Hacker News Reader

Comment by frankbreetz | Hacker News Reader

I have always heard you should have 10x your salary (starting salary or ending salary, I am not sure).

This makes the average retirement "426,000 for those aged 65 to 74" seem less bleak, but the median(164,000) makes it sound pretty bad.

There is so much conflicting advice on this topic. It makes it difficult to plan. Are we getting Social Security? Will it be reduced? Is the safe withdraw rate of 4% a safe assumption? The article uses 7% for rate of return, is this inflation adjusted? Do These calculators make assumptions, like your house will be paid off, or you have reduction in spending from kids moving out?

I am assuming if you pay SS tax and put 15% of you income into the S&P for 30 years, you should be able to retire at 65. Hopefully it works out!

View on HN

There is a ton of poorly thought advice on this subject online. I recommend looking at some of what more reputable authors have published, such as Wade Pfau.

Even among experts there is not going to be a complete agreement on what is the best strategy, but there is broad agreement on some key points. I will briefly mention the two most important ones in my opinion.

First, realize that since investments compound, the (random) returns you get for the first few years of your retirement will have a disproportionate effect on whether you will have enough long-term. This is called the sequence of returns risk, and there are some things you can do to reduce that risk somewhat.

Second, and as a consequence of the (random) variability of the value of your investments over time, it is very beneficial to be able and willing to cut down on your expenses when your investments have lost value, particularly if it happens during those crucial first years.

Lastly, consider the possibility of purchasing an annuity. It provides you with some insurance in the event that you live longer than you expected.

It is VERY worth talking to a professional about this. It's possible to build your savings in a manner they will produce income via dividends, bonds and other methods that give you a pretty great tax advantage and you don't have to sell as many assets during retirement. This is a huge advantage overall, especially in the years the market is bad.

I am not a financial professional but rely on one to guide me.

Where does one find or learn about how to find a good person to work with US on this. I always worry its the finance professional's wallet first then maybe us.

Look for a fiduciary or a for fee planner (not a commission based one). They don't have a stake in selling you specific things, they just charge a flat rate. Whether they're any good or not is a different story, but they aren't in the business to sell you anything other than their services.

It's 10x the salary you need for the lifestyle you want to maintain.

Why is it base off salary and not spend?

does this assume I contribute 15% to 401k or do I take 15% off my salary?

Does this assume my house is gonna be paid off?

What are the SS assumptions?

Reply on news.ycombinator.com