Stop Saving So Much for Retirement

[BigNick]

... the powerful financial upside of working longer. Among other things:

• Retiring at 70 rather than 62 means you have to support yourself without a paycheck for eight fewer years. That means that, for same size nest egg, you get more income.

Right. So you get to be 70 with a nice income, rather than 62 with a slightly less nice income. Does anyone here know a single 70-year-old (who is not on the poverty line) who wouldn't trade with a 62-year-old making 3/4 as much?

Retiring at 62 means that you have 8 years more to live the way you want, and those 8 are not "out of 62" or "out of 70" or "out of 86", they are out of the 20-24 years which on average you have left, before you either die or or don't care any more. That's a third of your frickin' life spent sat in the corner of the office, being "the geezer who won't retire" from 9-5, 49-50 weeks a year. Great.

Personally, I intend to take this reasoning a step further. Taking "going ga ga time" to be age 85, I'm going to work on the basis that the value of a year is not constant, but instead that it's higher the younger you still are. Let's take a nice simple linear approach and say that at age N, the value of a year is (85-N). So at 62, a year is worth 23; at 70, it's worth 15. Retiring at 62, you have 276 points in front of you; at 70, that's down to 120, which is 57% less (yes, I know the numbers are arbitrary).

Oh, and they forgot one other thing:

•You have eight more years to save and your savings have eight more years to grow.

The eight years of working will probably knock two or three years off your life expectancy, too. So your savings will have to last you even less time. Woo-hoo.

 

[traineeinvestor]

There is no way I am planning to w*rk until I am 70. I've no intention of working past 50 unless at the point of a financial gun (and hope to go sooner).

There are just so many things wrong with planning to work that long (and spending accordingly);

1. can you physically do the job?
2. can you mentally do the job (and keep your skills current)?
3. will you still be able to get a job at that age?
4. if you lose your job or change your mind, will you have enough savings to retire sooner?
5. will you still be able to do all the things you want to do in retirement at that age?

No thanks. I'll stick with plan A and aim to FIRE in a year or two.

 

[mystang52]

Article's premise is a joke, and will only add fuel to the fire of those who see no reason to LBYM. Besides the possible health issues at an older age, how about a more likely scenario: losing a job and then trying to find another one (because you never saved $$ before then) at age 55+.
Everything in moderation applies to saving/spending, but then again I'm preaching to the choir.

 

[REWahoo]

As is the case in many of these articles, the real fun is in the comments section. 660 and counting, and it looks to me like 90% or more aren't all that complimentary...

 

[Jay_Gatsby]

Right. So you get to be 70 with a nice income, rather than 62 with a slightly less nice income. Does anyone here know a single 70-year-old (who is not on the poverty line) who wouldn't trade with a 62-year-old making 3/4 as much?

Retiring at 62 means that you have 8 years more to live the way you want, and those 8 are not "out of 62" or "out of 70" or "out of 86", they are out of the 20-24 years which on average you have left, before you either die or or don't care any more. That's a third of your frickin' life spent sat in the corner of the office, being "the geezer who won't retire" from 9-5, 49-50 weeks a year. Great.

Personally, I intend to take this reasoning a step further. Taking "going ga ga time" to be age 85, I'm going to work on the basis that the value of a year is not constant, but instead that it's higher the younger you still are. Let's take a nice simple linear approach and say that at age N, the value of a year is (85-N). So at 62, a year is worth 23; at 70, it's worth 15. Retiring at 62, you have 276 points in front of you; at 70, that's down to 120, which is 57% less (yes, I know the numbers are arbitrary).

Oh, and they forgot one other thing:

The eight years of working will probably knock two or three years off your life expectancy, too. So your savings will have to last you even less time. Woo-hoo.

I've always used the same equation for every hour I billed past 40 hours a week in private practice (law). Each extra billable hour per day was worth double to me, with those on the weekend worth triple. As such, I never understood the desire of many associates to hit 2,400+ hours to get the biggest bonus. The firm's costs and profits are covered once you hit around 1,800 (if not less than that), so every hour you bill above that only makes more profit for the firm, with your share of that profit shrinking for every additional hour you bill. Personally, I thought that having a life outside work was worth sacrificing the possibility of $15-20k more a year (it was only a possibility because if you were only a few hours short, the firm would screw you out of your bonus and keep ALL of the money).

 

[jazztbone]

pablum to console the masses

Well said, FD. This article is nothing but pablum to console the masses who fail to live within their means. ER is of course one goal, but FI is the primary goal - the ability to fund all of your necessities without relying on a job. One you achieve FI, you can spend any additional income to your hearts content, if you choose. The vast majority of people lack the discipline to ever come close to FI, let alone ER.

Ditto for DW and me.

Anyways, this is yet another article trying to convince us that retiring and preparing for retirement is so 20th century. My FIL never saved much money because he was convinced he would never retire. Of course things didn't work out as planned. Here he is now, 63, jobless for the past 3 years, no savings, no health insurance and overdue bills as far as the eyes can see. I am sure that, right about now, he would love to get back the money he spent on "cruises and other indulgences" and not have to worry about how he's gonna keep a roof over his head.

 

[Focus]

Taking "going ga ga time" to be age 85, I'm going to work on the basis that the value of a year is not constant, but instead that it's higher the younger you still are. Let's take a nice simple linear approach and say that at age N, the value of a year is (85-N). So at 62, a year is worth 23; at 70, it's worth 15. Retiring at 62, you have 276 points in front of you; at 70, that's down to 120, which is 57% less (yes, I know the numbers are arbitrary).

I never realized life was so much like ... a tax depreciation table.

 

[fisherman]

I left a job because I realized the manager who was implementing Six Sigma didn't actually understand standard deviation. He went to LSS after an unsuccessful implementation of Kaizen which was done when quality went to hell after a "downsizing" and all the most experienced (and highest paid) technicians and lab staff were laid off. We'd been doing Kaizen and LSS for 20 years, but calling it SOP

Boy that is some Mega Cr*p BS I do not miss!

 

[Jay_Gatsby]

I never realized life was so much like ... a tax depreciation table.

It is indeed. You start to realize this when you hit your mid-to-late-30s. Physical capabilities start to deteriorate (unless you work hard to maintain them in the gym, and even then it's easy to get injured).

As the article points out, "Save like you'll be on your own tomorrow. Live each day like it could be your last."

 

[Bimmerbill]

Soooooo...... If I never retire I can spend all my money now!
BBL, going shopping!

 

[haha]

I've always used the same equation for every hour I billed past 40 hours a week in private practice (law). Each extra billable hour per day was worth double to me, with those on the weekend worth triple. As such, I never understood the desire of many associates to hit 2,400+ hours to get the biggest bonus. The firm's costs and profits are covered once you hit around 1,800 (if not less than that), so every hour you bill above that only makes more profit for the firm, with your share of that profit shrinking for every additional hour you bill. Personally, I thought that having a life outside work was worth sacrificing the possibility of $15-20k more a year (it was only a possibility because if you were only a few hours short, the firm would screw you out of your bonus and keep ALL of the money).

Doesn't this pretty much seal off your chances of making partner and getting on the long end of that stick?

Ha

 

[Midpack]

Early Retirement & Financial Independence forum supposedly. I'm here for the FI part, not so much the RE part.

+1 - me too. I am going to retire this year to get away from Corp BS and some leadership responsibility, but after a break of a year or so, I hope to re-enter the workforce doing something I enjoy more. FI has made that possible...

Is there anything wrong with folks who choose to continue to work because:

• they really enjoy their jobs,
• just want/need the structure of a job in their lives,
• want to amass the greatest nest egg they can for family, charity, whatever.

Nor is there anything wrong with those who just want to quit working altogether to pursue other interests, and have the means to do so.

So I wonder when I see posters who defend one choice as if there are no other legit options. Should be a non-starter, even here IMO.

 

[ziggy29]

Is there anything wrong with folks who choose to continue to work because:

• they really enjoy their jobs,
• just want/need the structure of a job in their lives,
• want to amass the greatest nest egg they can for family, charity, whatever.

Nor is there anything wrong with those who just want to quit working altogether to pursue other interests, and have the means to do so.

So I wonder when I see posters who defend one choice as if there are no other legit options. Should be a non-starter, even here IMO.

Of course there's nothing wrong with that. But my usual heartburn with articles like this is that they seem to start with the premise that early retirement is no longer a realistic option, so you might as well give up that dream and find ways to deal with w*rking longer.

Of course working for longer than you *have* to because you *want* to is a perfectly valid choice. I just don't like it when it feels like these authors are trying to convince them to settle for less than what they want, if what they *really* want is out.

 

[Katsmeow]

Doesn't this pretty much seal off your chances of making partner and getting on the long end of that stick?

Ha

Not the OP, but I am an attorney. And the answer is....it depends. In some firms becoming partner is almost entirely based upon how much business you bring in. As for other firms, it depends upon the criteria in that firm. Not every firm requires associates to bill 2400 hours to become a partner. There are plenty of firms where 1800 consistently, coupled with good work, is enough. And of course, there is a range in between.

But the point is that if you are meeting the criteria minimum billable hour criteria to be partner eligible, or if you don't want to be a partner (I was a shareholder before I joined my current firm and could have come in as a shareholder but chose not to do so) or if you are already a partner, then there is very little marginal benefit from working an extra few hundred hours every year.

 

[nun]

Not the OP, but I am an attorney. And the answer is....it depends. In some firms becoming partner is almost entirely based upon how much business you bring in. As for other firms, it depends upon the criteria in that firm. Not every firm requires associates to bill 2400 hours to become a partner. There are plenty of firms where 1800 consistently, coupled with good work, is enough. And of course, there is a range in between.

But the point is that if you are meeting the criteria minimum billable hour criteria to be partner eligible, or if you don't want to be a partner (I was a shareholder before I joined my current firm and could have come in as a shareholder but chose not to do so) or if you are already a partner, then there is very little marginal benefit from working an extra few hundred hours every year.

As a former employee of a NASA/DOE/DOD contractor the pressure on me as a salaried technical manager was never to bill more than 40 hours even if I worked 60 and came in on weekends. I'd put in cost and manpower estimates to have them slashed by senior management to meet some cost goal on a bid. If we won the contract I was left to deliver product with insufficient resources and would often put in extra hours doing assembly work as I just couldn't afford to pay the hourly staff overtime.

 

[ziggy29]

As a former employee of a NASA/DOE/DOD contractor the pressure on me as a salaried technical manager was never to bill more than 40 hours even if I worked 60 and came in on weekends. I'd put in cost and manpower estimates to have them slashed by senior management to meet some cost goal on a bid.

OMG, flashbacks. I can remember staff meetings where we were reminded that we had to complete compliance training on proper timekeeping and not mischarging, and the next item might be a reminder not to use a particular charge code because it was overbudget, and instead use a code that wasn't overbudget even though the overbudget code was the correct one.

Don't miss that.

 

[REWahoo]

This thread is disgusting. Such language!

 

[Alan]

+1 - me too. I am going to retire this year to get away from Corp BS and some leadership responsibility, but after a break of a year or so, I hope to re-enter the workforce doing something I enjoy more. FI has made that possible...

Is there anything wrong with folks who choose to continue to work because:

• they really enjoy their jobs,
• just want/need the structure of a job in their lives,
• want to amass the greatest nest egg they can for family, charity, whatever.

Nor is there anything wrong with those who just want to quit working altogether to pursue other interests, and have the means to do so.

So I wonder when I see posters who defend one choice as if there are no other legit options. Should be a non-starter, even here IMO.

I fully agree and this past 5 weeks I have been volunteering, working 10 hours a week preparing taxes as part of the AARP Taaxaide program. It has been challenging and very gratifying, but I'm already for it to be over for the year although I'm sure I'll repeat the experience next year.

Even though this has been a complete departure from my career, and I thought I could see myself re-entering the workforce after a year or 2, I am now pretty sure that for me retirement is more preferable than work of any kind. I guess this reflects the experience of folks who have posted saying that they were laid off or took a sabatical and found they loved it.

 

[SecondCor521]

OMG, flashbacks. I can remember staff meetings where we were reminded that we had to complete compliance training on proper timekeeping and not mischarging, and the next item might be a reminder not to use a particular charge code because it was overbudget, and instead use a code that wasn't overbudget even though the overbudget code was the correct one.

Don't miss that.

Reminds me of this Dilbert:

Dilbert.com - The Official Dilbert Website with Scott Adams' color strips, Dilbert animation, mashups and more!

2Cor521

 

[RetiredGypsy]

Do this, her calculations showed, and you'll end up with 70 percent more income in retirement than someone who saves like crazy for the rest of his or her career.

It seems like there's a lot of unlisted parameters with this article, and her advice.

 

[Telecaster]

Cancer Changes Minds

Having a heart attack and cancer in your 50's will take all the steam out of your nifty ideas of working 'till 70.

 

[Independent]

I fully agree and this past 5 weeks I have been volunteering, working 10 hours a week preparing taxes as part of the AARP Taaxaide program. It has been challenging and very gratifying, but I'm already for it to be over for the year although I'm sure I'll repeat the experience next year.

Even though this has been a complete departure from my career, ...

I've thought about volunteering like this. I'm a financial analyst but I've never done (individual) taxes. Did you have the background before you started or did you get training just for the volunteer work?

 

[Alan]

I've thought about volunteering like this. I'm a financial analyst but I've never done (individual) taxes. Did you have the background before you started or did you get training just for the volunteer work?

I did not have the background. I was an engineer who used TT to do my own personal taxes.

They have a pretty good training program and you can attend a 4 day training class, which I did, or do all the learning from workbooks and/or online with the IRS link and learn site. You may want to try creating an account for yourself and have a look at what is involved.

Even though I took the classes I chose to do the IRS exams online, but you can also take the tests on paper. I've met a whole load of folks, and done returns with a whole range of situations. I've probably now done about 50 returns over 9 half-days working and everyone I have dealt with has been very nice and grateful for the help.

 

[Ronstar]

+1 - me too. I am going to retire this year to get away from Corp BS and some leadership responsibility, but after a break of a year or so, I hope to re-enter the workforce doing something I enjoy more. FI has made that possible...

Is there anything wrong with folks who choose to continue to work because:

• they really enjoy their jobs,
• just want/need the structure of a job in their lives,
• want to amass the greatest nest egg they can for family, charity, whatever.

Nor is there anything wrong with those who just want to quit working altogether to pursue other interests, and have the means to do so.

So I wonder when I see posters who defend one choice as if there are no other legit options. Should be a non-starter, even here IMO.

I agree to a point. I briefly go through the obits every day in the paper. A lot of obits of people in their 50's, 60's. I may enjoy my job, but I enjoy my personal time more. As personal time seems more limited, the job seems more like it has to go.

 

[Alan]

I did not have the background. I was an engineer who used TT to do my own personal taxes.

They have a pretty good training program and you can attend a 4 day training class, which I did, or do all the learning from workbooks and/or online with the IRS link and learn site. You may want to try creating an account for yourself and have a look at what is involved.

Even though I took the classes I chose to do the IRS exams online, but you can also take the tests on paper. I've met a whole load of folks, and done returns with a whole range of situations. I've probably now done about 50 returns over 9 half-days working and everyone I have dealt with has been very nice and grateful for the help.

Here is a better link.
Link & Learn Taxes, linking volunteers to quality e-learning