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|Subject: Re: Savings Rate (long)||Date: 6/9/2005 8:38 AM|
|Author: HaltCatchFire||Number: 3302 of 5056|
I find the worksheet has some basic issues, but as a guestimation tool, it has some serious value to me. One of the biggest issues I see is that they suggest using 80% of your current salary as the amount you will need in retirement. I find that number to be very high. From the FIRE board, I remember a discussion that put the real number closer to about 50%. What are you using as your benchmark? The article does discuss cheaper clothing, commuting, etc costs, but they also point out that you will probably pay more for health care and possibly you will travel more. Still, many people who are aggressively chasing FIRE live on less than 50% now.
I've not seen the article. As usual, this will not stop me from commenting.
I don't really care how much of my salary I need to replace. I'm more concerned about meeting 100% of my expenses.
Most IRL people I talk to are just stunned that Mrs.Fire and I track our expenses down to the penny, month after month. We can tell you what percentage of our income goes to taxes, insurance, mortgage, cars, charity, you name it. We use this data to drive down our expenses. Detailed expense data gives me a good estimate on how much we'd need to FIRE. But, as I said, most people do not have this tight a grip on their expenses. But income is much easier to estimate. So the "experts" use that instead.
I've never really done the math to figure out how much I need to save, so this was an eye opener for me. According to the worksheet, I only need to save $200 more a month to retire in 20 years. I'm not sure that I trust that. It seems quite low. FIRE should be a touch harder, shouldn't it? :)
You'd think. But you're simultaneously raising your saving rate and reducing your target amount through reduced expenses (assuming you LBYM and don't go into debt to save). You're driving faster to reach a closer milestone.
It's really sad to me that most people could FIRE if they only tried. But they don't.
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