Thursday, August 5, 2010

Saving Only 10 Percent of Your Income Is for Losers

Here is an excerpt from a retirement planning article about how hard retirees are finding to make it in this day and age:

    "The man who runs Palm Beach Share-n-Care Centre, where retirees and the aged to gather for events and activities, said pensioners hit hard by superannuation funds had to pull back on their favourite pleasures.

    "You can tell in the bingo, they're not spending as much as they normally would," said Mr McRae.

    "That's normally a pretty good indicator of how well people are doing.

    "There's a lot of pensioners doing it tough at the moment. There's probably a lot who have done money in the stock exchange."

    Plans for overseas holidays have been cut indefinitely, largely because nest eggs have evaporated, and the number of those on the borderline to poverty has increased, he said.
Financial advisors advocate that you use a simple retirement calculator to determine how much retirement income you will need before you submit your retirement letter. The exercise in determining how much money you will need for retirement will not result in perfect information, however.

Even if people could come up with perfect information, most people won't make use of this information because they aren't about to increase their savings much, if at all.

There are two problems conditions that most North Americans suffer from:

1. A need is any luxury that their neighbor happens to have.

2. Instant gratification takes too long.

    Ernie Zelinski has just started writing a book called How NOT to Retire BROKE in which he is going to make the point that saving 10 percent of your income is for losers and people should save at least 40 percent of their income so that they end up with an adequate retirement income.

    I was delighted to hear that someone is doing even better with their saving rate than Zelinski proposes.

    On January 17, 2010, in reply to a blog post "5 Reasons Why You Will Retire Broke and Unhappy," an individual who writes his or her own blog post called Retirement Investing today stated:
      "I personally am taking my retirement savings seriously and have by living very frugally been able to increase my savings to 60 percent of my gross earnings. I’m targeting a very early retirement. Achieving this high rate has been partly achieved by watching my Lifestyle Creep as you identify in Point 5. As I achieve pay increases I have actively decided not to change my standard of living."
    In short, knowing how much money people need to retire comfortably will do them absolutely no good if they can't handle money.

    It was J.P. Getty who said, "People who don't respect money don't have any."

    Check out David Letterman's Retirement Plan of David Letterman

    Here are a few new retirement sayings

      I have retired, un retired, and retired again all in the past 10 years.
      — Unknown retiree

      “We’ll rock till we drop. We have all agreed this won’t be the last time. Everyone’s rocking."
      — Ronnie Wood, (in July 2010 at age 63, in response to rumors that the Rolling Stores were going to retire. At the time, lead singer Mick Jagger was 67, guitarist Keith Richards was 66, and drummer Charlie Watts was 69.)

      "It [retirement] was absolutely boring. You can't go and say, 'I'm retired now. That's it!' It won't take long and you're really gone for good and someone throws the last shovel of dirt on a coffin with your name on it. That's the moment you're really retiring — whenyou die."
      — Ozzy Osbourne