Comments on: Is 2X Your Salary a Good Retirement Goal?

By: Early Retirement Extreme

Early Retirement Extreme — Thu, 21 Feb 2008 18:27:54 +0000

This is too crude a calculation.

Investment income = rate * investments
e.g.
10,000 = 10% * 100,000

Contributions = savings rate * wage income
e.g.
10,000 = 20% * 50,000

So the idea holds more or less if one takes a pedestrian (20-30 years to retirement approach) with savings rates of 15-20% and market returns of 7-10%.

However, this crossover point is CERTAINLY NOT a retirement goal just like the point when investment income equals the cable bill (instead of the IRA/401k contribution) is not a retirement goal.
Rather it’s about one third of the way there in time and only 8% there in terms of money (if the ROI holds). In other words, for those that are pursuing standard retirement, this crossover point is a goal they should reach about 10 years after they started working.

The real retirement goal is

investments = 25 to 35 * retirement expenses

By: MoneyNing

MoneyNing — Mon, 17 Sep 2007 17:18:46 +0000

Unfortunately, two times the income saved is not nearly enough for retirement :(

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Mon, 17 Sep 2007 13:38:34 +0000

[...] Man at Lazy Man and Money asked whether 2 times of your salary is a good retirement goal. It’s my goal that someday I can replace a major part of our income by investment [...]

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Mon, 17 Sep 2007 03:21:51 +0000

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Mon, 17 Sep 2007 03:21:51 +0000

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By: Retirement Goals, Savings Index, Credit Card Secrets: The Roundup » Money and Personal Finance Blog In Silicon Valley

Sun, 16 Sep 2007 14:49:30 +0000

[...] interest than you are from your retirement contributions, you’ve reached the crossover point. I think I should be there already based on this guideline, but I’ll need to confirm [...]

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Sun, 16 Sep 2007 02:08:24 +0000

[...] Man asks whether 2x your income in retirement savings good [...]

By: Pinyo

Pinyo — Sat, 15 Sep 2007 21:52:20 +0000

“I figure if I put in $15,000 in retirement this year, I will have over $82,000 in buying power at age 66.”

I never thought of retirement investing in that term. I think you’ve got some cool and motivating idea there.

By: Stephanie's Blog

Stephanie's Blog — Sat, 15 Sep 2007 13:37:00 +0000

Another reason to opt-out…

I keep hearing about how if you don’t want to get all those useless credit card offers, you should call……

By: Brip Blap

Brip Blap — Sat, 15 Sep 2007 03:27:22 +0000

Maybe I’m doing something wrong, but I have just over twice my income saved and I can’t even begin to imagine how I could live off the interest. I understand that isn’t the point, exactly, but I’m shooting for something more in the range of 20 times my current income before I could really kick back and enjoy for whatever was left of my life at that point.

By: Patrick

Patrick — Sat, 15 Sep 2007 01:27:09 +0000

I only wish I knew how much I will need in retirement. I still have well over 30 years before I reach retirement age also, so I think I have plenty of time to grow my funds.

It is usually much more difficult to be 2x your current salary at a younger age as well – because your investments haven’t had time to benefit as much from compound growth. I’m not sure if I am at the 2x pace, but I think I am doing well for my income level and age.

By: rstlne

rstlne — Fri, 14 Sep 2007 20:05:33 +0000

I don’t know about that. I think I need at least 10 times my income in today’s dollars just to be on the safe side.

By: guinness416

guinness416 — Fri, 14 Sep 2007 19:54:02 +0000

It’s perhaps a useful interim goal, a smaller amount that’s dfinitely more psychologically manageable.

By: RateLadder

RateLadder — Fri, 14 Sep 2007 19:27:13 +0000

I strive to push out the retirement cross over point as far as possible while never decreasing my cash flow. That is a much better goal than achieving the retirement cross over point.