
Ask HN: How much have you saved for retirement? - whitefish
This blog post says as a Software Engineer working in the US you should have $4 Million in savings to have the same income, in retirement, as a fresh software engineer.<p>http:&#x2F;&#x2F;chase-seibert.github.io&#x2F;blog&#x2F;2014&#x2F;01&#x2F;01&#x2F;saving-for-retirement-as-a-software-engineer.html<p>How much have you saved for retirement, and at what age?
======
super-serial
Nothing... because methane in the arctic will end human civilization by then.
[http://arctic-news.blogspot.com/p/extinction.html?m=1](http://arctic-
news.blogspot.com/p/extinction.html?m=1)

It makes more sense to take big risks with money and then use any big payoffs
to help geoengineering efforts or prepare for living in a bunker. That may
sound silly but some rich people are already doing that:
[http://www.newyorker.com/magazine/2017/01/30/doomsday-
prep-f...](http://www.newyorker.com/magazine/2017/01/30/doomsday-prep-for-the-
super-rich)

~~~
JJJJJJSsss
I don't dispute man-made climate change, it's obvious by now.

I also don't dispute man-made climate change bringing about more extreme
weather and raising sea levels, which are catastrophic things by themselves.

However, it's when you wrote about the "end of human civilization" that I got
skeptical. There is no scientific consensus for that, and no compeling reason
to believe such exaggerated claims, even if "rich people" took precautions
against it, or some lone climate researcher claims it in a blogspot post.

Do not plan your retirement thinking that human civilization will end before
you retire, because much more likely than not, it won't. This is so absurd
that you're setting yourself up to have your end-of-life tragedy be in the
future a pretty good joke about taking conspiracy theories seriously.

------
bsvalley
If you live in a place like the Bay Area, the best retirement plan involves
these 4 steps:

1\. Owning a home in the Bay Area by the time you retire. No mortgage, no
rent. Just bills.

2\. Sell that place when you retire in order to move to a cheaper location.
Use whatever's left from the sale of your home as an income for the rest of
your life. Let's take a $800K home for example, if you make $150K per year,
you may qualify after 2-3 years by saving as much cash as you can for a down
payment. That house/condo might be worth 1.5 to 2 million dollars in 30 years
from now, who knows? Despite the inflation, if you sale it for say $1.5, after
tax and real estate fee you might end up with $1.2 net. This is not income
money. You could then buy a $500K house somewhere cheap, then use the
remaining $700K as part of your retirement money, which brings in $35K net per
year for 20 years. This is roughly the equivalent of $50K gross income per
year.

3\. Make sure to add a little bit in your personal saving account every month,
even if it's $100-$500 it's fair enough on a 30 year period.

4\. Make sure you add up a little bit in your 401K.

The combination of all 4 will maximize your retirement while leaving in your
own place. Real estate in a place like the Bay Area is the best investment
because of the location. It doesn't matter if it's a tiny 1 bedroom in San
Francisco or a crappy old house in South Bay, it will hold its value over the
years and will most likely help you moving to a cheaper place with a lot of
cash in hands.

~~~
whack
> " _Real estate in a place like the Bay Area is the best investment because
> of the location_ "

How do you know this? What you're saying sounds just like all the bankers and
mortgage salesmen in 2007 promising that real estate prices will never fall.
If you want to bet on SV real estate being the best investment, go ahead. But
call it what it is: a speculative bet.

For those who would prefer not to speculate on their retirement savings,
professionals have already put together very sophisticated calculators that
tell you whether it's better to buy-or-rent. Check it out and run the numbers
yourself, before trusting uncited blanket recommendations given in a HN
comment.

[http://www.nytimes.com/interactive/business/buy-rent-
calcula...](http://www.nytimes.com/interactive/business/buy-rent-
calculator.php)

~~~
tehlike
It is speculative, but so far it has resisted nicely.

All housing went down in the bubble bursts, but bay area still enjoyed nice
7-8% yoy growth so far.

There are couple things that could make it pop badly - like detroit like
situation where it goes bankrupt, or the other is tech companies decide to
move elsewhere.

I think this is where you should eiversify either way. Buying properties where
tech is currently strong is a nice way to diversify

Austin, bay area, ny might be good spots for this.

------
whack
I believe the guideline is that in order to enjoy a $X/year retirement income
(adjusted annually for inflation), you need a nest egg of $25X. So if you'd
like to retire with $100k/year, $2.5M would do it. And even less if you are
willing to factor in social security income.

If you adopt a buy-and-hold investment strategy over the course of 20-30
years, with a good mix of index funds, the above should be easily within
reach.

~~~
1ba9115454
Not sure it's safe to assume the stock market will go up and up. Perhaps it
will, but where does that money come from?

~~~
whack
The S&P 500 has a PE ratio of ~20. Which means that for every $20 of stocks
that you earn, your portfolio of companies are generating $1 in yearly profit.
These profits alone represent a ~5% ROI. That's where the money comes from.

------
kolijila
I'm 24 and have 10k in Wealthsimple because I can't be bothered to learn more
about how to manage my investments myself right now (and I've been a dumbass
with money for the past 6 years).

WS tells me I'll have ~$5,222,649 when I'm 65 if I continually add $5k/mo to
my invesments.

They say "We include your scheduled contributions into this projection and
assume a return of 5.1-5.45% on stocks and 0.74-1.05% on bonds after 0.5%
fees. The impact of taxes is not included. Actual returns may differ."

My ideal plan is to have ~$600k+ in investments and withdraw 1-2%/yr to cover
food costs. I'm looking at some 200-300 acre stretches of land for around
$150k~ in Canada where I plan to build a house myself. Looking to hookup solar
and for a freshwater lake to be running through the land. The goal is to self
sustain for however long I need to so I can think and work on my hobbies
without the overhead of rent/career.

I feel like trying to scrape together an hour or two here and there for a
hobby doesn't do anything for me because I'm working on things that require
large stretches of uninterrupted time over the span of weeks/months.

~~~
cylinder
New account - suspicious. I don't doubt that startups like Wealthfront are
gaslighting HN and Reddit.

~~~
pm90
Or it might simply be that people don't like to discuss specific numbers
related to their income/investment on a public forum under their real name.

------
DamonHD
In the UK the (usual) limit you can have in your pension fund is now £1m.

I would expect to have about 20 times whatever I wanted to live on per year,
and that yearly amount would high enough above what I know is enough to be
comfortable. The state pension should kick in something too.

However, I don't expect to completely retire at any point though legally I
currently could in only 5 years' time (then another 10 years or so to state
pension age). So if I'm not doing a reasonable amount of work and keeping my
brain active at 70 I would be disappointed.

~~~
pm90
This is my thinking as well. I like to think I would be working in some
capacity much beyond the current retirement age. One of the reasons I like to
keep a healthy lifestyle is that I want to be physically and mentally capable
of continuing to make useful contributions until the very end... and that last
part really scares me, but that's another conversation.

~~~
DamonHD
What scares you? Mortality, or being able to keep being useful, or something
else? (I'm not being flippant: I live next to a graveyard which reminds me
that I'm not getting out of the first of those!)

~~~
pm90
I guess its a combination of Mortality and lack of independence/increasing
dependence, while bodily functions slowly get less and less effective. I am
very afraid of the idea of fading away. Perhaps I would be more comfortable
if, e.g. I knew that my end would come at a very specific day and that I would
remain healthy until then and the poof!

~~~
DamonHD
Then you should know the joke about the difference between an English actuary
and a Russian actuary. The former tells you your life expectancy ie an age you
might expect to die, whereas the latter gives you a date, time and place.

I suspect I'm somewhat older than you, and faults are already accumulating and
have been significantly so for 20 years or more. I can see how it may
eventually become too tiresome to carry on if some of the breakage can't be
fixed. But there are often compensations...

------
cbanek
I'm 35, and have been saving for retirement and maxing out my 401(k) ever
since I started working. I don't think I'll ever have 4 million dollars in my
retirement account, but I think (hope?) I'll be fine.

I think it's the numbers that are suspect in this analysis.

1\. The calculator asks for your salary, then uses your current salary to
determine your need for money in retirement. If you're saving 20% of your
salary, then really you are only living on 80%, and that 80% should be used as
your 'living expenses money'.

(fine print of calculator: We then assume you can live comfortably off of 85%
of your pre-retirement income. So if you earn $100,000 the year you retire, we
estimate you will need $85,000 during the first year of retirement.

I think it should be at least 85% of what you're not saving. For example, if
you're making 100k, saving 20k, then really you should take 85% of 80k, which
is 68 - not 85.

Also costs change as you get older. While you may spend more for health care,
you hopefully won't have to pay rent, for raising children, etc.

Finally, they seem to say they want to take all the money and purchase an
annuity. It seems like as soon as you retire, your money stops growing (other
than for inflation) because of the annuity, but if you kept that money growing
while you were retired, it would probably be even less.

Really the big trouble is you can't rely on ever increasing markets with some
7% yearly rate of return. It could be higher, it could be lower. If it's lower
for a long time, basically the US retirement systems (both 401k and pension)
are in huge trouble.

~~~
mindingdata
They take the 85% of 100k because it's assumed when you retire, you won't be
saving any of your income, just drawing down.

This calculator is often uses to demonstrate different savings rates :
[https://networthify.com/calculator/earlyretirement](https://networthify.com/calculator/earlyretirement)

The reason why saving more quite rapidly lowers your retirement age is because
it's a twofold saving. Firstly you are saving more money which is good, and
secondly you are learning to live on less.

To take a super simple example. Let's say you can live on 50k a year. And you
can get 3.5% on term deposit rates (You can in NZ). Then you should need
50,000 * (100/3.5) = 1.4 million approx to retire and be able to earn 50k a
year off interest alone.

~~~
cbanek
Totally agree with all that, and that's what I rely on, that I can live
frugally.

But in the article, they link to the calculator that gave them the 4 mil
figure, and that asks how much you make, and how much you are saving. But it
doesn't take the savings out first. So it's saying you can live on 85% of what
you need now, if you save 0% or 50%. Since they have the number you are
saving, it doesn't make sense to me to bake that into the 85% number, when
they can calculate it based on the info you provide. I really think it's that
on average, you only need 85% of your income, likely due to some smaller cost
of living changes, but also tax implications, etc.

Your calculator is much better, and assumes you have enough money to draw down
only the gains, and not the principal, but that's not what the calculator in
the article does (as they mentioned in the fine print), they buy a fixed
income inflation adjusted annuity at 6%.

------
mikestew
_This blog post says as a Software Engineer working in the US you should have
$4 Million in savings to have the same income, in retirement, as a fresh
software engineer_

Fidelity is always telling me I need some ungodly amount of money saved in
order to continue the lifestyle to which I've become accustomed. I don't need
that much. Here's what my current income pays for that won't be an issue in
retirement:

1\. Maxed out 401K at $18K/year. The wife's doing the same.

2\. $3K a month paid to mortgage principal, in addition to the house payment.
(It is financially unwise to pay down a 2.5% loan quickly, but I'm not
retiring with a house payment.)

3\. Commuting expenses.

4\. A hell of a lot more eating out than I plan to do in retirement.

5\. My current tax rate. A lower tax rate in retirement is the whole basis of
the appeal of tax-deferred accounts.

And let me give you some anecdata to work with as you ponder your starvation
in retirement: my parents. Mom just bought a brand new Corvette last year. Dad
is talking about a new $65K truck to replace the one they bought just a few
years ago. The just bought a new $35K fifth wheel camper this year. A large,
long-paid-off house on six acres in Florida. Lots of camping trips, which
means feeding that hungry diesel truck that's pulling that fifth wheel, and
camp spots with hook-ups ain't cheap. Maybe it's not how kings live, but I'd
have no problem with the lifestyle. They're in their 70s now, I don't see the
money running out any time soon.

And they retired in their 50s with about a million dollars.

You'll need $4 million if you still hold a mortgage in the Bay Area and you're
stilling hitting the $EXPENSIVE_NIGHT_SPOT thrice a week, while having Uber
Eats delivery your dinner every night. Which you won't be doing when you're 55
or 65 if you have any sense. Which means you don't need anywhere near $4
million.

To get to answering your question, I plan a minimum of $1 million, and a max
of $2 million, when we retire. We're not going to continue to live in Redmond,
WA, I don't think. Taxes are pretty good, IMO, but we'll sell the Redmond
house and buy something in, say, Bellingham and pocket the difference. I have
absolutely no reason to believe we'll be anything other than just fine and
dandy. Especially considering that the median person of our mid-50s age has
less than a tenth of our current savings, and you don't see masses of retired
people starving in the streets, do you?

~~~
throwaway8800
I agree with you completely. I view my current income as almost irrelevant
when it comes to determining how much of a retirement nest egg I need to have.

My approach is to actually contemplate what retirement looks like and develop
a budget based on that to determine what our expenses will be, and
subsequently how much income will be required to support that lifestyle.

------
closeparen
$0. I'm focused on building a six-month emergency fund first.

I don't need anything approaching 100% income replacement, as it would make no
sense to pay exorbitant rent for proximity to jobs as a retiree.

I doubt I'll save enough over my lifetime (outside of 401k) to scratch a down
payment on a Bay Area 1-bedroom condo, but it'll be more than sufficient to
buy a palace for cash anywhere else the _moment_ I don't need to live here
anymore.

(I have worked in Midwestern IT cost centers, never again).

~~~
eb0la
Make it one year fund. Even better, have make one-year fund using peak expense
month as a reference. The probability of not needing to use it fully is high,
but not 1.

~~~
closeparen
I think it would be silly to prepare for long-term unemployment in the Bay
Area. I can move to within a few blocks of my parents' house and live almost
the same lifestyle for ~50% of the cost, or a lifestyle befitting a long-term
unemployed person for ~25% of the cost.

Moving costs _something_ , but would pay for itself very quickly. If I leave
my furniture to the Craigslist scavengers, just the lease-break fee of 1
month's rent and a plane ticket with a couple of checked bags.

At some point it becomes important to start the ball rolling on that sweet
compound interest, pick up the preferential tax treatment (saving the max of
$18k to a 401k would only cost me about $10k), pay down student debt early for
a guaranteed 4.5% return, and (yes) travel and enjoy being young.

Effectively, the fund I'm working on _will_ be worth even more than a year, as
long as I relocate.

------
cm2012
Less than 2% of the US will ever see anything near $4 million in their bank
account.

Most people would consider it a LOT to save $20k a year, which would be well
under a million by retirement.

~~~
TheAdamAndChe
It would only be below a million if you stuck your money in a savings account.
If it's in an investment account, after 30 years at 7% growth per year and
$20k deposited per year, you should have $1.87 million dollars saved. Which
isn't tons when you consider inflation, but it's definitely better than what
you're suggesting.

~~~
toomuchtodo
7% returns are unrealistic moving forward; I would target ~5-6%.

CalPERS came to this conclusion a few months ago, and they're a bit behind the
rest of Wall Street when it comes to returns estimation.

[http://www.cnbc.com/2017/02/08/calperss-sees-58-percent-
retu...](http://www.cnbc.com/2017/02/08/calperss-sees-58-percent-return-with-
new-allocation-below-7-percent-goal.html)

Some Wall Street veterans are predicting returns even lower.

[https://www.bogleheads.org/wiki/Historical_and_expected_retu...](https://www.bogleheads.org/wiki/Historical_and_expected_returns)

~~~
TheAdamAndChe
This honestly doesn't surprise me. The fact that tons of men aren't working
anymore is an indicator that the old methods of maximizing productivity by
lowering wages and increasing hours isn't going to work as well in the future.

------
Eridrus
That's a bit of an odd analysis.

The biggest chunk of my income is eaten up by taxes and rent. Once you've
retired and your only income is from long term capital gains, taxes are much
less of an issue and hopefully you've purchased a home so you don't need to
rent. It also ignores social security, which based on the quick calculator at
ssa.gov seems to be not an insubstantial amount, though I get that people
don't want to count on that.

On the flip side, it completely ignores inflation which may mean that while
your savings may be very large compared to how much you need to live today,
they may not be adequate 30-40 years from now.

Without a good estimate for what your expenses will actually be, the number
you "need" turns out to be complete nonsense IMO.

~~~
mikestew
_Once you 've retired and your only income is from long term capital gains_

You'll also likely be drawing down a 401K, and the government wants their
deferred taxes back. So capital gains taxes aren't the only tax consideration.
Granted, you most likely will in a lower tax bracket come retirement time.

------
Artlav
> Ballpark, you make about $100k a year in your 20s

I'm green with envy... With that much money i could have probably retire right
now at 30, and i'm half way there.

Then again, i live in a country with free medicine, free education, no
lawyers, a recently-ended oversupply of housing leaving me with 1.5 apartments
and a house from grand-grand parents who "moved on", and all bills and
necessities coverable by about $2k a year, so i'm not sure if i have a right
to be envious.

More to the point, i keep the money scattered around - foreign currencies,
gold, crypto, etc, to avoid losing all at once and staying ahead of the
inflation. I don't expect to ever become a millionaire, barring a lucky
investment or something.

------
warsharks
absolutely zero, i have very little chance of surviving to retirement age and
even if i do i cant imagine id have any desire to not carry on working, its
not like im a bricklayer, chances are ill still be able to type and as long as
i can do that ill be working

------
bko
I'm too young to consider my savings as retirement, but I created a handy
spreadsheet that allows you to estimate how much you'll have by the time you
retire.

[https://docs.google.com/spreadsheets/d/1nV8N16sBFiqDtZqkORlh...](https://docs.google.com/spreadsheets/d/1nV8N16sBFiqDtZqkORlhLGgBmVxghohCnXJtPzrmu-A/edit?usp=sharing)

Feel free to point out bugs or copy and add features.

~~~
seattle_spring
> I'm too young to consider my savings as retirement

Why do you say that? I started saving for retirement at 16, and have never
considered it anything but.

~~~
bko
What I meant was that although I have savings, I am undoubtedly going to have
unforseen expenses in the near future that I cannot say that my savings are
earmarked for retirement

------
TheAdamAndChe
I'm 23. I have a goal of $2.4 million dollars by age 60. I currently have
$4.3k saved. I'm having trouble meeting my goals because I am having trouble
finding work. I live in the third largest city in my state, but it's not a
city positively affected by globalization, so unemployment is high and wages
are low. I can't move because my wife has a career started here. Such is life.

~~~
tehlike
where are you based, and what do you do?

~~~
TheAdamAndChe
Southern Missouri. I'm trying to get a career started in IT with an end goal
of becoming a penetration tester. I've got a year and a half of tech support
experience, several certifications, and am currently working on a degree. All
tech jobs at my level in my area have been outsourced, unemployment is high
here, and economic growth is slow. This has made it very tough to get started.

~~~
tehlike
could you move out of state?

~~~
TheAdamAndChe
Nope. Like I said in my post, my wife has a career started here, and I am not
leaving her just to chase a career that is likely to be outsourced in the next
decade.

~~~
tehlike
Outsourced is probably not going to happen at a full capacity.

I would consider places where you two could have reasonable careers.

For example, sf is good for tech, but ny might be good for both finance and
tech. Now might not be the right time, but after her promo might be a better
time.

------
cko
> When you do pay taxes on the money in retirement, your tax rate will likely
> be lower.

The only reason it will be lower is if income is lower.

Some people say to not contribute more than the match, because you end up
paying more taxes in retirement (taxed as income) than if you just ate the
taxes first and paid capital gains on it later.

------
ksherlock
Something to consider: assume you make $100,000 and you max out (~$18,000)
your 401K. Are you going to be saving $18,000 a year for retirement when
you're retired?

------
sotojuan
Not much, paying loans first. Should be finished with that in two years (age
25).

~~~
tehlike
depends on the interest rate on that loan.

if you are working for a large co, consider putting money in 401k first, and
get (up to?) 50% match.

