Quote:
Originally Posted by DoubleF
But, I think... that's the the issue I have is that most guides and calculations. They do not address lifestyle differences or wants and basically assumes that almost everyone will approach retirement the same way. Many also build in some wild ballpark figures as a contingency, when in reality these individuals do not necessarily have these or the amounts required are wildly out of whack.
So perhaps the reason why this is an issue is that the calculation should be modular?
ie something along the lines of: Your post retirement needs might be a combination of some form of A + B + C vs D + E + F. One side being cash requirements post tax and one side being cash supply?
A + B + C is some form of combination of assets/activities you plan to enjoy, regular maintenance/reoccurring costs for those assets/activities, unforeseen circumstances that have a cost etc. Some might be TVM'd more aggressively than others.
D + E + F is some form of combination of available cash flow including things like yearly income less taxes, savings, grind downs etc. Some are TVM'd, others are not.
Like, obviously it's a complex concept and too many people think there's a one size fit all. In fact, these people should always be told, "There is no one size fits all or a good ball park calculation. It's a case by case basis. But, depending on your situation, maybe you may identify with one of these dozen ish pre-calculations."
Yes, it's a case by case basis, but I think the major disconnect is that most people think there's a handful of good guides, when in reality, people need to start realizing there are perhaps as many options due to almost as many varied lifestyles. To avoid crazy numbers going forward, perhaps a good guide going forward may want to address at least half a dozen to a dozen lifestyle combinations rather than assume almost everyone can kinda fit into 1-3 different lifestyle combinations.
It's a good idea.
One thing to be aware about something like this is that you can teach it, but it might not actually internalize the way you expect to the person you teach it to. You may have to consider that you tried your best to teach it, but what the ends up manifesting is out of your control.
Anecdotally, I've run into many people who either continued what they were taught. Others rebelled against it completely after they grew up. I've also heard of situations where the same financial discipline manifests totally differently between two individuals who were taught the same financial disciplines identically (ie: Siblings).
I've also run into weird stories about how the financial discipline begins to manifest negative connotations because of the person who taught it. (ie: I refuse to do this because my parents were cheap and I hated that and I don't want my kids to live that way). Thus, they need/want to learn a method different than what they were taught to achieve basically the same way (usually slight difference in lifestyle).
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And that is why rules of thumb, and general guidelines, aren't sufficient. A plan (at least a good plan), has to be specific to the individual, their goals, their income and limitations, their health, and many other personal factors.
Saying 'you should save 11x your income' might be fine for one person, and completely inappropriate for another.