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September 9, 2011
Will You Need 135% of Your Salary in Retirement?
But according to research conducted by Dan Ariely, people need 135% of their final income to live the way they want in retirement. The reason for this astounding difference has to do largely with the way Ariely, a professor of economics and behavioral finance at Duke University, did his research.
I had no idea that I needed 35% more. That's what the research shows. I must be doing something wrong.
Instead of asking people to ballpark how much of their final salary they will need, he asked the following questions:
How do you want to live in retirement?
About the same as I did when I was working, but without the commute? Most of all, just enjoy the free time I guess.
Where do you want to live?
Same place I lived when I was working? Now that I don't have a job, I could probably move to someplace cheaper I suppose. No hurry on that. I like where I live.
What activities do you want to engage in?
Same things I was doing when I was working, only without the work? For example, playing with the dog on the front lawn is great fun.
$0.00 * 1.35 = $0.00
I was skeptical, but the 35% rule does seem to apply even to dog playing. Who knew?
"The Best Things in Life are Free" (Jack Hylton, 1928)
ICE: Mortgage Delinquency Rate Increased Year-over-year in October
-
From ICE: ICE First Look at Mortgage Performance: Serious delinquencies hit
17-month high while foreclosure activity remains historically muted
• At 3.45% ...
1 hour ago
10 comments:
Professor Ariely, reality is calling, answer the white courtesy phone.
Does he know that Perry wants to kill SS and Medicare, and is that how he came up with 135%? I read the link, and there is no mention of the current political possibilities. Defined pensions are almost done, and many 401ks, still invested in the market may well be sandbagged. So where is the cash coming from? Savings accounts? Please. Savings have been on a downward trajectory for more than a decade. The number of Americans with liquid assets of even 100k is fairly small. Is his point that retirement is not possible? Or, did the word "want" invite his respondents to drift into fantasy?
I'd like to know where Professor Ariely is planning to get the 135% of his current salary so he can retire. Who knows, maybe he found a gold mine.
fried,
Professor Ariely, reality is calling, answer the white courtesy phone.
Nice, lol.
It must be especially painful for the rich. Imagine earning a million dollars that final year only to realize that you need to find another $350,000 (per year) in retirement to have all that you desire.
Worse, imagine the dismay of getting a 10% raise that last year. WTF!!! That's another $35,000 per year you'll NEED just to have any hope at all of a comfortable retirement. A wise person should not only decline that raise, but walk straight into the boss's office and demand a 50% pay cut! The less you make that final year the better! ;)
Sarcasm!
Mark,I'd still like to know where Ariely is investing to get his 135%...the question remains unanswered.
By the way, I should start to stockpile dog food...that's where I see the most inflationary rise in pricing.
Most of all, just enjoy the free time I guess.
Stag,
You seem to have an under-developed vanity gene. It's tough for debt pushers (aka bankers) to exploit people like you. Good thing you're part of such a small minority. The "mall" majority rules!
I often hear that Muslims "hate" us because of our freedoms. If I didn't know better, I'd think that bankers hate us for our free time. Good thing I know better. ;)
I went to a Winco (super discount grocery chain) last week to return something.
In the special customer service area they kept a close watch on their liquor shelves, but the baby formula was kept behind the service counter.
Yeah. This next decade is going to be extra-special, where the peak baby boomers born around ~1957 age from their 50s into their 60s.
The stresses are going to keep building.
"Is his point that retirement is not possible?"
If it wasn't, it should have been.
"This next decade is going to be extra-special, where the peak baby boomers born around ~1957 age from their 50s into their 60s."
Golf courses will not be a good business model going forward.
fried,
Mark,I'd still like to know where Ariely is investing to get his 135%...the question remains unanswered.
How To Make $200 Per Second In This Tough Economy
Troy,
The stresses are going to keep building.
Bull market in antacids! Sigh.
mab,
It's tough for debt pushers (aka bankers) to exploit people like you.
My whole family was in banking. Perhaps I know enough not to @#$% where I eat, lol. Sigh.
Anonymous,
Golf courses will not be a good business model going forward.
Bad Business Plan Idea
There's a golf course not far from where I live. It has a restaurant on site.
I'm thinking of building a restaurant on the other side of the highway to compete with it solely on price.
I'd be targeting that niche of people who can afford to golf regularly ($37 weekend green fees + $26 cart fees) but are extremely frugal when it comes to food. I could call the restaurant McGolphers.
I'd still NEED to be making money in the off peak winter season of course, so I'd cut prices even further to compensate.
How could I possibly lose? ;)
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