. The age at which that will happen just shifts around. Before the dotcom bubble, it was 50 or even younger. Part of it for me is that we have very liberal vacation time, 6 weeks and a few days, plus regular holidays, so we travel if we wish. I have no desire to go away for a month at a time. As far as the expensive cars, etc, no interest. I live in a nice neighborhood, and drive one of the cheapest cars on my street. Neighbors belong to $20K/yr country clubs, I don’t golf. Like Dr Stanley’s Millionaires Next Door, we’ve been happy to live below our means.
20X seems like a lot, which goes back to the question.. how much is enough? 6X my average income is good enough for me, especially since I will be debt free in retirement.
I guess i’m kinda morbid, and I LIKE to think I’ll be dead by 60-65. Hence, that’s why I work so hard now to make and save money so I can be retired by 45. At 45, I’ll have about 10-13X my gross. That’s enough for me, and I’ll be ready to travel the world and do other things more than what 6 weeks a year can a lot me.
Thank you so much for telling your readers about my Flat Tax article. I hope they like it.