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Faulty reasoning from beginning to end, starting with the headline.
To ascertain how much money is needed to live well, one should define "live well" and then determine how much money is needed for that lifestyle. The 25th percentile of individual income may be a starting point, but that says only how much income these people have, and not how much they spend.
Do they need all their income to sustain their lifestyles, or conversely, are their lifestyles even the least bit luxurious? Could the same lifestyles be achieved at lower cost (i.e. is that level of spending necessary for the goods and services received)?
Then Burns switches to cash flow (taking us full circle to the problem with the headline). But he compares what a retiree would spend (4% of assets, plus SS), with pure income (not expenditures) of people of all ages, including middle age workers with families and a mortgage. Apples and oranges at best.
Maybe I missed it, but it doesn't seem to take into consideration the time period for which one would be living the life of riley. Retiring at age 35 vs 55 and the applicable years in retirement are quite different.
Comments
To ascertain how much money is needed to live well, one should define "live well" and then determine how much money is needed for that lifestyle. The 25th percentile of individual income may be a starting point, but that says only how much income these people have, and not how much they spend.
Do they need all their income to sustain their lifestyles, or conversely, are their lifestyles even the least bit luxurious? Could the same lifestyles be achieved at lower cost (i.e. is that level of spending necessary for the goods and services received)?
Using IRS figures (Excel spreadsheet) only includes taxable income. What about the Suze Ormans of the world that keep their money in munis?
Then Burns switches to cash flow (taking us full circle to the problem with the headline). But he compares what a retiree would spend (4% of assets, plus SS), with pure income (not expenditures) of people of all ages, including middle age workers with families and a mortgage. Apples and oranges at best.
Fun with numbers? Yes. Meaningful? Hardly.