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Horribly misleading nonsense from the Motley Fool
01-18-2021, 08:53 PM
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#1
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Full time employment: Posting here.
Join Date: Feb 2011
Posts: 852
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Horribly misleading nonsense from the Motley Fool
Well, they do own up to the name fool....they start off this article bad enough with distortion of the old wrong advice about saving for retirement to replace not the just the standard and wrong 70% but according to them, as if it were the actual standard, 70-90%! But then they argue you have to actually replace 100% of your pre retirement income. Or more!
https://www.fool.com/retirement/2021...could-leave-y/
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01-18-2021, 09:07 PM
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#2
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Recycles dryer sheets
Join Date: Jul 2019
Location: Phoenix
Posts: 328
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Motley Fool ceased being useful almost 20 years ago.
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01-18-2021, 09:10 PM
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#3
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Administrator
Join Date: Apr 2006
Posts: 22,923
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Quote:
Originally Posted by urn2bfree
Well, they do own up to the name fool....they start off this article bad enough with distortion of the old wrong advice about saving for retirement to replace not the just the standard and wrong 70% but according to them, as if it were the actual standard, 70-90%! But then they argue you have to actually replace 100% of your pre retirement income. Or more!
https://www.fool.com/retirement/2021...could-leave-y/
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We here know that you need enough to cover your post retirement spending, whatever it is, regardless of your pre-retirement salary. (i.e - you could need more than 100% depending on your plans). However, their formula will in most cases probably result in people saving more than they need, which is better than the converse. So I'll give them a pass.
__________________
Living an analog life in the Digital Age.
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01-18-2021, 10:35 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2016
Posts: 8,968
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I'm spending twice as much retired compared to working.
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01-18-2021, 11:29 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Apr 2005
Location: Duesseldorf, Germany
Posts: 1,202
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We spend as much or more as before, but still not as much as we earned before ER.
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01-18-2021, 11:43 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 17,715
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Yeah, we're probably at 2X or more now. Higher expenses, of course, but mostly kids/charities. Gotta (try to) get rid of the stash before we croak. We prefer to see where our inheritance goes. YMMV
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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01-19-2021, 04:12 AM
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#7
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Full time employment: Posting here.
Join Date: May 2007
Posts: 880
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Inflation adjusted, we're spending on average the same now retired as pre-retirement. Vacation and healthcare insurance spending has replaced the mortgage and family support expenses.
__________________
"It is better to have a permanent income than to be fascinating". Oscar Wilde
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01-19-2021, 04:59 AM
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#8
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Full time employment: Posting here.
Join Date: Mar 2019
Posts: 745
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Spending can be split into two pools: Expenses that are absolutely needed to live and discretionary expenses. If people are spending at more than their pre-retirement rate it is because (a) they have accumulated enough assets to do that and (b) they have ramped up discretionary spending.
You don't "need" 100% (or more) of your pre-retirement income to retire comfortably because not only will you no longer be dedicating a portion of your income to retirement savings but you will not be paying social security taxes on any income you have (which was eating up 7.65% of your income when you were working). Not only that, a maximum of 85% of your social security is taxable. (Granted, that is offset by tax breaks you lose for retirement savings so I will ignore that).
Let's take a simplified example. A couple making $100,000 per year and saving 10% per year for retirement has $82,350 ($100,000 - $10,000 - $7,650) to spend pre-income tax. That alone drops your income needs to 82.35% of what it was to maintain the same standard of living. This does not include the nearly $1,000 in federal income tax savings on that reduced income. (Note: the actual calculations for any one situation are much more involved than this, but this makes the point - that you can have less gross income in retirement but still spend the same amount of money).
Yes, that is an oversimplification but the point is, if you are spending more in retirement than you were spending pre-retirement, it isn't because you need to, it's because you want to. That's fine, but don't insult my intelligence Motley Fool by saying I can't retire comfortably unless I have the at least same income prior to retirement.
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01-19-2021, 06:00 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Nov 2008
Posts: 3,390
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It didn't take long a few years ago after reading the first couple of articles from the Motley Fool to realize their conclusions were rarely of any value to me.
Cheers!
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01-19-2021, 06:05 AM
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#10
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Thinks s/he gets paid by the post
Join Date: May 2016
Location: Mid-Atlantic
Posts: 2,638
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One thing I keep having to re-realize is that pre-retirement INCOME for us includes a ton of saving that we will not need in retirement! About 25% of our gross income goes into our Roth IRAs or 401(k)s, so while as usual Gumby got right to the heart of it, it's really about expenses, not income, I think most people don't realize 1) how much of their income is for wants rather than essential expenses, and 2) how much their expenses might change in retirement.
Personally, I hope to spend a LOT more on travel and charitable giving in retirement, but that depends on how much I can "run up the score" before I retire.
__________________
-Looking to FIRE in the mid-2020s, which would be our mid-50s.
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01-19-2021, 06:47 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2012
Posts: 6,097
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Quote:
Originally Posted by The Cosmic Avenger
One thing I keep having to re-realize is that pre-retirement INCOME for us includes a ton of saving that we will not need in retirement! .
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This is very true, and is something the "you need all your income for retirement" crowd forgets. I really wanted to comment or send feedback to the author to explain this to them.
Our savings rate for the lest 17 years I worked before retirement averaged 30%. Our biggest expenses were federal and state taxes, whose amount was driven by our income. then we also gave gifts and charity. Some years we had college expenses for our children. Our actual "living" expenses were less than half our our gross income.
The mantra "it is not your income before retirement, it is your expenses after retirement that you need to plan for" rings true.
__________________
FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
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01-19-2021, 07:53 AM
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#12
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Moderator
Join Date: Oct 2010
Posts: 10,623
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If one tracks their expenses prior to retirement, there's little need for these rather unhelpful rules of thumb. Many of us (analytical types) have the numbers, so it's easy to plug in what we expect in the future (income tax goes down, travel goes up, commuting down, etc). That's much more accurate than some arbitrary percentage.
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01-19-2021, 09:27 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Jan 2020
Location: Milwaukee
Posts: 3,941
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Not to mention not having to pay 7.65% in FICA+Medicare.
On a slightly different note, as a result of looking (spurred on by this forum) at what the latest silly thing MF has said, I now get MF ads nonstop.
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01-19-2021, 09:50 AM
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#14
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Full time employment: Posting here.
Join Date: Apr 2011
Location: Castro Valley
Posts: 788
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I wish these articles would state that the amount of money you need at retirement is the amount it takes to fully fund your standard of living. Add the cost of your expenses, routine discretionary spending and non-routine discretionary spending. That's it!!!
The people who spend more in retirement are probably the people with a lot of money and have decided to up their standard of living.
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01-19-2021, 10:04 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Jan 2014
Location: Everett
Posts: 1,592
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Quote:
Originally Posted by jkern
I wish these articles would state that the amount of money you need at retirement is the amount it takes to fully fund your standard of living. Add the cost of your expenses, routine discretionary spending and non-routine discretionary spending. That's it!!!
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But if most people took a good look at their expenses they might be shocked and start cutting back, resulting in a collapse of our economy!
Naw, let's keep them believing that they have to save an inordinate amount of their income to ever retire, so they'll just throw up their hands and continue spending it all.
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01-19-2021, 10:30 AM
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#16
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,468
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I am so glad that somewhere along the way (back when I was working), I figured out that cutting back on spending could have a pretty big effect on growing my retirement nestegg.
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01-19-2021, 10:50 AM
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#17
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Thinks s/he gets paid by the post
Join Date: Oct 2004
Location: Portland
Posts: 2,038
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I will forever be grateful for Intercst and his board on the Fool which later directed me over to here. I had not thought of being able to retire early before that.
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01-19-2021, 10:57 AM
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#18
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Dryer sheet wannabe
Join Date: Jun 2019
Posts: 17
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Although the linked article is lousy and they have their fair share of tripe, I have found other parts of the Motley Fool website to be very helpful. It's certainly been a tremendous benefit to my portfolio and retirement planning overall.
Just go here and select "no" to email: https://www.fool.com/account/communication-settings/
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01-19-2021, 11:07 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,996
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One more reduction in retirement expenses, our state taxes our income while working, up to 5%. Our state does not tax ANY type of retirement income. At least, for now.
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01-19-2021, 11:10 AM
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#20
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Full time employment: Posting here.
Join Date: Mar 2019
Posts: 745
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You'd be surprised by how many people can't figure that out. I once had someone ask me how to become more financially independent. My answer was simple: "Live beneath your means." They looked at me as if I had just exited from an alien spacecraft.
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