Worry about future

[LivingAlmostLarge]

How do you deal with figuring out if you have saved enough for the future? I worry all the time about not saving enough. I know we are saving and I know from friends that they aren't saving at all or have nothing saved.

Both types of parents those who stay at home can't afford to save because of lack of income and dual income who say they will save once daycare is over. So it cuts both ways. I find it interesting that whether you work or not there is a reason to not save.

But I look at our account balances and wonder how will we ever fund our retirement? It doesn't seem like we'll have enough. Even as we keep adding to it and make our finances stronger I realize that college is on the horizon and that retirement number seems overly impossible.

[Bob B.]

Yep, me too. And, you and I probably have different retirement savings goals.

It's probably human nature to set a goal that is just a little bit beyond reach.

[JoeP]

I've gotten some heat from this comment in the past, but we are perfectly fine dialing back our standard of living a little in our retirement years. We currently live in an area with excellent public schools and colleges, high technology, lots of libraries and artsy stuff, etc. It comes with high taxes, which is tolerable now, but might end up killing us in retirement. It would not bother us one bit to live in an area with lower taxes and fewer of the above-mentioned amenities...we're ok if we have to drive an hour a few times a year to visit an art festival or see a concert.

So we're not worried. Retirement house will be paid for with cash and there will be money left over, taxes will be lower, no more life insurance, less energy consumption with a smaller house, etc.

[feh]

How do you deal with figuring out if you have saved enough for the future? I worry all the time about not saving enough.

One of the better tools for determining if you're on track for retirement:

http://firecalc.com/

[ua_guy]

Sometimes there just isn't enough to cover expenses and save. Other times (and it often is) it's just a lack of discipline.

If you haven't already, you should tackle your worries about retirement and saving head-on. Worrying about things without a plan is wasted time. If you haven't taken the time to sit down and figure out what retirement looks like for you, and do all the estimations of how long and how much you'll need to cover expenses, it's worth doing. If you're using retirement program advice and online calculators, take the time to understand how/why they're using the numbers they are.

There's a lot of worry about retirement where you'll just need to find your inner peace. Nobody can control the performance of, or predict the outcome of financial markets. It's not guaranteed you'll live to see retirement. If you do, it's impossible to predict unexpected expenses that land in your lap. But by planning, you can start to rest knowing that you've got a mitigation plan that works for you.

I think the latest headline is that you need 8 times your average annual income to retire, and you'll need at least 1x by the time you're 35 to stay on track towards that goal as your money invests in markets of average returns. That's not going to fit everyone's expectations or needs, but it's an easy litmus test that you can take on the back of a cocktail napkin.

Knowing what you're saving for is a significant piece of the battle.

[kork13]

hahaha most definitely YES. I briefly stress about that concern at least every few months. I'm only 27, so I look ahead 40 years from now, and there's just so many unknowns. I basically sit down, pull all my financial balances again, and run a few projections based on a variety of different assumptions of what might happen. I know that I'm saving aggressively and keeping my expenses reasonable, both of which will help me down the road. So I run some scenarios, including a "worst case", and generally reassure myself that things will work out by showing myself the numbers. I'm on a good track, so as long as I maintain that (or even close to it), I'll be fine... it just takes some reassurance every so often so I don't go

I find it interesting that whether you work or not there is a reason to not save.

This, I think, is a constant, totally regardless of the stage of life you're in. You can ALWAYS find reasons not to save, so it simply requires measured (or forced if necessary) steps to keep yourself and your finances in check.

[kork13]

One of the better tools for determining if you're on track for retirement:

http://firecalc.com/

I'm just going to second this one... I love the flexibility of inputs on this one, and also the fact that it runs something like a hundred possible projections. Every time I have one of my "future freak-outs", this is one resource I use for running my projections.

[ruffy]

I stress all of the time because sometimes there just isn't enough. This year has been rough between deaths and weddings we seem to be planning things all of the time...or defending ourselves because we couldn't make it to some of them. I've pretty much given up on the whole saving thing this year...hopefully next year will be better...after the move anyway.

[asmom]

How do you deal with figuring out if you have saved enough for the future? I worry all the time about not saving enough. I know we are saving and I know from friends that they aren't saving at all or have nothing saved.

Both types of parents those who stay at home can't afford to save because of lack of income and dual income who say they will save once daycare is over. So it cuts both ways. I find it interesting that whether you work or not there is a reason to not save.

But I look at our account balances and wonder how will we ever fund our retirement? It doesn't seem like we'll have enough. Even as we keep adding to it and make our finances stronger I realize that college is on the horizon and that retirement number seems overly impossible.

LAL, it helps if you are not too rigid in your retirement planning. Meaning, consider what type of lifestyle you have planned. Does it involve travel? Living near the beach or in the mountains? Shopping for the grandkids? Now consider the alternative if you don't have enough. Tell yourself, I would like to have X amount of money to live a Y lifestyle but if I only have C amount of money then I can still live a D lifestyle and will feel pretty good about it. Maybe you will still travel but you will only take a big vacay every other year instead of every year. Perhaps you will have that home in the mountains but it will have only 3 bedrooms instead of 5, etc.


I'm at a point now where I can't save anymore without feeling deprived. I know I won't starve to death but will I be able to afford the second home I would like? Perhaps not but that's okay. Will I be able to drive a luxury car finally? Doubt it. Again, that's okay. I would like those things in my future but if they won't happen, I'll be okay.

[LivingAlmostLarge]

I guess because it seems surreal that I'll have in another 25 years millions in the bank and able to retire. All of my aunts and uncles don't they retired however with pensions so their retirement kittys were minimal. My mom retired with $200k in a 401k and a nice large 70% pension, paid for medical premiums for life for her and my dad at age 55. I know that $200k won't be enough to retire on now.

So it seems unreal how much I'll have to save to fund my retirement. I don't think what to think. It seems so far away and out of reach to have saved millions for retirement by 60. According to FIRC we will succeed. According to back of napkin 1x at 35 - done, and 8x for sure about 4x now, but how do we know it'll be enough?

I heard I needed 30x my income now. And I don't even live up to our income now so do I really need my income? We live on about 1/3 our income. Should I calculate off of that? It seems ridiculous that I'm going to be living off our entire income in retirement.

Can people who are late 40s and older weigh in? Do you think you have enough for retirement? Have you saved the millions we'll supposedly need? Do you have a pension? Is that the difference?

[feh]

I heard I needed 30x my income now. And I don't even live up to our income now so do I really need my income?

This is a ridiculous rule of thumb. Ignore it.

Clearly, your current income is not relevant. What is relevant is your expenses in retirement. Folks should use 30x expenses for a quick, back-of-the-napkin calculation.

We have 30x expenses now, which is why I'm planning on retiring in 3 years. If I needed 30x income, I'd be working another 15 years, at least.

[feh]

One other thought LAL - when you're young (ie. 20s/30s), it really doesn't make sense to think about some big number you need to reach. Just focus on saving a certain percentage of your gross income. 15% is probably the minimum. If you want to retire early, 25% may be the goal.

Shooting for a particular total saved really doesn't make sense until you're <10 years from retirement, IMO.

[kork13]

Folks should use 30x expenses for a quick, back-of-the-napkin calculation.

This is probably the best & simplest rule of thumb to follow.

Honestly, even just 25x expenses should allow you to retire comfortably. 25x is enough that the annual gains *should* mostly provide for your annual expenses with very little withdrawn against your principle each year. Having 30x just about assures it.

[disneysteve]

Folks should use 30x expenses for a quick, back-of-the-napkin calculation.

I've always heard 25x as the rule of thumb. And keep in mind that doesn't account for Social Security so assuming SS doesn't cease to exist, the real number is somewhat lower than 25x.

Can you retire with less? Absolutely. My father retired with nowhere near 25 or 30 times expenses saved. He died a few years later, now over 20 years ago, and my mother has been just fine with the nest egg that they built. She has worked a little here and there but more to have something to do than because she needed the money. In fact, at 83 years old, she still works part time in the kitchen of the senior apartment building she lives in.

So I've always been a little skeptical of the 25x rule anyway as I've seen many relatives retire with far less than that and live very comfortably.

[feh]

I've always heard 25x as the rule of thumb. And keep in mind that doesn't account for Social Security so assuming SS doesn't cease to exist, the real number is somewhat lower than 25x.

Yes, 25x should be fine for somebody retiring in their 60s. I have 30x stuck in my mind because we'll be retiring early, so we need a larger nest egg.

Of course, this number will vary from person to person, depending on how much risk they are willing to take. Running out of money before death would be bad, and nobody knows how long they're actually going to live.