Is the 25x Rule the Best Way to Save for Retirement?

Is the 25x Rule the Best Way to Save for Retirement?

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[timgaugler]

I think a key difference not mentioned in the video is that the Fidelity rule of thumb is 10x your income whereas the 25x rule is based on expenses. That said, I agree with what the video says about not using rules of thumb for decisions as important as retirement.

[travis]

When you're not near retirement, using an income based rule of thumb may make sense because you may have no idea what your retirement expenses may be. However when you're 10 years or less away, I think you need to move to move to an expense based plan because your income may be disconnected from your expenses.

[CoastFIREisawesome]

The Fidelity rule of thumb is a good goal to start towards until you know what your annual expenses are likely to be as you near retirement... then based on the age you want to retire, you decide if you should use 3%, 3.5%, 4%, 4.5%, or 5% in relation to your annual expenses. The 2 numbers roughly match for me now (I'm 35), but they weren't close when I was in my 20s. I expect they will become different again in my 40s.

[NathanHedglin]

Totally agree. I plan to retire early so I’m always sharpening my scalpel. There are too many factors for me to pick a rough metric.

[j.mney]

The 25x rule ties back to the 4% rule for retirement. Good luck to all you future millionaires!

[kevinquinn]

I calculated the Net Present Value (7% return) of my projected required retirement income from ages 60 to 85 and I got a result equal to 17 times income age 60.

[xlavahott]

If you use the 3 bucket strategy, your bucket #1 will have 3 years of cash to add to other income streams, bucket #2 will hold ten years of funds, so 13 years are accounted for.

[BenjaminBrittain]

Thoughts on financial coaching vs financial advising as career paths?

[carlocoduto]

Another great show. I think most of these people watch for the reason I do...the star wars mugs!!!🤣😅

[josephinegonzalez]

Is the 25x rule inflation adjusted. This is what I'm having the biggest issue planning for retirement.

[charletfoster]

Just save n invest regularly according to your needs n you will be fine

[Hazelrat]

2:10

The 4% rule isn’t based off a 25 year timeline, it’s based off a safe withdrawal rate that will let the account value keep pace with inflation

[matthewstruthers]

What happened to the Boba Fett mug? This show is way cooler than R2-D2.

[jackjia]

You should never take a number and just retire on that. 10X or 25X or 33X are just numbers! They can be your GOAL! But they shouldn't be the retirement point. Get a number and start saving. Once you reach your number, reach your goal, do not retire right away. Find professionals and work with them. They might cost you some thousand at most, but they can make sure your plan will work. At retirement point, proper risk management and stress tests are way more important than a few thousand dollars.

[Bruceistheboss]

Hey y’all, I like you guys but please put up more of the shorter videos. Thanks!

[tyler_]

It’s not 100% divided by 25 years gets you 4%. Or else that wouldn’t work for people planning to be retired for more than 25 years… it’s because 7% average returns - 3% average inflation (4%) means if you only ever pull out 4% of your nest egg then it should last forever (as it’s also earning 4%). So your annual expenses need to be 4% of your nest egg, or 1/25.

[SantaBarbaraAlberto]

Interesting question! In reality the recommendated range is 8x to 25x not only based on the 4% rule as a guide but the 70% income actuarial use to estimate your retirement pension amount.

Unless you are working in a public sector profession or have a define benefit pension, there is little chance to have 70% income benefit anymore. Private sector pensions a more likely to be between 35% to 45% depending on years of service.

The good news is that most retirees need less than 50 of income in retirement and expenses decreases as we aged.

Now, in retirement every depends on your expenses. If you house is paid for, you probably need about 30%-35% of your income. If is not somewhere between 40%-60%, depending of lifestyle in retirement. Translation. If your house is paid for 8x-10x your expenses If not 15x-25x expenses.

[Zanny_jay]

*I don't know who needs to hear this but stop saving all your money, invest some of it if you really want financial freedom.*

[djpuplex]

The average person lives fifteen years in retirement, the Average life expectancy is 76.5. Everyone's planning on living to 90? I think planning on a 20-maybe 25 year retirement is more logical.