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Money magazine

July 22nd, 2007 at 04:50 pm

I see that many of you read money magazine and scfr mentions the chart on page 109. I did not quite understand how to figure that chart out. Maybe one of you smart people can tell me how much we should be saving according to that chart.
My husband is near 55, makes close to ( but less) than 80K and we have about 800K in savings. How much should we be saving per year?

Posted in saving | 2 Comments »

2 Responses to “Money magazine”

  1. disneysteve Says:
    July 22nd, 2007 at 05:56 pm 1185123375
    1185123375

    According to the chart, you need to save 37% of annual income minus 0.5% for every $10,000 you have already saved. In your case, you've saved $10,000 80 times. 80 times 0.5 is 40. So you need to "save" 37% - 40%, or negative 3%. In other words, you have enough saved to meet 80% of your pre-retirement income even if you stopped adding to your savings now and just let the existing money continue to grow.

    The fine print notes that this assumes a retirement age of 65 and annual inflation of 2.5%. If he wants to retire earlier or inflation is higher, that alters the equation.
    In any case, I'd say you guys are in great shape.

    I'm going to start a new thread on the Personal Finance board to discuss this article.

  2. Ima saver Says:
    July 22nd, 2007 at 06:27 pm 1185125278
    1185125278

    Thank you so much for figuring that out for me, Steve. And for explaining how to figure it out. I get it now!!

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