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Horribly misleading nonsense from the Motley Fool
Old 01-18-2021, 09:53 PM   #1
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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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Old 01-18-2021, 10:07 PM   #2
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Motley Fool ceased being useful almost 20 years ago.
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Old 01-18-2021, 10:10 PM   #3
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Originally Posted by urn2bfree View Post
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/
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.
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Old 01-18-2021, 11:35 PM   #4
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I'm spending twice as much retired compared to working.
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Old 01-19-2021, 12:29 AM   #5
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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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Old 01-19-2021, 12:43 AM   #6
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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
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Old 01-19-2021, 05:12 AM   #7
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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.
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Old 01-19-2021, 05:59 AM   #8
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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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Old 01-19-2021, 07:00 AM   #9
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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.


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Old 01-19-2021, 07:05 AM   #10
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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.
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Old 01-19-2021, 07:47 AM   #11
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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! .
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.
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Old 01-19-2021, 08:53 AM   #12
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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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Old 01-19-2021, 10:27 AM   #13
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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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Old 01-19-2021, 10:50 AM   #14
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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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Old 01-19-2021, 11:04 AM   #15
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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!!!
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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Old 01-19-2021, 11:30 AM   #16
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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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Old 01-19-2021, 11:50 AM   #17
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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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Old 01-19-2021, 11:57 AM   #18
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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.

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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.
Just go here and select "no" to email: https://www.fool.com/account/communication-settings/
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Old 01-19-2021, 12:07 PM   #19
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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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Old 01-19-2021, 12:10 PM   #20
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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.
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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