Comments on: A Closer Look at the 80% Retirement Rule

By: Dennis

Dennis — Thu, 19 Mar 2009 11:27:49 +0000

Well, Sorry but I have to Disagree with this 80% rule.. In both my own and Dozens of others I have consulted thru our Senior Center? It’s more like 110%, not 80% of what their current bills are..
Why so much More? Ans> Human Nature..
1. Wife wants to go Travel
2. Do more for the Kids and Grandkids
3. Goes Shopping and Has more Lunches with her Fellow retired GF’s & More Dinners with Friends
4. The Man Goes Golfing more with the Guys
5. Buys a New car..his Gold watch if you will
6. They become Winterbirds…
7. She wants to Finally Remodel the Kitchen and Bathroom.. But rarely cooks anymore..
8. He wants to Get a new Roof, Siding and other Upgrades on the house done (for the last time) so he won’t have to deal with it when he gets older and after he’s gone, she won’t either..
9. They want to give More expensive Gifts to Kids/family
10. They become Suckers…Loaning $ to Family and Friends..Investing Poorly..

and that’s just the Top 10 surveryed out of over 35,000 AARP members from a few yrs ago..

and “inflation” for a retiree? Try 5% apy, not less when figuring out your next 20-30 yrs expenses..
That’s right.. 27% added to every 5 yrs!

and Dealing with the Vast Majority of People on Investing? They have no business Investing their own $ on their Own! Either Put (a) whatever Amt. @ 6% apy will give you to pay your bills into Bonds and (b) the Rest into a Couple of Balanced Funds like VWINX or HSTRX or a 30/70 mix Port of Indexes and leave it alone..
And if the Rtns on those 2 investments Isn’t going to get the Job done for you? What is that telling you?

This is something best told to People when they hit like 10 yrs Before retirement time.. It’s a Real wake Up call for many of them…called a Reality Check on their Own Investing Abilities..

There is a Test they have to see if your Qualified to be Investing your $ on your own, but they want to Hide it and not tell the People about it.. For if everyone had to take it? 93% would Fail it!

Scarey isn’t it?

By: TJ

TJ — Thu, 14 Feb 2008 18:13:24 +0000

Sorry for not posting it for you — http://www.mybusiness401k.com
you’ll see a whitepaper aimed at CPAs and financial advisors, but some of the nuggets are in there for us everyday investor types. I’m doing this exact thing right now to invest in a tech startup here in Seattle.

There can be criticism of this being more risky, but i’m happy to explore that in your blog and comments as i am convinced that it is less risky than other options in stocks and mutual funds. But, again, i’m big on real estate.

Another site worth a look is ira123.com and there are a slew of others. Like anything, there can be a lot of hype and puffery around a concept.
Thanks Pinyo.

By: Pinyo

Pinyo — Thu, 14 Feb 2008 14:08:49 +0000

@Retirehappy – Thank you for your compliment.

@TJ – I’ve never heard of solo 401k before. I’ll take a look.

@Make Friends – Exactly. That’s why it’s important to understand your financial situation and how the rule comes about.

By: Make Friends, Earn Money

Make Friends, Earn Money — Thu, 14 Feb 2008 11:24:55 +0000

80% retirement rule is helpful to work towards as an objective but isn’t always accurate. For example as you appraoch retirement it is likely that some of the major expenditure costs like your mortgage and significant loans will have been paid off and these often take a large chunk of any income. I suppose it depends upon the type of retirement you want.

By: TJ

TJ — Thu, 14 Feb 2008 08:43:45 +0000

I just discovered your blog and really dig it. Thanks for all the work you put into it.

I found you while looking for people who write about retirement as my client has just done a whitepaper to help CPAs tell their clients about an IRS-approved way to invest in alternative investments from their solo 401k (we call it a small business 401k). It has been around since 1974, but until now has been pretty cumbersome for even the pros.

Have you seen much info on solo 401k investing in real estate or startups or what have you? I’d be interested to read more about that, if you are researching new topics.

Our whitepaper might offer some nuggets, although it is not aimed at the consumer.

By: Saturday Roundup | Credit Withdrawal

Saturday Roundup | Credit Withdrawal — Sat, 22 Dec 2007 19:10:57 +0000

[...] Moolanomy – A Deeper Look at the 80% Rule [...]

By: retirehappy

retirehappy — Thu, 20 Dec 2007 03:42:17 +0000

I think a lot of people forget about inflation when it comes to retirement, it’s great that you included it. This is a good look at a “rule of thumb” and it’s important to understand its reasoning and origins.

By: traineeinvestor

traineeinvestor — Wed, 19 Dec 2007 01:57:53 +0000

I view the “80% rule” as dangerous. For the reasons you have given above it will only be the “right” number by sheer chance. It is much better to do your own calculations, allowing for inflation, changes in lifestyle and so on.

By: Pinyo

Pinyo — Tue, 18 Dec 2007 23:39:27 +0000

@Mrs. Micah – I am sorry about your mom, and like you I intend to live a full and balance live — not too much now and not too much later.

@FourPillars – Yeah, they are useful to a degree, but it’s dangerous not to understand how these rules came to be and what factors affect them. I love quick rules of thumb, but always with caution.

@Matt – Absolutely. In fact, I am wrote something to that effect in my guest post for the Millionaire Mommy Next Door. I think it will go live soon. I hope you will get a chance to read it. I think retiring abroad is very appealing; at least to some folks.

@Terry – Medicare is one thing I have to learn more about.

You’re right on about investing in retirement. Personally, I think some of the standard investment recommendations are too conservative considering 20 years in retirement is a long time.

@TraineeInvestor – Welcome to Moolanomy and thank you for your comment. Right on!

By: Terry

Terry — Tue, 18 Dec 2007 22:58:36 +0000

Health insurance is a big cost as one gets older. Many people keeping working later in life to keep their health insurance benefits. At age 66 medicare kicks in.

Investments should focus not just on saving money, but on instruments that keep generating income after one retires.