Comments on: Research on Financial Circumstances of Retirees

By: Fidelity’s ‘Scary’ Retirement Findings

Fidelity’s ‘Scary’ Retirement Findings — Thu, 25 Oct 2007 00:01:06 +0000

[...] Jon Chevreau and Rob Carrick have weighed in on the latest Fidelity study that finds that “Canadians are on track to replace only 50% of their pre-retirement income once they retire”. Fidelity continues to insist that this is well short of the “recommended 80% level” despite the shaky assumptions in their original research and another extensive study by Malcolm Hamilton showing that the replacement level on average is closer to 50%. [...]

By: Are Canadians Saving Enough For Retirement? Part 2

Are Canadians Saving Enough For Retirement? Part 2 — Sat, 16 Jun 2007 03:27:53 +0000

[...] to actuary Malcolm Hamilton (who based his conclusions based on a 1997 survey), the median retired senior couple needs $24,700 [...]

By: Are Canadians Saving Enough For Retirement?

Are Canadians Saving Enough For Retirement? — Fri, 15 Jun 2007 19:03:50 +0000

[...] vigorously disagreed when the financial industry suggested it to be a million dollars or more, even the lowest estimates run to at least a few hundred thousand dollars plus a fully paid-off [...]

By: FourPillars

FourPillars — Wed, 06 Jun 2007 11:52:26 +0000

George, that is a ridiculous assumption. I spend $1500/month on my mortgage…and I will need that $1500 for spending when I’m retired?

I’ll take the $1500 if it’s there but I definitely don’t need it.

By: George

George — Wed, 06 Jun 2007 04:05:49 +0000

FourPillars: The response from Fidelity was basically that they made the assumption that any net income not put toward retirement savings was spent and therefore part of “consumption”. I don’t think that’s a fair assumption, and it definitely doesn’t apply to people who live below their means – it seems to apply only to people that spend almost every dollar that they earn.

ML: The thing that struck me was that Hamilton’s paper was based on the facts of people already retired, rather than speculation. The Fidelity report seemed based on assumptions and speculation rather than facts.

Of course, one problem with looking at “retirement” is that views of it change greatly from generation to generation. A lot of retired people right now lived through the depression in the 30s, which means that they may simply be extremely frugal by nature. It’ll be interesting to see if similar research is done within the next 10-20 years looking at Boomers in retirement, to see if the trends continue.

For me, I’ll just aim to maximize my savings and my actual consumption needs, and focus on making my “I can retire now if I want to” date sooner rather than later.

By: ML

ML — Mon, 04 Jun 2007 13:19:30 +0000

Thanks George

Malcolm hamilton has long ben a favorite of mine, The firm he was/is with Mercer Human Resources Consulting was employed by my ex-employer to give us HR and retirement advice.
I retired at 58 and found his calculations to be largely correct.

ML
Ottawa

By: outroupistache

outroupistache — Tue, 29 May 2007 10:04:18 +0000

Very useful reference article, thanks to George and CC both.

By: FourPillars

FourPillars — Tue, 29 May 2007 03:02:58 +0000

Interesting post on the article.

I’ve done some cost-based estimating on what I need to retire and it works out to about 45% of current income, which is more than what I’m living off of now if you don’t count “younger” costs like mortgages etc.

George – I got a laugh out of your emailing the report to Fidelity. They might have to completely redo their marketing.

By: George

George — Tue, 29 May 2007 01:11:51 +0000

Thanks for the kudos, CC. Glad you liked the article. I’ve got to thank “ML” who commented on your post on “Fidelity’s Retirement Math” – ML’s comment is what led me to the article.

I e-mailed a link to the article to the folks at Fidelity and asked for their comments, just to see what kind of response they would have. I’ll post a comment once I’ve heard back from them.