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Ask HN: How much have you saved for retirement?

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Re: Ask HN: How much have you saved for retirement?

#21

Post by closeparen »

$0. I'm focused on building a six-month emergency fund first.

I don't need anything approaching 100% income replacement, as it would make no sense to pay exorbitant rent for proximity to jobs as a retiree.

I doubt I'll save enough over my lifetime (outside of 401k) to scratch a down payment on a Bay Area 1-bedroom condo, but it'll be more than sufficient to buy a palace for cash anywhere else the moment I don't need to live here anymore.

(I have worked in Midwestern IT cost centers, never again).

Re: Ask HN: How much have you saved for retirement?

#22

Post by hanoz »

bsvalley wrote: post #18

If you live in a place like the Bay Area, the best retirement plan involves these 4 steps: 1. Owning a home in the Bay Area by the time you retire. No mortgage, no rent. Just bills. 2. Sell that place when you retire in order to move to a cheaper location. Use whatever's left from the sale of your home as an income for the rest of your life. Let's take a $800K home for example, if you make $150K per year, you may qua…

It's a bit depressing, and a damning indictment of the system, that most people's only hope for a comfortable retirement is basically a massively leveraged bet on the housing market.

Re: Ask HN: How much have you saved for retirement?

#23

Post by mindingdata »

cbanek wrote: post #19

I'm 35, and have been saving for retirement and maxing out my 401(k) ever since I started working. I don't think I'll ever have 4 million dollars in my retirement account, but I think (hope?) I'll be fine. I think it's the numbers that are suspect in this analysis. 1. The calculator asks for your salary, then uses your current salary to determine your need for money in retirement. If you're saving 20% of your salary,…

They take the 85% of 100k because it's assumed when you retire, you won't be saving any of your income, just drawing down.

This calculator is often uses to demonstrate different savings rates : https://networthify.com/calculator/earlyretirement

The reason why saving more quite rapidly lowers your retirement age is because it's a twofold saving. Firstly you are saving more money which is good, and secondly you are learning to live on less.

To take a super simple example. Let's say you can live on 50k a year. And you can get 3.5% on term deposit rates (You can in NZ). Then you should need 50,000 * (100/3.5) = 1.4 million approx to retire and be able to earn 50k a year off interest alone.

Re: Ask HN: How much have you saved for retirement?

#24

Post by whack »

bsvalley wrote: post #18

If you live in a place like the Bay Area, the best retirement plan involves these 4 steps: 1. Owning a home in the Bay Area by the time you retire. No mortgage, no rent. Just bills. 2. Sell that place when you retire in order to move to a cheaper location. Use whatever's left from the sale of your home as an income for the rest of your life. Let's take a $800K home for example, if you make $150K per year, you may qua…

> "Real estate in a place like the Bay Area is the best investment because of the location"

How do you know this? What you're saying sounds just like all the bankers and mortgage salesmen in 2007 promising that real estate prices will never fall. If you want to bet on SV real estate being the best investment, go ahead. But call it what it is: a speculative bet.

For those who would prefer not to speculate on their retirement savings, professionals have already put together very sophisticated calculators that tell you whether it's better to buy-or-rent. Check it out and run the numbers yourself, before trusting uncited blanket recommendations given in a HN comment.

http://www.nytimes.com/interactive/business/buy-rent-calcula...

Re: Ask HN: How much have you saved for retirement?

#25

Post by cylinder »

hanoz wrote: post #22
bsvalley wrote: post #18

If you live in a place like the Bay Area, the best retirement plan involves these 4 steps: 1. Owning a home in the Bay Area by the time you retire. No mortgage, no rent. Just bills. 2. Sell that place when you retire in order to move to a cheaper location. Use whatever's left from the sale of your home as an income for the rest of your life. Let's take a $800K home for example, if you make $150K per year, you may qua…

It's a bit depressing, and a damning indictment of the system, that most people's only hope for a comfortable retirement is basically a massively leveraged bet on the housing market.

Stocks are leveraged too. Our entire economy runs on credit.

Re: Ask HN: How much have you saved for retirement?

#26

Post by cylinder »

kolijila wrote: post #11

I'm 24 and have 10k in Wealthsimple because I can't be bothered to learn more about how to manage my investments myself right now (and I've been a dumbass with money for the past 6 years). WS tells me I'll have ~$5,222,649 when I'm 65 if I continually add $5k/mo to my invesments. They say "We include your scheduled contributions into this projection and assume a return of 5.1-5.45% on stocks and 0.74-1.05% on bonds a…

New account - suspicious. I don't doubt that startups like Wealthfront are gaslighting HN and Reddit.

Re: Ask HN: How much have you saved for retirement?

#27

Post by whack »

I believe the guideline is that in order to enjoy a $X/year retirement income (adjusted annually for inflation), you need a nest egg of $25X. So if you'd like to retire with $100k/year, $2.5M would do it. And even less if you are willing to factor in social security income.

If you adopt a buy-and-hold investment strategy over the course of 20-30 years, with a good mix of index funds, the above should be easily within reach.

Re: Ask HN: How much have you saved for retirement?

#28

Post by JJJJJJSsss »

super-serial wrote: post #9

Nothing... because methane in the arctic will end human civilization by then. http://arctic-news.blogspot.com/p/extinction.html?m=1 It makes more sense to take big risks with money and then use any big payoffs to help geoengineering efforts or prepare for living in a bunker. That may sound silly but some rich people are already doing that: http://www.newyorker.com/magazine/2017/01/30/doomsday-prep-f...

I don't dispute man-made climate change, it's obvious by now.

I also don't dispute man-made climate change bringing about more extreme weather and raising sea levels, which are catastrophic things by themselves.

However, it's when you wrote about the "end of human civilization" that I got skeptical. There is no scientific consensus for that, and no compeling reason to believe such exaggerated claims, even if "rich people" took precautions against it, or some lone climate researcher claims it in a blogspot post.

Do not plan your retirement thinking that human civilization will end before you retire, because much more likely than not, it won't. This is so absurd that you're setting yourself up to have your end-of-life tragedy be in the future a pretty good joke about taking conspiracy theories seriously.

Re: Ask HN: How much have you saved for retirement?

#29

Post by cbanek »

mindingdata wrote: post #23
cbanek wrote: post #19

I'm 35, and have been saving for retirement and maxing out my 401(k) ever since I started working. I don't think I'll ever have 4 million dollars in my retirement account, but I think (hope?) I'll be fine. I think it's the numbers that are suspect in this analysis. 1. The calculator asks for your salary, then uses your current salary to determine your need for money in retirement. If you're saving 20% of your salary,…

They take the 85% of 100k because it's assumed when you retire, you won't be saving any of your income, just drawing down. This calculator is often uses to demonstrate different savings rates : https://networthify.com/calculator/earlyretirement The reason why saving more quite rapidly lowers your retirement age is because it's a twofold saving. Firstly you are saving more money which is good, and secondly you are lea…

Totally agree with all that, and that's what I rely on, that I can live frugally.

But in the article, they link to the calculator that gave them the 4 mil figure, and that asks how much you make, and how much you are saving. But it doesn't take the savings out first. So it's saying you can live on 85% of what you need now, if you save 0% or 50%. Since they have the number you are saving, it doesn't make sense to me to bake that into the 85% number, when they can calculate it based on the info you provide. I really think it's that on average, you only need 85% of your income, likely due to some smaller cost of living changes, but also tax implications, etc.

Your calculator is much better, and assumes you have enough money to draw down only the gains, and not the principal, but that's not what the calculator in the article does (as they mentioned in the fine print), they buy a fixed income inflation adjusted annuity at 6%.

Re: Ask HN: How much have you saved for retirement?

#30

Post by toomuchtodo »

TheAdamAndChe wrote: post #10
cm2012 wrote: post #7

Less than 2% of the US will ever see anything near $4 million in their bank account. Most people would consider it a LOT to save $20k a year, which would be well under a million by retirement.

It would only be below a million if you stuck your money in a savings account. If it's in an investment account, after 30 years at 7% growth per year and $20k deposited per year, you should have $1.87 million dollars saved. Which isn't tons when you consider inflation, but it's definitely better than what you're suggesting.

7% returns are unrealistic moving forward; I would target ~5-6%.

CalPERS came to this conclusion a few months ago, and they're a bit behind the rest of Wall Street when it comes to returns estimation.

http://www.cnbc.com/2017/02/08/calperss-sees-58-percent-retu...

Some Wall Street veterans are predicting returns even lower.

https://www.bogleheads.org/wiki/Historical_and_expected_retu...

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