David Blanchett

So two very different numbers, right?

The pre-tax income is you make $100,000 a year.

After you net out how much you're saving for retirement, taxes, all these things, your goal would be about $70,000.

Okay, so let's just assume that is your starting point.

Now, the most common assumption in financial plans is that that $70,000 a year, or whatever the number is, would increase annually by inflation for the duration of retirement.

In reality, it doesn't tend to do that.

We tend to see increases in spending to be 1% or 2% less than inflation.

So if inflation averages say 3% a year, you only might spend about 1.5% more per year.

And where that's really, really important is if you kind of grow that out

over a 20 or 30 year time horizon where the actual amount you're gonna be spending could decline significantly in today's dollars.

Right, and how much you should have saved, you know, 20 or 30 years ago, because like most of us are saving, thinking about how much I spend today, right?

I spend $100,000 today.

The problem is, is if you're like spending like 250K in 15 years, you weren't saving enough for, you should have been saving like 3X,

but you were saving for that goal.

And so that's kind of this problem.

And so I think that like there are some good rules of thumb that you can use, like try to save like a third of your raise to kind of help yourself catch up and then spend the rest.

And I wouldn't say, hey, don't spend any of your raise, but just be aware of the implications that could have on your retirement situation if all of a sudden you're spending a lot more than you've been saving for in the past.

So, you know, I actually published some research on this effect about a decade ago, and I'm going to release a new piece of research on this effect again, probably early next year.

And the results are like identical.

So much larger data set, much bigger analysis, right?