conversation: User (zonination): "Alternate title: *The Shockingly Simple Math Behind Early Retirement 2: Electric Boogaloo*\n\n## About\n\nAfter reading Mr. Money Mustache's [The Shockingly Simple Math Behind Early Retirement](http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/), I was inspired to map out various other scenarios. There are some valid criticisms of the piece that I won't dig into, but my main inspiration was a series of questions: "This page assumes I want to live off my pre-retirement budget; What if I wanted to hold off on retiring so I can be mega-comfortable? What if I retire *too early* by mistake or misfortune? Essentially: What would the scenarios look like if I compared the full set of savings rates against the full set of possible years saved?"\n\n## Gallery\n\nBelow are images of plots generated from this project. Image 2 should match up with the numbers in the Mr. Money Mustache article:\n\n* [Image 1](https://raw.githubusercontent.com/zonination/retirement/master/income.png)\n* [Image 2](https://raw.githubusercontent.com/zonination/retirement/master/budget.png) *(income - savings = budget)*\n\n[Here are a list of assumptions](https://github.com/zonination/retirement/blob/master/README.md#assumptions)\n\n## Exploration and Explanations\n\nIf you were to ask me, "zonination, what's more important: my desired income or desired budget?" I would reply with the fact that it's your **desired budget**, because it takes into account what you are living on now vs. surviving after retirement.\n\nA vast majority of us are not going to save 100% of our income, and we'll likely want to call it quits after working from the ages of 20 to 65. So let's assume a max working time of 45 years, a max savings rate of 60%, and replot. In addition to this, let's also mark an area on our plot to highlight what some experts recommend:\n\n* Elizabeth Warren recommends saving 20% of your income in her [50-30-20 rule](https://www.gobankingrates.com/personal-finance/senator-elizabeth-warren-50-30-20-budget-rule-save-pay-off-debt/) (from *All Your Worth: The Ultimate Lifetime Money Plan*)\n* William Bernstein recommends saving 15% of your income in his 16-page pamphlet *[If You Can](https://www.etf.com/docs/IfYouCan.pdf)*\n* Let's assume their advice is to save for between 35 and 40 years.\n\n[Image 3](https://raw.githubusercontent.com/zonination/retirement/master/altplots/budget-1.png)\n\nThere are some financial experts who recommend 10%, but as you can see from a prior plot, you'd need to work a *long* time in order to retire on 1x your budget. Looks like Warren and Bernstein's advice to save 15%-20% is, for a lack of better phrasing, *right on the money*.\n\nHow does this look when we add the average US savings rate as a vertical line to the plot?\n\n[Image 4](https://raw.githubusercontent.com/zonination/retirement/master/altplots/budget-2.png)\n\nAs of this writing, the [US Personal Savings Rate](http://www.tradingeconomics.com/united-states/personal-savings) is currently 5.5%, however [including employer match](http://www.fool.com/investing/2016/10/03/heres-the-average-americans-savings-rate.aspx) the average thankfully gets a little closer to 8.5%. If these people were relying entirely on their personal savings to retire, that would give them a little less than half their income by the time they come of age. Luckily, for some of these folk, they will have Social Security and pensions, but those are fading as time goes by.\n\n**So here's the key takeaway:** If you are young, and if you can, try to save 15%-20% of your income, minimum (yes: count employer matching as savings). **Pay yourself first.** Buy and hold (a strategy outlined [here](https://github.com/zonination/investing/blob/master/README.md)) until retirement. Rebalance when needed. Worst case, you end up wealthy.\n\n## Don't agree with these findings?\n\nThat's fine; just don't leave before [taking a look at them yourself](https://github.com/zonination/retirement). All the code contained within this repository is open-source. The methods are purely mathematical, so there is no raw data. I've listed the assumptions in the first three lines of code, and the top of the readme."
  Self: "The overall US personal saving rate already includes employer match ([Line 7](http://bea.gov/iTable/iTableHtml.cfm?reqid=9&amp;step=3&amp;isuri=1&amp;903=58) of this table). The Fidelity savings rate must have been generated from a different data set or uses a different definition of income than BEA."
  