Do You Find Standard Financial Advice Inspirational or Disillusioning?

Photo credit: JD Hancock, CC BY 2.0.

When I checked Twitter this morning—which I am trying to do less and less, but still doing—I saw that a section of the people whom I follow were getting a little riled up by this tweet:

By the time you’re 30, aim to have 1x your annual income set aside for retirement. At 40, 3x; at 50, 6x; at 60, 8x; and by retirement, 10x.

— Jean Chatzky (@JeanChatzky) November 1, 2017

Plenty of people responded with variations of “and just how are we supposed to do that, with low wages/high rent/student loans?” and jokes about skipping their avocado toast.

But this is the kind of standard, if aspirational, financial advice you’d expect from the Today Show’s financial editor. Chatzky obviously can’t get into the nuances of why some people can’t save that much in a single tweet—it doesn’t look like she’s been upgraded to 280 characters yet—though she also responded to criticism by acknowledging that this level of saving isn’t always possible:

1/? Seeing your many reactions to the benchmarks. I get it. They're outrageous in an era when many can't save at all. The point is to aim.

— Jean Chatzky (@JeanChatzky) November 1, 2017

I won’t replicate the entire thread here, but the tl;dr is “if you can’t save that much, save what you can.”

I currently have one year of my post-tax income saved for retirement, along with about five months of post-tax income in liquid cash savings. Since I’ll be turning 36 this weekend (TEAM SCORPIO FOREVER), that gives me four years to save another $100,000 for retirement, along with anything else I may want to save up for.

Given that at least some of that $100,000 will come from market growth, I could tell myself that I should try and save $25,000 every year for the next four years, and divide that amount between retirement and non-retirement savings. At a 15 percent (pre-tax) savings rate, that means I’ll need to earn $166,666 each year—which is more than twice what I’m currently earning.

Part of the reason I’m moving to Cedar Rapids is to reduce my cost of living (or, more specifically, ditch a city that is rapidly becoming unaffordable before I sink too much money into it), so I could in theory save more than 15 percent of my income—but I won’t really know that until I get settled in. I could also lose one or more of my freelance income sources, not be able to replace them, and have to lower my savings rate for a while. The future is UNPREDICTABLE and we often can’t control how much money we earn-save-spend, which is the primary argument against Chatzky’s advice.

But this move is also making me think about ways in which I could save and/or earn more money. I’ve been reading Mr. Money Mustache and doing searches like “bike safely winter.” Which means I am a little more receptive to this kind of advice than I might be if I didn’t feel like that level of savings was a possibility. Even though I know exactly how difficult it is to save your income by age 30, because I did the math for you earlier this year.

I guess the real question is whether you see advice like this and think “okay, I want to try to save as much as I can even if I don’t hit those goals,” or whether you think “that is outrageous”—and I am well aware that any one person’s response will be shaped by privilege, income history, family/culture, interest in prioritizing money/savings vs. prioritizing other aspects of their life, and general optimism. (I am both a Scorpio and an optimist.)

What do you think?

And how much would you need to save over the next X years to have Y money saved by the next Big Age Benchmark?

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