Posted on 01/08/2012 9:57:57 AM PST by Silentgypsy
high earners need to save extremely high percentages of their income -- as much as 77 percent for the 45-year-old just starting to save for retirement at age 62 -- to produce that 80 percent.
The concept underlying Munnell's paper, and a lot of other retirement planning advice, is that you can figure out how much you need to save once you have a number for that 80 percent replacement rate.
But there's reason to believe that oft-quoted 80 percent figure is wildly on the high side. That, in turn, makes the retirement calculations based upon it also wildly off. And that means if you're trying to save enough money to produce that 80 percent figure, you may be putting away too much, or skimping unnecessarily on the early years of retirement.
(Excerpt) Read more at finance.yahoo.com ...
I beg a thousand pardons for screwing up your video game, Your Excellency. I don’t know to which Munnell you refer. (See, I even avoided ending the sentence with a preposition for you, I don’t do that for everybody, you know.)
Alicia Munnell
a recent paper from the Center for Retirement Research at Boston College titled "How much to save for a secure retirement," relies on that 80 percent figure. "Households with earnings of $50,000 and over needed about 80 percent of pre-retirement earnings to maintain the same level of consumption," writes Alicia Munnell, author of the study.
But wait, there's more
Alicia Munnell, director of the Center for Retirement Research at Boston College, admits she has yanked money out of her 401(k) to pay for big purchases, such as a child's honeymoon. "Whenever the kids needed something, I would take money out," says the 66-year-old management professor. "I'm supposed to be smart and savvy because I work in this area and I know all the pitfalls, but I've done a very bad job."
Another personal finance sin Munnell confesses to: In the mid-'90s, at age 50, she elected to begin taking around $2,500 in a monthly pension from the Boston Federal Reserve, where she'd worked for 20 years. "I didn't do anything smart with the money. I spent it."
Munnell is an advocate for maintaining Social Security benefits as they stand now, given that both the federal program and employer-sponsored plans aren't providing enough retirement income. She concedes, though, that "there's no free lunch." People will have to work a lot longer now, she says, as described in her 2008 book, Working Longer: The Solution to the Retirement Income Challenge, or face a much lower standard of living in retirement. "The only alternative is to save more," something she's trying to do.""
For to be.
Thanks! The only person in my age group that I know lost 50% of his retirement 401K was a guy who employed a financial consultant and invested very aggressively in very high risk vehicles. Secondary to a personal mess, I only started investing in ‘85. Everyone I know who managed their own investment strategies wound up as OK as you could hope for in the current environment.
I say save as much as you can, I’d much rather have much more than any system advises. However, my problem is that I need to learn how to spend again....
Thanks Silentgypsy for the ping.
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I say save as much as you can, I’d much rather have much more than any system advises. However, my problem is that I need to learn how to spend again....
Thanks Silentgypsy for the ping.
Dave Ramsey Fan Ping List.
If you would like to be added to the “Live like no one else, so that you can LIVE like no one else” list, feel free to Freepmail me.
Dave would say, Normal doesn't save anything. Normal worries about all the above and doesn't even start saving.
Weird starts early, say at age 22. He opens and puts in the minimum and works up to the target. By age 26, he has thousands tax free. By 60 he will have millions tax free.
Yeah, Normal, worries and doesn't do a thing. Normal will be living in a double-wide, if he's lucky, and eating dog food for retirement.
Oh, and Normal probably ridiculed Weird along the way.
Running natural gas pipelines in rocky country is expensive if not practically impossible. New England is very rocky.
HEY! Do food stamps accumulate like rollover minutes on your cell phone? Ima thinking if they do and I can get on them now, by the time I retire I’ll have beanie-weenies for life. MAYBE EVERY DAY FOR LIFE!!!!!
“...my problem is that I need to learn how to spend again....”
Lol! Ah, but the satisfaction involved in seeing a tough little farm vehicle, buying it with savings, and using it for hauling heavy stuff around the property because you’re too old and broken down to lug it around in a wheelbarrow any more.... :)
I *love* beanie weenies! We make a big crockpot of wonderful savory beans and then add coin-cut cheddar wurst, ham, bacon ends, other kinds of sausage. If you’re gonna pick on food, please leave beanie weenies, yogurt, nachos, protein shakes, and PB on saltines w/a glass of milk alone. That’s what I lived on when I was in college for the second time (while working full time), and I was a progressive resistance lifter and ran a 10K once a month from 1980 until 1993. (Foot became deformed and couldn’t even racewalk any more.)
I’m not picking on beanie weenies. Sure, I make jokes. It is merely an attempt to alleviate my despair.
I’ve seen days where a can of beanie weenies was a godsend.
Now if I was gonna pick on food, and I really have to struggle to call this food, it is okra....
HEY! I used to run. 5-6 miles a day. 4-5 times a week. The most was a 15 miler.
That one still makes me laugh.
Freepmail
I wasn’t series about your worldview re: beanie weenies. I just enjoy picking on you :)
Okra and nopalitos (the cactus that looks like a ping-pong paddle with spikes) are pretty slimy. Breaded, deep-fried okra is OK. I still haven’t figured out what to do with nopalitos but I’d like to, because people who eat them find it easier to control their blood sugar. Mr. SG is diabetic, and he can’t stand the stuff *sigh*.
For how many years did you run? I only lasted 13. Do you lift weights or do you rely on your work to keep you in shape? (I’m not in shape.)
I wasn’t series about your worldview re: beanie weenies. I just enjoy picking on you :)
Okra and nopalitos (the cactus that looks like a ping-pong paddle with spikes) are pretty slimy. Breaded, deep-fried okra is OK. I still haven’t figured out what to do with nopalitos but I’d like to, because people who eat them find it easier to control their blood sugar. Mr. SG is diabetic, and he can’t stand the stuff *sigh*.
For how many years did you run? I only lasted 13. Do you lift weights or do you rely on your work to keep you in shape? (I’m not in shape.)
Ohnoes! The dreaded Double-Post Poltergeist has reared his ugly head! Your turn to pick on me heh heh heh.
I only ran for 7 years.
And I pretty much rely on starvation to keep me in shape.
I did, however, lose about 25 lbs. in December from overwork.
That almost equals the amount of weight I lost when I finally cut off all that hair.
WHY would I pick on a sagging old crip who tries to push off their AD on some DPP???
Agreed. A huge bunch of worthless drivel.
The more you rinse the less slime there is.
They can also be pickled and that cuts the slime factor as well.
Thanks!
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