Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 11-29-2012, 03:02 AM   #21
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I gave a guess from the top of my head while having a large glass of wine ;-) I will have a closer look at my BoA and Edward Jones accounts for the year, will calculate the spend/pay ratio more precisely, and will make any correction to my post if needed.
Quote:
Originally Posted by growing_older
Unless your salary is tiny and you somehow have almost no expenses, I do not see how this is possible. Taxes alone can easily take 20%. Do you live on nothing?
__________________

__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-29-2012, 09:26 AM   #22
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
We're saving a little more than 30% now. I could save a little more, but at some point you have to balance securing your future with enjoying the here and now, so I have no interest in an "austerity budget" just to get the savings rate higher. I find forcing myself to save too much is a form of stress I don't need, at least when I think I'm already doing fine in that regard.
__________________

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline  
Old 11-29-2012, 09:39 AM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,968
It appeared to be an article for a general, mainstream audience. I critiqued it from that POV, not my own experience.

A lot of people HERE have managed to save 40% or more, but would you feel comfortable trying to convince a mainstream audience to do the same?

I dare you...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline  
Old 11-29-2012, 10:19 AM   #24
Recycles dryer sheets
RISP's Avatar
 
Join Date: Jul 2012
Posts: 307
Quote:
Remember, if you are only in cash, the match you receive from the company will generate a 3-6% annual return all by itself and that will COMPOUND on a year over year basis.
Uhm...that's not true, is it? I'm not familiar with the US approach, but let's say I get a "100% match on the first 3% to 6%" as quoted in the article. That would be REALLY generous, I guess. Let's further assume that I make 100,000$ a year and contribute the maximum 17,500$. On the first 6,000$, I get a 100% match, meaning total payment into the 401(k) is my 17,500$ plus 6,000$ from my employer, which equals 23,500$. The match adds 34% (6,000$/17,500$) to what I contributed myself. Great!
Now what if I have contributed the maximum for 15 years? Even assuming 0% investment returns (because it is oh so smart to be "only in cash" ), my balance is 15 x 23,500$ = 352,500$. Now, the 6,000$ match means only a 1.7% (6,000$/352,500$) "annual return". Not too shabby still, but clearly not "3-6% annual return" (and most probably below the inflation rate). Any positive return on my balance increases the effect. And of course it does NOT compound because the match is only paid on new contributions, isn't it? Did I get that right?
__________________
RISP is offline  
Old 11-29-2012, 10:24 AM   #25
Recycles dryer sheets
timeasterday's Avatar
 
Join Date: Aug 2011
Location: GA
Posts: 211
Quote:
Originally Posted by RISP View Post
Did I get that right?
Yeah, I think so. The match only applies to that year's contributions, thus it is not compounding the previous investment.
__________________
timeasterday is offline  
Old 11-29-2012, 11:06 AM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Quote:
Originally Posted by obgyn65 View Post
I save 80-90% + of my salary.
I save 109.3%. Of course, I live in a shoe box in the middle of the road...

Quote:
Originally Posted by REWahoo View Post
Surely you understand you are an outlier.
Yes, I am aware of that...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline  
Old 11-29-2012, 04:53 PM   #27
Recycles dryer sheets
Backpacker's Avatar
 
Join Date: Feb 2011
Location: On a dirt road
Posts: 189
Quote:
Originally Posted by Midpack View Post
It appeared to be an article for a general, mainstream audience. I critiqued it from that POV, not my own experience.

A lot of people HERE have managed to save 40% or more, but would you feel comfortable trying to convince a mainstream audience to do the same?

I dare you...
CEO and I were talking just yesterday about wanting to talk to our staff about retirement, as many of them have the "I'll just work until I die" mentality. SOunds like you've tried that route wtih limited success. This is my fear as well. We have about 40 people on staff here and I bet about 5 (counting me and the CEO) have any kind of realistic plan in place to fund retirement.

I hate to give up before we even try but I think the buy in to why you all need to save more would be dismal.
__________________
"Up sluggard and waste not the day, in the grave will be sleeping enough." Benjamin Franklin
Backpacker is offline  
Old 11-29-2012, 04:59 PM   #28
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,078
Quote:
Originally Posted by Backpacker View Post
CEO and I were talking just yesterday about wanting to talk to our staff about retirement, as many of them have the "I'll just work until I die" mentality. SOunds like you've tried that route wtih limited success. This is my fear as well. We have about 40 people on staff here and I bet about 5 (counting me and the CEO) have any kind of realistic plan in place to fund retirement.

I hate to give up before we even try but I think the buy in to why you all need to save more would be dismal.
Please don't give up without a try.

Yes, it is unlikely you will win over many to the need to save/invest more for retirement but chances are a few may see the light. Even if you only get one to come around think of the potential good you've done for them - and perhaps for their family as well.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 11-29-2012, 05:00 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,968
Quote:
Originally Posted by Backpacker View Post
CEO and I were talking just yesterday about wanting to talk to our staff about retirement, as many of them have the "I'll just work until I die" mentality. SOunds like you've tried that route wtih limited success. This is my fear as well. We have about 40 people on staff here and I bet about 5 (counting me and the CEO) have any kind of realistic plan in place to fund retirement.

I hate to give up before we even try but I think the buy in to why you all need to save more would be dismal.
We offered a 401k plan, so we were required by Fed regs to provide an annual 401k plan meeting for all employees (though what content is not specified...). We tried every angle we could think of to encourage planning (scare tactics, easing into contributions, estimated nest egg calcs, etc.) and our company and plan administrators had online tools so they could learn and experiment on their own (in private). We even suggested they go outside our plan if they were more comfortable with a broker/FP.

Doesn't mean I'd ever have given up trying, and we met to review our approach each year, but it's very tough sledding IME. And in fairness, we did influence some employees, but definitely a minority. The (unfortunately hourly) majority just whined about why we didn't offer full COLAd pensions and retiree health care beginning at age 55...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline  
Old 11-29-2012, 05:03 PM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Backpacker View Post
CEO and I were talking just yesterday about wanting to talk to our staff about retirement, as many of them have the "I'll just work until I die" mentality.
I wonder how this might be done. Or if it should be done. These folks are employees, not pals, and it's really in the best interest of the company that they keep being productive for the company, right? Add in the chance of alienating employees by bringing it up ("Sure Mr Bigshot can think about quitting--so could I if I had his paycheck! He knows nothing about how things are at our level") and it's clear why most companies leave this stuff to their HR department or the common sense of their employees. There's no reason for the average employee to believe the CEO or anyone in management knows better than they do about retirement planning, and any attempt to officially intrude on this fairly personal issue is likely to breed a bit of resentment.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now  
Old 11-29-2012, 05:09 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,968
Quote:
Originally Posted by samclem View Post
I wonder how this might be done. Or if it should be done. These folks are employees, not pals, and it's really in the best interest of the company that they keep being productive for the company, right? Add in the chance of alienating employees by bringing it up ("Sure Mr Bigshot can think about quitting--so could I if I had his paycheck! He knows nothing about how things are at our level") and it's clear why most companies leave this stuff to their HR department or the common sense of their employees. There's no reason for the average employee to believe the CEO or anyone in management knows better than they do about retirement planning, and any attempt to officially intrude on this fairly personal issue is likely to breed a bit of resentment.
I guess you could interpret it, but it's required as I understand it. From US DOL site...
Quote:
Providing Information in Participant-Directed Plans

When plans allow participants to direct their investments, fiduciaries need to take steps to regularly make participants aware of their rights and responsibilities under the plan related to directing their investments. This includes providing plan and investment-related information, including information about fees and expenses, that participants need to make informed decisions about the management of their individual accounts. Participants must receive the information before they can first direct their investment in the plan and annually thereafter. The investment-related information needs to be presented in a format, such as a chart, that allows for a comparison among the planís investment options. A model chart is available on this web site. If you use information provided by a service provider that you rely on reasonably and in good faith, you will be protected from liability for the completeness and accuracy of the information.
Investment Advice And Education

More and more employers are offering participants help so they can make informed investment decisions. Employers may decide to hire an investment adviser offering specific investment advice to participants. These advisers are fiduciaries and have a responsibility to the plan participants. On the other hand, an employer may hire a service provider to provide general financial and investment education, interactive investment materials, and information based on asset allocation models. As long as the material is general in nature, providers of investment education are not fiduciaries. However, the decision to select an investment adviser or a provider offering investment education is a fiduciary action and must be carried out in the same manner as hiring any plan service provider.
Meeting Your Fiduciary Responsibilities
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline  
Old 11-29-2012, 05:28 PM   #32
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Well I am not sure how to say this but I did my calculations at lunchtime again, and I can confirm that 80-90 % is the right ballpark figure. This made me realize that :

1) I am one of the most conservative participants here with zero equity;

2) I may be one of those here who spends least money as compared to his income. Maybe that's why I can ER now at age 47, after only 10 years of work in the US.

And no, I don't live in a shoebox but in a high rise luxury condo.

Quote:
Originally Posted by HFWR View Post
I save 109.3%. Of course, I live in a shoe box in the middle of the road...
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline  
Old 11-29-2012, 05:35 PM   #33
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,078
Quote:
Originally Posted by obgyn65 View Post
Well I am not sure how to say this but I did my calculations at lunchtime again, and I can confirm that 80-90 % is the right ballpark figure.
So you're telling us you put 80-90% of your before tax earnings in savings? That leaves you only 10-20% of your before tax earnings to pay income taxes and live on. Since that 10-20% may not even cover your income taxes (you do pay taxes, right?), your numbers don't make sense.

I think you need to re-check your math.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 11-29-2012, 05:49 PM   #34
Full time employment: Posting here.
 
Join Date: May 2008
Posts: 589
I save 75-80% net and plan to continue to do so through my working career. That works out to 60-65% gross. My salary increases from promotions go into a higher savings rate for the most part, the inflation increases mostly do not.
__________________
plex is offline  
Old 11-29-2012, 05:52 PM   #35
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,078
Quote:
Originally Posted by plex View Post
I save 75-80% net and plan to continue to do so through my working career. That works out to 60-65% gross.
That's really aggressive but unlike Obgy's numbers, I can see where it is possible.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 11-29-2012, 06:05 PM   #36
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Let's try this again - using fictitious numbers. Someone makes $250,000 a year (say $7,000 bi-weekly, net of 401k contributions) and spends $30,000 annually (he is single, LBYM, no kids, no debt).

His income after taxes = $7,000*26 weeks= $182,000 per year

His spending = $30,000 per year

Saving ratio after taxes = 1-($30,000 / (182,000+17,000)) = 85% [Edit : 17,000 is the 401k plan contribution.]

Saving ratio before taxes = 1-($30,000 / $250,000) = 88%

Again, not my actual numbers, but within ballpark. And again, I am not in finance so my methodology may be wrong. Apologies if this is the case.

Quote:
Originally Posted by REWahoo View Post
So you're telling us you put 80-90% of your before tax earnings in savings? That leaves you only 10-20% of your before tax earnings to pay income taxes and live on. Since that 10-20% may not even cover your income taxes (you do pay taxes, right?), your numbers don't make sense.

I think you need to re-check your math.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline  
Old 11-29-2012, 06:14 PM   #37
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I should stay away from financial numbers. They don't really interest me since I am not materialistic nor greedy. What is more important, in my view, is what I do with my money, such as sending medicines to third world countries, give to United Way, or help support free clinics.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline  
Old 11-29-2012, 06:20 PM   #38
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,078
In your example:

Earnings before tax = $250,000
Tax = ($250,000 - $182,000) = $68,000
Expenses = $30,000
Savings = ($250,000 - $68,000 - $30,000 + $17,000 401k) = $169,000

Percent of salary saved = ($169,000/$250,000) = 68%

Quote:
Originally Posted by obgyn65 View Post
I should stay away from financial numbers.
You and I are in total agreement here.


Edited to include 401k savings
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 11-29-2012, 07:09 PM   #39
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Ok. If this is the normal way to calculate savings ratios, then I was wrong. Apologies.

Quote:
Originally Posted by REWahoo
In your example:

Earnings before tax = $250,000
Tax = ($250,000 - $182,000) = $68,000
Expenses = $30,000
Savings = ($250,000 - $68,000 - $30,000 + $17,000 401k) = $169,000

Percent of salary saved = ($169,000/$250,000) = 68%

You and I are in total agreement here.

Edited to include 401k savings
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline  
Old 11-29-2012, 08:28 PM   #40
Recycles dryer sheets
Backpacker's Avatar
 
Join Date: Feb 2011
Location: On a dirt road
Posts: 189
Quote:
Originally Posted by REWahoo View Post
Please don't give up without a try.

Yes, it is unlikely you will win over many to the need to save/invest more for retirement but chances are a few may see the light. Even if you only get one to come around think of the potential good you've done for them - and perhaps for their family as well.
Great points; I am sure we'll give it the old college try. A few years ago we hired a Financial Planner (independant of any firm) that bills out at about 50-60 bucks an hour and gave all employees a free hour with him. They and their spouse could meet with him and get a review of their current plan and he made recommendations on areas to change. Such as AA and amount contributing, discussed income replacement, etc. I dont think we had 100% participation then but we did have several folks make some important changes.

I think the advice from an outside expert may be easier to take for some people vs a "sermon" from the CEO or the EVP Also helps avoid the you rich guys can't relate complaint.
__________________

__________________
"Up sluggard and waste not the day, in the grave will be sleeping enough." Benjamin Franklin
Backpacker is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 07:46 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.