Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 7
How do you compare with the formula given above ?

I know this has been discussed a hundred times before on various boards, but I had to bring it up again. That formula is too simplistic to mean much. For one, such as myself and the OP, who is 32 years old - I would consider it quite prodigious to even have 3.2 times our household income - certainly above average. On the other hand, I hope and pray that by the time I am 60, I have significantly more than 6 times my salary. Otherwise, retirement might look quite bleak.

The authors of the book tried to fit a linear graph to what is an exponential function. It works okay for the middle numbers, but does a terrible job on the ends - those at the beginning of their careers and those at the end. According to the formula, my little sister, who graduated from college last April should have (2.4 * $56,000) since she is 24 and has an annual salary of $56,000. Kind of silly when you think of it that way.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.