Month: December 2014

How Much Money Do You Need in Retirement?


Financial advisors have long recommended that you need to save enough to reproduce 80 percent of your current salary for retirement income. If anything, that suggestion serves as a starting point, but what does it really mean? Let’s assume I make $100,000 a year. If I retire at 65 and expect to live to 90, then I would have to accumulate $2 million in savings, not counting Social Security or pensions, before pushing away from the work desk for good to meet that 80 percent threshold.

Easy enough, right?

Unfortunately, our income-driven society and the corresponding financial planning often leave out one equally important variable in determining how much money you need to live on after freeing yourself from the daily work grind – your expenses. There’s income and there’s outgo. As destructive as inflation can be to the future dollar value of your nest egg, lifestyle creep might be even worse. As your income rises, so does your spending level. As we progress through our careers, our promotions and raises are all too often visible in the form of bigger homes, nicer cars and high-end clothing and not in the size of our savings accounts.

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Dismissing the Old Age Myths

We’re living longer and working less as a culture, but are the years at the end worth living?

As a child, I thought 40 was old. As I rapidly approach that milestone, I’m hesitant to make similar claims about more distant age thresholds as I realize I’ll end up there (hopefully) at some point in the not-too-distant future. Regardless of how we categorize age groups beyond our current setting, is there legitimate reason to think that quality of life diminishes once Social Security and Medicare kick in?
WSJ stat chart  
Apparently not. The Wall Street Journal’s Anne Tergesen wrote an enlightening article today attempting to answer that very question. Some of her gems include research indicating “that emotional well-being improves until the 70s” before plateauing and data suggesting “that friendships tend to improve with age.”

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