The other day I decided to get serious about how much we'd actually need to have in retirement. I'm a worrier, so I've been generally following Dave Ramsey's 15% solution as a way to keep it simple.
But I decided to go to the Fidelity website, and plug some numbers in to figure out what we should be saving for DH's retirement plan, which is miles behind mine.
Let's say that for the sake of an example, they say we needed to save $1000/month from a $4000 net monthly income to get us to have their desired 85% of current income in retirement. Does that 85% they figure reflect the 25% of current income also? So unless I still wanted to invest roughly 25% of the 85% they say I'd need, wouldn't I actually need considerably less? Because I wouldn't need then to fund the retirement, right?
They're funding gross income, right? Not gross income with the retirement savings taken out?
My other rant for the day is commission-baxed investment advisors. If anyone thinks the average person "needs" a stock broker, they ought to look at how the professionals like Merrill Lynch have bene doing managing their portfolios.
Confused about retirement calculators
January 18th, 2008 at 05:32 am
January 18th, 2008 at 01:29 pm 1200662988
January 18th, 2008 at 02:03 pm 1200664996
Let's say, for simple numbers, that you earn 100K. They are saying that in retirement, you should shoot for an income of 85K. Now, if you currently save 25K, you are actually only living on 75K. That means that in retirement, you might get by just fine with 85% of that, or about 60K.
Here's the problem, though. Surveys of current retirees consistenly show that most are spending about the same amount as when they were working. Certain expenses drop, but other expenses, like health care, travel, dining, etc. increase. So planning for 85% of current income may not be adequate.
January 18th, 2008 at 08:19 pm 1200687596
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