Retirement Planning: Why Most People Can Only Blame Themselves

There's one variable you control more than any other.

Mar 1, 2014 at 1:00PM



People love to blame someone else for their problems. Take retirement planning, for example: Every day I read about folks saying the cards are stacked against them as they strive to save enough to live comfortably in their golden years.  

If only they knew how much they were contributing to their own difficulties -- and how easily that could be remedied.

That doesn't stop some from making excuses
Earlier this month, The Guardian put out an article that makes retirement planning seem like an impossible task unless you're in the 1%. In it, the author claims that if you want to retire with a salary of $100,000, currently earn $150,000 per year, and put away $20,000 per year starting at age 40, it will take you 110 years to save the requisite amount of money.

The article claims that "'saving for retirement' needs to be held in check, lest it brainwash anyone and pile guilt on hardworking families for having some mild enjoyment of life rather than living only for the future." And it finishes by stating: "The retirement issue in this country is less due to personal failure than structural failures." Those structural issues, specifically, are lower wages, the loss of pensions, and higher executive pay.

I'll be the first to argue that "living in the moment" is the most important part of enjoying your life. I won't deny there are some serious problems with trying to get by on minimum wage. And there's no question that some executive pay has gotten way out of proportion

But to make a blanket statement that these factors excuse the average American's inability to save for retirement is absolutely ridiculous.

Let's get real
I'm not the only one who thinks so, either. I actually came upon this story after reading a blog started by a guy who retired at age 30 because -- like Antoine de Saint-Exupery -- he believed the good life lay in simplicity and intentionality, not rampant consumption.

I'll get to the biggest point in a minute, but let's stop and show why this article's assumptions were so misguided.

First, if you start saving for retirement at age 40, you've wasted your most valuable asset: time

Second, the article assumes that absolutely none of your yearly $20,000 contributions are put into the market -- they're simply held in a bank account. That's ludicrous.

In reality, if this person had started with a salary of $95,000 at age 25 (a fair assumption if they've hit $150,000 by age 40) and saved 20% of their pre-tax income and invested it every year, earning the historical average of 9.8% per year, they would reach their retirement goal by age 58.

But all of these numbers miss the biggest point!
Of course, there are lots of assumptions baked into my calculations, and I'm sure more that a few holes can be poked in it. But all of this misses the most troubling question about the Guardian article: who in their right mind needs $100,000 to live on comfortably in retirement?

Remember, by the time most people reach retirement, their house is paid off, and their kids are out of college. Those are usually the two largest expenses a family has in their lifetime. And this money is inflation-adjusted; it's like living on $100,000 of today's dollars.

Today, the average American household takes in roughly $50,000 per year -- so this is someone who, in retirement, will be spending ridiculous amounts of money above the average person. Apparently the "guilt being piled on hardworking families" is by those who believe they need so much in retirement.

How much do you really need?
Four years ago, my wife and I quit our full-time jobs, reorganized our life around the principle that freedom to be with family and friends was the most important thing, and had a daughter.

Last year, we made a combined $65,000 per year, or 50% less than we did at our old jobs. But we couldn't be happier with our situation -- which includes spending three months of every year in Costa Rica, where I'm typing this right now.

I did some back-of-the-envelope calculations, and if we were to take our spending today, less our mortgage, college, and most life insurance and disability payments -- which will presumably be taken care of or not needed by then -- and add in higher health insurance costs, we'd need about $25,000 per year to live the same kind of lifestyle.

We're able to do that for two huge reasons: We saved more than 20% of our income while working (and we continue to), and we're quasi-minimalists who believe there's a lot of truth to the Saint-Exupery quote that opened this piece.

If that seems a little crazy to you, it's worth noting the greatest bit of wisdom I've come across in the aforementioned early retiree's blog:

"In most ... areas of modern life ... the cost and the benefit are actually two unrelated things. You can spend a lot, and get no benefit at all. Or you can spend very little, and get the greatest results. The Early Retirement Extreme guy would say that these variables are actually described on two entirely separate axes." 

Focus on the right benefits, and retirement can take care of itself.

Get started now
If YOU would like to figure out how to make retirement an attainable goal but aren't sure how to do it, read up in our brand-new special report, "Your Essential Guide to Start Investing Today." The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers