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December 10, 2010


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First Gen American

I figure that not only will my mortgage be paid, but you also aren't saving 20% of your income anymore for retirement, so that's a big chunk right there.

Jacq @ Single Mom Rich Mom

One thing I'm looking very forward to is not paying $50k a year in taxes. Maybe I'm manipulative that way, but I think having a job that spans 6 months but is over 2 tax years (ie. Oct-Mar) and deliberately working less hours than I could is the best tax minimization strategy I can think of.

I've noticed that some people I know who are thinking about early retirement or downshifting in some way but aren't very good with $ seem to have an "I will be frugal when..." mentality. But will they? Really? Maybe the no-brainer x% advice is more for those types?


Yes, yes, YES! The thing that bugs me most about "retirement advice" is the incessant repetition of that rule-of-thumb that one needs 80%, or whatever %, of one's current income in retirement. It is completely, utterly, WORTHLESS.

The amount of money one needs in retirement depends on what one needs to spend to live. It will have little or no bearing on how much one currently earns; it us usually much lower but could be even higher.

In saving for my early—age 45—retirement I was saving one third to one half of gross income. I was living comfortably on a fraction of my modest salary. Did I need 80% of that income in retirement? Of course not!

The only practical way to determine this figure is to do a budget of one's prospective retirement expenses. But once one mentions the "B" word, a lot of people tune out because it is too much work. I consider it an indicator of whether the person is really serious about retirement, especially early retirement.

Syd, I'm going to e-mail you a short essay I wrote years ago, called "Retirement Planning for Beginners", as a how-to guide for some local friends. It won't be anything new to you, of course, but will give you an idea of how I've tried to explain the subject and dispel the wretched "percent" myth.

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