Loadsa Loadsa Loadsa

It seems that an American journalist has caused a bit of a Twitter storm for publicising the following advice:

According to Jean Chatzky, a financial journalist, by the time you are 30 you should have at least the equivalent of your annual income saved for retirement. By 40 it should be three times your annual income; by 50, six times; by 60, eight times and by retirement 10 times. How do you do that? You save 15% of your income every year (most of it into the stock market) from the age of 25 onwards.

I can’t say I saw anything out of the ordinary in what was stated, but then I do read stuff about FIRE so perhaps I need to admit that I’m not part of the mainstream when it comes to finances.

Circulating stuff on Twitter is one sure fire way of hitting a young audience. Or, perhaps more accurately, I should state that by doing so you’ll miss an older demographic who are still slavishly watching the BBC or Sky News and reading the papers. So, as the tweet picked up steam on line, the youth reacted in utter horror at the seeming impossibility of saving a penny, never mind 15% of their income.

I have to admit that I don’t remember saving much in my teenage years or my twenties when it seemed there was so much stuff to buy and so little cash to buy it with: hifi separates on which to play my budding album collection, driving lessons in the hope that I could borrow my dad’s car (an old Fiat 126, the only car in the family), beer, Chinese takeaways, clothes from Burton’s menswear and so on. There weren’t iphones and laptops and ridiculously priced coffees, but we had our temptations.

What there was though, in the Eighties, was a growing sense of the importance of money and the desire to get some and make it work for you. Other people seemed to be doing it, which was why they were driving around London in Porches while sporting blue striped shirts with red braces. It also seemed that certain tradesmen were beginning to do quite well for themselves and that we needed to Tell Sid about the British Gas shares that were coming to market. In the Thatcher years I do think we became much more money orientated, but it was with a sense that there was a positive edge to it. You could get some and you could use it to get some more.

I turned 30 in 1993 and had just married, and that’s when I remember thinking about trying to save and invest for the future. I doubt I was thinking about retirement at the that point but, having pretty much spent everything I earnt up until then, I wanted some sort of financial cushion to support my family going forward. I’d realised how pernicious debt could be with credit cards that just never were cleared and I resolved to pay them down – once I did, the money I’d been spending to do that would be “put to work” in buying investments and shares.

Sometimes, however, I do wish I had had access to the information in the 1990’s that I have now. What if I’d been reading Early Retirement Extreme and Mr Money Moustache when I turned 30 instead of 50? What if I’d had access to the information about UK investing that I’ve found on Monevator and been applying it for twenty years? What if I’d had the forums on Money Saving Expert at my fingertips to give me further advice on tax, pensions, ISA’s, ETF’s and the rest as I required it?

So, on the one hand, I sympathise with the youth of today looking at the financial mountain they have to climb, but I also kind of think that  it was always thus. The young will never have any money, they never do. But, what they do have on a scale way beyond anything I had, is access to information and knowledge that will help them when they decide the time is right. “When the student is ready, a teacher will appear”, is a saying that’s always appealed to me because it often seems to be true. The teacher appears when you seek them out and, given the internet, the ability to find that guru, or gurus, has increased exponentially since the days when Norman Tebbit told us to get on our bikes.  


12 thoughts on “Loadsa Loadsa Loadsa

  1. That gives me hope for the future. I’m on 38x at (not quite) 40 years, so a good headstart on 3x. I did have the advantage of Monevator at 30 (give or take a couple of years). Very fortunate in that respect. I can still remember the 1st article I read (9 lazy portfolios) and it blowing my mind.


  2. Frankly your post is a load of cobblers

    The fact of the matter is every generation born since the 1970s has been getting progressively poorer


    You attribute your ability to retire at 55 to your great frugality and investing acumen – when in fact its simply because your employer offered you a final salary pension scheme and you bought a house when they were cheap because interest rates were high and buy-to-let had been regulated out of existence

    Articles like this from smug boomers make we want to vomit


    • This maybe assumes your salary hasn’t changed? Mines changed dramatically over last 5 years (tripled) and currently sat on 2x gross annual salary. I’ve always saved at least 10% and now 14% of salary. My pension was never optional for me even at 18 it was automatic to save 10% and then see what I could do with the rest. No final salary for me and I’m 37 so it’s perfectly possible. Most of the growth on my pensions has come whenever I was earning less than 30k a year


    • Yep. Time machine back to 1993 and load up on property with a post it note reminder to mine a few bit coins when 2009 finally rolls round.

      You got any good book recommendations?


    • “Every” generation has been getting poorer since the 70’s? How many generations is that; 2 at most? And how many generations prior to that time were wealthier than the previous generation?

      You’ve worded your statement to suggest that a gazillion generations were wealthier than the previous (when it’s perhaps only 3 or 4, in any meaningful terms), and since the 70’s a humongous number of generations have been getting poorer rather than 1 or 2. Perhaps it’s the way of things for a few generations to go up and the next few to go down.


      • Its a fair point, I remember thinking when d-ream sang ‘things can only get better’ that it was unlikely to be statistically correct?


  3. People don’t realise (or won’t acknowledge) just how much of their fortune is down to random luck, preferring to assume they must have done something smart instead. I’ve always been frugal because a very precarious start in life taught me how fast wealth can evaporate when fate throws a couple of axe blades at your head. As such, you can’t make the moves unless you have the tools, so the young today with the discipline to save will still have no opportunity to put it into effect if they’re on minimum wages because the only jobs around are sh*t.

    Just one personal example is that my private work pension ~ doubled in a couple of years because it dovetailed perfectly with the CB printing money like Zimbabwe. Was it smart of me in any way? Well, lets just say that if I had that kind of insider knowledge, then I too would be spouting the number of multiples of your annual salary you should have by whatever age. Incidentally the poor fk at the desk next to me at work also doubled his pension estimate, but when his wife noticed, it made it worth her while divorcing him and that cleaned out his gain. It’s almost always just dumb luck, that’s why Chinese culture worships luck so much and Europeans used to. (remember primitive superstitions like the no. 13 being unlucky?)


  4. @FI – yes its an overwhelming cognitive bias

    I remember watching this -> https://youtu.be/vwx5IvypC5Q which was linked from some other blog, might have been TEA, MV or 3652 days or something.

    Although its a bit christian happy-clappy I think theres more than a grain of truth in it – and its a powerful visual analogy?


  5. Great read as always.

    Being in my mid thirties and stumbling across the likes of yourself, monevator, MMM and JCollins feels like a blessing.

    Having inherited some very poor habits towards money I have finally seen the light and cleared debt at 30, saved some FU money 😉 and started investing via vanguard for a brighter future.

    Slightly embarrassed to say that I never knew anything about compound interest and the power it has and like you blew everything in my twenties.

    If only they would teach financial education in school.


  6. @ The Rhino,

    Wow, talk about a picture being worth a 1000 words. It’s hard for the deluded or other deniers to argue when hit that hard, that fast, in the face by reality.


  7. If you are making some career and salary progression in your mid 20’s and you choose to save most of your increased net pay instead of raising your lifestyle then you can get onto this path and achieve these multiples. You do need to consistently live below your means but this is possible.


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