The big problem with this table is that it assumes that you want to live on the same amount that you do while saving. If I'm saving 50% of my income to retire in 17 years and then decide I can bump it up to 65% of my income (let's say by no longer dining out) all of a sudden my "retirement" happens 7 years earlier. It feels good to read that because it looks like I'm saving 7 years of work by just saving a bit more. However, the new "retirement income" that I'll be living at goes down from 50% of my income to just 35%--the table expects that, since you can live on the new income, then it is enough for you to retire on. If I raise my savings rate by cutting things I can live without (for now), I'm "locked in" to not having those things in retirement.
If I'm making $5k a month after taxes and saving 90% of that (so, living on just $500 a month), MMM's table says I can "retire" in under 3 years. However, that retirement is one in which I live on just $500 a month--not what everyone has in mind when they consider retirement. If I'm making $5000 a month and want to live on $2500 in a month in retirement, I will have to save for considerably longer than 3 years.
This is the most glaring at saving 100% of income. It doesn't really make sense that I can "retire" in 0 years by saving 100% of my income. The table is basically saying, "If you can afford to work and not spend any of the money you make, you can drop your income from $5000 to $0 and live without worry!" Never mind that people may have children, or get sick, or feel like traveling, or any other possible scenario in which an extra cost is incurred.
You're absolutely right. That's another assumption: you'll continue to spend roughly the same amount in retirement as you did while working. The idea isn't to live in squalor so that you can retire early—it's to cut out the expensive things that add no joy to your life...permanently.
You're arguing against a strawman. The generally reasonable assumption is that you are not living in squalor for the purpose of making the whole calculation meaningless.
> The big problem with this table is that it assumes that you want to live on the same amount that you do while saving.
That's probably the best way to reliably predict how much you'll need to retire. It's a mistake to think of "saving" as a sprint to a pre-determined finish line. The point is you have to design a lifestyle that works for you, at a savings rate that'll see you home in a reasonable number of years.
> If I'm saving 50% of my income to retire in 17 years and then decide I can bump it up to 65% of my income (let's say by no longer dining out) all of a sudden my "retirement" happens 7 years earlier.
Going a bit further with the idea of lifestyle design, in this example you didn't make the decision to stop dining out as a means to spend less so that you can retire and then finally start eating out. You cut down on the eating out simply because cooking healthy meals at home for yourself is an important part of your life. You value the challenge of turning raw ingredients into delicious food, the knowledge you attain enriches your life, and you love the warm feeling of feeding friends and family with something you poured so much love and work into. And it's something you'd do for the rest of your life, even if money wasn't an issue. If that's not for you then you can't save more by eating out less. The "saving" doesn't work if you can't be happy with the lifestyle that you have as a result of the saving.
> If I'm making $5k a month after taxes and saving 90% of that (so, living on just $500 a month), MMM's table says I can "retire" in under 3 years. However, that retirement is one in which I live on just $500 a month--not what everyone has in mind when they consider retirement. If I'm making $5000 a month and want to live on $2500 in a month in retirement, I will have to save for considerably longer than 3 years.
Yes. That means you have to find a lifestyle that you can be happy with that only costs $500/month (not impossible, but not luxurious and definitely not first-world). Or earn a higher salary so that 90% savings rate gives you a $2k/month retirement (bit more doable). Or target a lower savings rate with the acceptance that your mandatory career will be longer than 3 years.
For me the value of the table is it puts into stark relief what I value or don't value. When making a decision to add some regular spending to my lifestyle I can always ask myself "Is this additional spending worth adding X years to my career?". If the answer is yes, then I know it really matters to me.
> Never mind that people may have children, or get sick, or feel like traveling, or any other possible scenario in which an extra cost is incurred.
The author does address this in the blog post (emphasis mine) "If you are spending 0% of your income (you live for free somehow), and can maintain this after retirement, you can retire right now. So your working career can be Zero." . He acknowledges that this is only possible if you somehow manage to get everything for free or paid for from sources of money that aren't your job (unrealistic but not impossible; eg. trust fund). 100% savings rate isn't useful as a practical example but is used to demonstrate the implications of the upper and lower bounds of savings rates, even if it's obvious.
If I'm making $5k a month after taxes and saving 90% of that (so, living on just $500 a month), MMM's table says I can "retire" in under 3 years. However, that retirement is one in which I live on just $500 a month--not what everyone has in mind when they consider retirement. If I'm making $5000 a month and want to live on $2500 in a month in retirement, I will have to save for considerably longer than 3 years.
This is the most glaring at saving 100% of income. It doesn't really make sense that I can "retire" in 0 years by saving 100% of my income. The table is basically saying, "If you can afford to work and not spend any of the money you make, you can drop your income from $5000 to $0 and live without worry!" Never mind that people may have children, or get sick, or feel like traveling, or any other possible scenario in which an extra cost is incurred.