I suspect that these formulas would put us at our current ages under what we would need to retire and would have overestimated what our net worth would have to be at earlier ages.
@sax congratulations on retirement. Your post about how much current property tax you currently pay took my breath away! Once you downsize, what do you think you will be paying in property tax?
Donât know if anyone has mentioned or looked into www.chrishogan360.com and looked at his retirement âformulaâ/information. I havenât done because I am pretty comfortable on our âtrackâ to retirement, but since some have questioned some of the formulas, maybe this can help affirm other formulas within your own individual situation and give you some peace. He is one of Dave Ramseyâs people - he is fun to hear speak. He talks about retirement being a âcelebrationâ if you are ready for it financially. He reminds me of a very joyful and personally engaging and funny Deacon from NW (Washington State or Oregon) that I have seen on EWTN - also a bit overweight and African-American.
Although there are some big earners here, there are some of us that are not, but hopefully all of us will be prepared for retirement if all goes well during the next XX years before retirement.
For H and me, the high income years are now, and the next three of those will be with college finished by the kids, and home finally paid off within the next 8. Hopefully no more medical hurdles (H has avoided - he did have inguinal hernia surgery when he was younger, and endured a prostrate biopsy and thankfully that was a calcium deposit; I have survived stage III cancer and am approaching 5 years cancer free). Primarily during the cancer years, we did have some significant inheritance money coming in thanks to my parents (3X Hâs annual salary. money came in over the years - from some gifting on earlier years to larger sums as properties were sold, and then final estate settling) which was so helpful for us to be in more financially secure position now and for retirement.
For us, we should downsize at some point, but we like this place and our property taxes are under $2,000/year. I think we would need to be excited about the housing market here meaning we should hit a good window of opportunity to sell at a fabulous price. Otherwise the timing can be ours, when we either decide a different city/state to live in, or if we want a downsized place here. We have some home updating needed - for example we have our master bath plumbed for double sink but our vanity has a single sink and a sit down make up spot (with a nice center drawer) because that is what we liked - however buyers want the double sink. We would also have to look at other newer homes in our area to see what people are use to seeing and what we should update. For example, I saw that some new homes may have a food steamer built in (or that can be a nice selling feature) - I think this is neat for people that would use regularly, and our cabinet company can redo our cabinet that has our microwave to having both stacked there. We have been warned by our HVAC service guy that our âcoilsâ are rusting (from inside out) and at some point we need to replace that high $$ item - the units themselves as coils are a major part of the unit cost (our units are Trane, that have been running 22 years so far).
OK⊠I figured out the forumula. Probably everybody thinks they need⊠about half again as much as they already have. Thatâs my theory about how most families would view an âidealâ house, that theyâd like but canât afford.
Sad update on Thomas Stanley, author of âThe Millionaire Next Doorâ:
I was at my trainers this afternoon (near the site of the crash). He told me one of his clients is a neighbor of the man who killed Stanley. The man was drunk (had been cut off at the bar and it was 3 in the afternoon no less), he was speeding and he was either on his phone or texting. And he has a 9 and 4 year old. So sad on so many levels.
Re: an earlier post: most of use are beyond tired of reading about the financial manipulation and shameless bragging about getting $$$ in FA and now subsequent bragging about private bankers and investments and early retirement. Our barf bags are overflowing. So whats the point in addressing it again and again when the bragging will just continue.
@dstarkâ
The formula was suggested by the authors of the best-selling book. Itâs an easy formula to calculate and an easy comparison test to apply. I think itâs more useful than the statistical âaverage net worthâ or âmedian net worthâ numbers that are so often reported in the media. How useful someone considers the formula seems to depend on oneâs personal result. Itâs good to meet the formula. Whether the number is actually enough for retirement depends on oneâs circumstances, obviously.
The formula is certainly a conversation starter.
For us, the formula is low because we are strictly self-funding our retirement without pensions. I exclude SS because I consider it as a guarantee against living too long and running out of money. Itâs part of my conservative approach, which includes LBOM.
http://www.wsj.com/articles/jonathan-clements-pushes-some-buttons-1408839302
About SS:
@Madison85â
According to the formula, I think itâs:
55 x $150,000 / 10 = $825,000
assuming $150,000 is combined income.
AttorneyMother, Simple is not always better and I like simple.
I like the retirement calculators better. I use those.
I am not going to use the formula. 
When to take SS depends on the individual.
I havenât read the book in ages, but IIRC that formula is not intended to be a guideline on what you need to save for retirement.
It delineates the line between two categories created by the author - âunder-accumulators of wealthâ and âprodigious accumulators of wealthâ.
Itâs a blunt instrument, and the categories are somewhat artificial and arbitrary IMO. I donât remember the book talking about retirement outcomes.
I also agree about having main bread winner delaying drawing SS until later (for us 66 is full SS, and delayed would be until 70 or some point in-between). This is disagreeing with Dave Ramsey who thinks one can earn better returns thru self investing on the money between early or full retirement rather than taking the delayed earnings rate.
If I donât return to work, I can start drawing my SS off of Hâs at age 62, but that situation may change between now and then.
How SS should be taken definitely needs to be studied based on individual circumstances and âwhat ifâ scenarios.
Do people think the Millionaire Next Door would be a good book to purchase for someone just starting out, or can you recommend a couple of books that are good for college kids? I worry based on descriptions that it might be a little outdated. Maybe I should wait until his daughter does the update or the new book? As background for suggestions, I have a finance major son who is very interested in things like this, and a math major who likes to read fiction, but Iâd like him to start thinking about adult money management. Thanks in advance.
Also, this quote from Stanleyâs blog needs to be considered:
Median household income in 1996, when the book came out, was about $35K. So he was analyzing families who were at a minimum of 2.5x the median income. I think this makes a big difference in how much wealth you can accumulate.
@1214momâ
Somewhere earlier in this thread, I suggested Jonathan Clements 2015 Money Book. For years he wrote the Personal Finance column for the WSJ. He has common sense advice thatâs a good start.
I bought a copy for my 25-year-old niece whoâs a graduate student.
Thanks @AttorneyMother. I will check that one out.
AttorneyMother,
This is CCâŠCC skews a little wealthierâŠ
Letâs say I am 60 and I am going to retireâŠ
I am going to live 30 years and die at 90.
I am going to spend $100,000 a year the first year after taxesâŠand then there is inflationâŠ
SS is 3,000 a month after taxes and I am going to take SS at age 70.
Inflation is 3 percent.
My investment returns are 3 percent after taxes.
I donât own a house.
How much do I need to retire and die with nothing?
If I follow the formula, I am going to have a problem.
Itâs an interesting read, but thereâs nothing magical there. The whole thing boils down to
- Live Beneath Your Means
- Don't waste money on expensive stuff
- Put your money to work and invest
Thereâs another point which probably wouldnât apply to a college kid, which is
- Don't give money to your kids
Well, maybe it would be helpful for them to understand why you arenât giving them money. 
@dstarkâ
I never thought the MND formula is a guideline for retirement savings. The retirement calculators that you and others have shared are much better and use Monte Carlo analysis. So, thatâs what Iâve been using.
About SS, Kotlikoff has a new book: http://www.amazon.com/Get-Whats-Yours-Secrets-Security/dp/1476772290
It was featured in the PBS Newshour a few days ago.
Edited: dstark
Believe me, I am busy running the numbers also. I have decided that in lieu of predicting the future, itâs better to save more, then I have less to worry about if market returns slow down.
Dave Ramsey expects returns of 12%, in which case filing early might be a good plan. Dave Ramsey is good at encouraging people to get out of debt. As far as his investment ideas? Well, IMO, heâs good at encouraging people to get out of debt.
I recommend spending $40 at maximizemysocialsecurity.com.
@IxnayBobâ
Iâm sure you know this, Kotlikoff is the owner/author of maximizemysocialsecurity.com. The book I linked is supposed to be a good intro.
AttorneyMother,
Absolutely!
Yes!
IxnayBob,
Dave Ramsey expects returns of 12 percent a year? Ok. I donât want to judge too early. Lol
How do you make 12 percent a year?