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What's your W:R?

March 12th, 2008 at 01:39 pm

There was an interesting article I came across that offered a different way to look at retirement planning.

The article discusses a years worked to years in retirement ratio. So, if I work from 25 65 and plan on living till 85, my ratio is 40:20 or 2:1. To live comfortably in retirement, I would have to save 15% a year. The article continues that a 15% savings rate over 40 years is extremely aggressive

I just thought it was an interesting and different view of retirement savings.

W:R RATIO AND REQUIRED SAVINGS RATE FOR RETIREMENT

Working Retirement W:R Required
Savings Rate (%)
40 20 2:1 14
43 17 2.5:1 11
45 15 3:1 9.5
48 12 4:1 7
50 10 5:1 6


Source: http://www.aei.org/publications/filter.all,pubID.24940/pub_detail.asp

4 Responses to “What's your W:R?”

  1. Caoineag Says:

    Interesting idea but am a little disturbed by the ratios. They assume a rather short retirement so what happens when you don't die as early as planned? I realize his premise is that people need to begin working longer but then he also thinks its too much to ask that we save 14% of our income...

    Oh and my ratio I am shooting for is 40:30...

  2. merch Says:

    Was it Bladder runner that on a certain birthday society would kill you? Big Grin
    I wish the table continued, but I thought it was interesting. It orginal appeared in Barron's in 2005.

  3. baselle Says:

    Kinda the Logan's Run version of retirement, dontcha think? Big Grin

  4. merch Says:

    That's what I was thinking - Logan's run. LOL.

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