Mind Mapping my way to retirement – Part 1
A while ago, Flexo wrote in his blog a story titled, “Retirement Income Rule of Thumb Debunked.” In it, he quoted a mysterious Mole of Money Magazine, who came up with the assertion that we should estimate our full current expenses now and add 10% to that. Then we have to come up with that amount for each of our retirement years.
This effectively debunked the previously held wisdom of needing 80% of our pre-retirement income per year of retirement.
This post was actively debated in the comments. And in her comment, Plonkee added in another rule of thumb that she was aware of. We should have about 25 times our estimated yearly expenses. (This rule was not debunked by anyone, not in the thread anyway).
Man, is this depressing or what?
We have rules of thumb that say, the maximum house we should go for is 1.5 - 5 times our yearly income, and another rule of thumb that says the biggest purchase of our lives would usually be the house.
How on earth do we get 25 times of our yearly income, sorry, 25 times of 110% of our yearly income as our retirement nest egg? This is 5 – 17 times our biggest purchase.
I can hear people telling me…..Yeah! That’s why we asked you to start saving early and let the power of compunding work for you.
Well, unfortunately, I did not hear clearly enough these wise words earlier.
I sat back and asked myself exactly where would I stand, given all these rules of thumb. I have the fear that I may not achieve this retirement rule of thumb.
So what would be my downside, and if I were to plan to do my best and start now, where should I direct most of my energies.
A post I read in Problogger gave me an idea of how to do this evaluation. Giving ideas on how to excite the minds of new bloggers to come up with ideas on posts, he suggested the using of mind maps.
So I drew a simple mind map of my current position.
So, this is where I stand now. For the next post, I shall look at where I want to be and how and what are my thoughts on what should I do to best bridge the gaps.