I am having some trouble with figuring out what my retirement planning goal should be. It seems like I get different results with every retirement calculator I use (though I always use the same variables), or read differing opinions in each article. I realize that retirement planning not an exact science and you always trade off risk and security but would appreciate some insight into a few different ratios i've heard.
Ratio 1: Save 10x Annual Gross Income, inflation adjusted to year you expect to retire. (vanguard, I think, promotes this)
Ratio 2: Save 25x Annual Expenses (I see this a lot in the FIRE community)
Ratio 3: Save 33x Annual Expenses (I see this in a lot of "don't touch principle" articles retirement planning articles)
Ratio 4: Save 1 Years expenses for each year you expect to be alive in retirement (recently read a Motley Fool article with that rule of thumb).
I will note two things: 1) I have no real interest in the Retire Early community so RE is not what i'm asking about, 2) I am somewhat moderate when it comes to social security. I think it will be there when I retire, but I also think it will pay out substantially less than it does now.
While I am more looking for comments on the ratios generally than my specific circumstances, I have include some of my info below for numerical comparison if you would like to look at that. I didn't include social security in any of the ratio's, as the ratio's themselves don't specifically mention social security.
If I currently make about $63,500 gross annually, or $53,156 net that would work out to be about:
Ratio 1: 3.22% annual inflation, over 41 years until retirement: 63,500 * 1.032^41 $232,858 x 10 = retirement goal: 2,328,583
Ratio 2: With how much I would need to save for retirement annually for this one, I estimate expenses at $33,021 x 1.032^41 = $120,131 x 25 = retirement goal: $3,003,293.
Ratio 3: With how much I would need to save for retirement annually for this one, I estimate expenses at $29,451 x 1.032^41= $107,143 x 33 = $3,535,750
Ratio 4: I expect to retire at about 70, with about a 50% chance that my wife or I will live to 100, so need 30 years of expenses. With how much I would need to save for retirement annually for this one, I estimate expenses at $30,696 x 1.032^41 = $111,673 x 30 = $3,350,199.
So it appears my retirement goal should be anywhere from 2.3 million dollars to 3.5 million dollars, but that works out to be quite a large difference in my annual contributions.
Again, you don't have to comment on my specific situation (though feel free too), I would just appreciate general comment on what ratio's are the most reliable.
Thanks for your thoughts!
Submitted November 01, 2018 at 10:03AM by matto89 https://ift.tt/2DfXIc9
