[mcovey]

All this does is scare me. I honestly hope I die before I have to retire, because there's no way I'm going to have saved enough money to live off of, even modestly, and no way I'm going to remain sharp enough to continue earning through and beyond my 60s.

[Veelox]

> there's no way I'm going to have saved enough money to live off of

It is possible. It will take work and change on your part. The first step is to track your spending. The easiest way to do this is get an account with mint, ynab (you need a budget), or personal capital. You can link all of your accounts with the site and app. You can then categorized your spending. After you do this you can start seeing where you can reduce your spending. The major areas you can save on are housing, transportation, food, and miscellaneous. The reverse order is probably the easiest to reduce costs.

The Millionaire Next Door is a great book that talks about the difference in mindset between people who are able to build wealth well and those who are not able to. It is really eye opening if you are always broke.

[ryandrake]

There is no straightforward risk-less formula, unfortunately. You can follow all the textbook advice, have a budget, max your 401k, pay down your debt, buy a house, blah blah blah, and after 20 years still only have 1x or 1.5x your salary in total savings [ask me how I know] due to bad luck, unfortunate market timing, lack of skill in investing, emergencies, etc. I hate all this simplified, incomplete advice. If successfully saving for retirement was so straightforward and deterministic, there wouldn’t be an entire industry, with consultants and books, built up around trying to help people hopelessly navigate it.

[Veelox]

If you start at 25, saving 10% of your salary into a 401k and never get divorced, spend <30% of your gross income on housing, and don't borrow to spend more than you make 90% of the time you will come out alright.

> If successfully saving for retirement was so straightforward and deterministic, there wouldn’t be an entire industry, with consultants and books, built up around trying to help people hopelessly navigate it.

There is a full industry. Saving money (for people with incomes above the median), like losing weight is simple. Yet there are still fat people and broke people.

[cryoshon]

>saving 10% of your salary

impossible for most people

>spend <30% of your gross income on housing

impossible for many (most?) places with jobs

>don't borrow to spend more than you make 90% of the time

this factor is indeed entirely up to individuals and a perpetual point of failure... but refusing to borrow and cutting minor expenses is not a road to any kind of wealth for most people. it's a road to retiring poor. most people are on that road.

[Veelox]

> >saving 10% of your salary

>impossible for most people

Part of me is tempted to look up statistics to make the point but if you are making more than 150% of the poverty line in the US, you can save 10% of your income, it is a choice not to.

> >spend <30% of your gross income on housing

>impossible for many (most?) places with jobs

It all depends on where you are willing to live. Also, if you move to somewhere to get a job, before you accept the offer you should check to see if it is possible to move there and follow this guideline. If you, you shouldn't move there because you will become worse off.

> refusing to borrow and cutting minor expenses is not a road to any kind of wealth for most people. it's a road to retiring poor. most people are on that road.

Depends on what you count as minor expenses. If I cut out $100 a month of expenses starting at age 25, and put that in an index fund that grows at 8% until I retire at 67 it will be worth $412,077.88. If I want to retire a millionaire I need to save just under $250/month, which is 10% of a 30k a year job. At $30k I am a little sympathetic if you cannot save $250/month. If you are making $50k, it is a matter of choice.

[cryoshon]

>if you move to somewhere to get a job

you're out of touch. this is not even the same type of job that the majority of people have access to. people's standard of living is far beneath what you suspect.

>If you are making $50k, it is a matter of choice.

try having a mortgage or high rent, a medical problem, kids, parents who need care, a car, student loans, clothing that aren't tatters, an emergency fund.... and all that comes before even baseline (necessary) entertainment / low-luxuries like internet access and padded chairs.

it isn't a matter of choice for most people. nevermind that 412k isn't enough to retire on if you have any of those burdens above. sure, they could spend $20 a week less on beer. but why would they?

[poulsbohemian]

Amen! I read The Millionaire Next Door when I was 22. Bought a house in a low-cost but appreciating neighborhood. Started working with an accredited financial advisor. Saved double-digit percentages of my income. Worked hard, made a six-figure income.

At forty? Here I am tens of thousands in debt, all that hard work gone. I did all the things society told me to do if I wanted to live the good life, but life can come at you in unexpected ways. For some people it is poor health, others a crazy ex and a truly unfair divorce. Businesses succeed, but sometimes they also fail.

Much like the founding story myth discussion here on HN, we might do well to hear some stories of personal financial failure as vehicles for learning.

[jbdubwub]

What happened? I'm always interested in the stories where things didn't work. People don't hear those.

[BeetleB]

>You can follow all the textbook advice, have a budget, max your 401k, pay down your debt, buy a house, blah blah blah, and after 20 years still only have 1x or 1.5x your salary in total savings [ask me how I know] due to bad luck, unfortunate market timing, lack of skill in investing, emergencies, etc. I hate all this simplified, incomplete advice. If successfully saving for retirement was so straightforward and deterministic, there wouldn’t be an entire industry, with consultants and books, built up around trying to help people hopelessly navigate it.

You can follow all the textbook advice, study hard, fill in your applications on time, get good grades in college, and once you graduate you could still not have a job for years due to bad luck, unfortunate economic conditions, lack of skill in picking your major, emergencies, etc.

What should I conclude about all the advice on studying?

[sf_rob]

I completely agree that these things are oversimplified and people don't discuss luck enough. However, if you're able to isolate your retirement savings from the rest of your life (which is a big if which doesn't apply to many people!), things aren't so bad on a long timeline. Here are two data points that I find quite compelling. The first is about a theoretical person who saves money in cash between market run-ups and only invests at market peaks (spoiler, they end up with much more than they invested). The second just points out that the S&P 500 has never had a nominal 30 year streak with less than ~8% annual growth (which is not to say it couldn't).

http://awealthofcommonsense.com/2014/02/worlds-worst-market-... http://www.businessinsider.com/30-year-sp-500-returns-impres...

[sokoloff]

There is an interesting article on the relationship between savings rate and number of years required to save for retirement.

Given a savings rate, the number of years required is income-invariant. (A given savings rate may not be invariant of course.)

https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...

[astura]

The Millionaire Next Door is not a great book - it's just survivorship bias and assumes correlation is causation.

http://www.latimes.com/business/hiltzik/la-fi-mh-the-death-o...

Plus one of the authors died driving a Corvette, not a Corolla...

Like all self help books, it's about selling hope.

Furthermore, you were entirely unwarranted in making the assumption that the GP has a spending problem instead of an income problem.

[gowld]

You have no idea what parent poster's income and skills are.

[Veelox]

You are right, I don't but since they are commenting on hacker news I give it a >90% that if they are willing to change their lifestyle than they can become less stressed about money.

[toomuchtodo]

Pay off a modest $100k house in a low cost of living area and you should be able to survive on Social Security alone.

Save more if you can though.

[5555624]

Do this when you are young, too. Doing this when you're older, say 50+, can still work, it's just harder. Unless I pay my mortgage off early, before I qualify for Social Security, I'll still be paying it. On the other hand, it's less than $800/month, so I am not too worried.

[loeg]

A mortgage is a sort of reverse bond. Ideally, you pay it off aggressively shortly before you plan to retire.

This whole blog series is great, and I'd recommend it, but this particular post is the one responsive to the mortgage and retirement part:

https://earlyretirementnow.com/2017/10/11/the-ultimate-guide...

[toomuchtodo]

I paid my mortgage off in my late 20s as a hedge against future unemployment.

[bduerst]

Do retirees have to pay property taxes?

[toomuchtodo]

Yes, but usually receive a discount for being seniors. That’s why I said low cost of living. Tennessee is nice.

[sf_rob]

And a lot of places freeze your property tax at 65, so you never have to pay more.

[toephu2]

A lot as in only 6 of the 50 states?

*http://www.ncsl.org/research/fiscal-policy/state-property-ta...

[sf_rob]

Most property tax is local not state. I don't have the percentage breakdown, but I have encountered this multiple times within my family (anecdotal I know). It's quite possible that this percent is not a majority.

Plus, your link is more like ~14/50 states if you're only considering lower income folks.

[matte_black]

Social security is a supplement, it’s not meant for you to live off, nor should you expect it to always be around.

[gowld]

Social security is meant to be a foundation, not a supplement. It's supposed be enough to live on, but not enough to live luxuriously on.

[metalliqaz]

Social Security, in my retirement? That's a laugh.

[snowwrestler]

While it is fashionable to doubt that Social Security will be around for the Gen X or Millenial retirements, the reality is that it's simply a matter of political will.

If people like Social Security (and they generally do), then all they have to do is vote for politicians who will protect it, and harass politicians when it looks like they won't.

Of course it's fine to plan for a retirement without Social Security... having too much money in retirement is not generally considered a problem.

But if you're feeling despair over Social Security, know that there is something you can do about it: political organizing.

[dbajakkchs]

IMO, publicly despairing that social security won’t exist in the future only serves to shift the Overton window, making it more likely that social security won’t exist.

[__blockcipher__]

Of course it won’t exist. It’s an asinine, regressive policy that uses trick after evil trick to convince voters that it’s not an unholy abomination.

I know my rhetoric sounds like a joke, but I’m 100% serious. You have the fake notion that “employers pay half” (no, the worker pays 100% of it truly), you have its regressive nature (poor people start working earlier and also die earlier, so it’s a redistribution towards the wealthy), you have the fact that it’s sold as a sort of insurance/retirement account when in actuality it’s neither.

Honesty, you’d be hardpressed to find a more awful government “safety net” program. I miss the days when I supported myself only on illegal income and got to avoid the whole issue. Alas, those days are gone.

[BeetleB]

>You have the fake notion that “employers pay half” (no, the worker pays 100% of it truly)

You have the fake notion that if we didn't have SS, employers would pay you more.

>you have the fact that it’s sold as a sort of insurance/retirement account when in actuality it’s neither.

It is in actuality neither. However, because of it, seniors were the age group who were least likely to be in poverty during the recent recession. During those years, it really acted well as a safety net.

[allsunny]

I agree. I think Social Security, like Medicare, is a "third rail" sort of thing. I expect politicians will have to cut back military spending before they can go after Social Security

[metalliqaz]

You haven't heard of Paul Ryan?

[metalliqaz]

Politicians don't listen to you or me. They listen to Moneybags McGee and his PAC. The vision of democracy that you described in that comment doesn't exist in the United States.

[function_seven]

The fact that Social Security has survived for several decades is evidence otherwise. Even Moneybags McGee knows better than to poke at AARP and the most reliable voting demographic in the world.

[gowld]

Even the conservative assumptions of the SSA show that SS will have some funding for your retirement, just not 100% of what is current promised. (Something like 75% 30 years from now)

[poster123]

Social Security will exist in some form because Americans won't let the elderly starve en masse, but there will likely be partial means testing (people with higher incomes or possibly assets get lower benefits), higher eligibility ages, and lower basic benefits.

[dbajakkchs]

Even on the current path, if no changes are made to improve solvency, social security will pay out at about 75%.