This is Part2 of a series. For important background and working assumptions,

please SEE

Inspired by the promise in Part1, to provide a more serious survey of the new opportunities that you can create for yourself by saving mightily, we are going to examine your retirement landscape after a ten year sprint of extreme saving.

The overall organization of today's posting will be to present the range of possibilities for THREE main cases:

The

Proposed unit of measure used thoughout the posting, explained here.

Tricks and techniques employed to produce the tables;

Better explanation, as promised in Part1, for how to determine if you are "on track".

A new calculation to adjust for loss of salary raises when retiring early.

Explains the "./Pay" entries in Tables A and A-Supp.

This will appear in a new browser window or new browser tab, depending on your settings.

This table is borrowed from Part1 and modified for Part2:

2X 4X 8X Yield Contrib Contrib Contrib 4.532% 18.727% 37.454% 74.908% - Special Case: This produces 2X in ten years AND falls along Fidelity's default solution curve. 6.00% 17.321% 34.642% 69.284% 7.00% 16.420% 32.840% 65.680% 8.00% 15.561% 31.122% 62.244% 9.00% 14.745% 29.490% 58.980% 10.00% 13.969% 27.938% 55.876%

Tables A & A-Supp: The PAYOUT is Always 45% and we Vary the Retirement Age downward from 67

Tables B & B-Supp: The Retirement Age is Always 67, and we Vary the PAYOUT upward from 45%

The original tables A and B have three columns that show investment yields required at contributions of 20%, 10% and 0%.

But some retirement solutions requiring higher contributions, may still be palatable to the high-discipline savers capable of participating in a 10-year sprint. Thus we have added Supplementary tables,

As a rule, these supplementary entries will be provided only when the 20% contribution requires a yield above 7.00%.

**
Retirement solutions strongly depend upon the assumptions you use!
In this posting, we use a frequently-quoted set of assumptions appearing in the footnotes of a Fidelity Investments article,**

Inflation 2.5%; Real 1.5% raises at 2.5% inflation, become actual raises of: 4.0375% per year;

COLA (cost of living adjustment) each year of retirement, at assumed inflation rate.

We would recommend recalculating with age 105 rather than 93

This would increase the savings difficulty, due to the larger nestegg required for 12 extra years of payouts,

but provide a larger margin of safety in case you live a long time.

In our Tables A & B, etc, these are the numbers that go into each calculation, except for the modifications specified for each scenario, such as a different payout rate (not 45%) or different retirement age (not 67),

or different amount of savings at start (0X, 2X, 4X or 8X, of starting salary), or starting age (25 or 35).

In our vernacular, the data cell at the intersection of each row and column of Tables A & B, and their Supplements,

completes a

which together produce the exact retirement payout percentage specified.

**Easier Default Retirement.** Full Retirement Age (FRA). 45% Payout. Contributions reduced or eliminated.

See Table A and/or Table B -- default information appears in both tables.

**Earlier Retirement.** 45% Payout, begins at younger Age

See Tables A and A-Supp.

**Higher Retirement Payout at FRA.** More than 45%, begins at Age 67

See Tables B and B-Supp.

PARTIAL discussion: **Combinations of Earlier retirement AND Higher payout,** limited to the compensation for missed raises.

Also possible, but NOT DISCUSSED in this posting:

"De-risk" your investments at retirement (move your nestegg to lower yielding, safer investments).

**For perspective, we will also discuss two CONTROL scenarios with NO savings sprint: 0X @25 and 0X @35.**

0X @25 is: the standard vanilla scenario; start contributions at age-25, zero savings.

0X @35 is: Oops, 10 years happened with other priorities; start contributions at age-35, zero savings.

DEFAULT RETIREMENT: Coasting (1% contribution) would require 12.970% yield, thus is not feasible;

10% contribution with 6.401% yield is realistic for some;

20% contribution with 4.332% yield is realistic for the rest;

EARLY RETIREMENT at age-62 is doable via 10% contribution with 7.291% yield, or 20% contribution with 5.161% yield;

at age-57 is doable via 20% contribution with 6.016% yield,

at age-52 is doable via 20% contribution with 6.986% yield,
or 30% contribution with 5.613% yield

at age-47 is doable via 30% contribution with 6.681% yield,
or 50% contribution with 4.898% yield

at age-42 is doable via 50% contribution with 6.103% yield,
or 70% contribution with 4.892% yield

HIGHER PAYOUTS at FRA (age-67, and instead of the 45% default)

62.5% payout is doable, supported by a 20% contribution with 5.321% yield;

80% payout is doable, supported by a 20% contribution with 6.053% yield;

DEFAULT RETIREMENT: Coasting (1% contribution) would require 16.109% yield, thus is not feasible;

10% contribution with 7.826% yield is too risky for most;

20% contribution with 5.354% yield might be realistic for many;

30% contribution with 3.908% yield will work;

EARLY RETIREMENT at age-62 is doable via 20% contribution with 6.541% yield, or 30% contribution with 5.038% yield;

at age-57 is doable via 30% contribution with 6.295% yield, or 50% contribution with 4.347% yield;

HIGHER PAYOUTS at FRA (age-67, and instead of the 45% default)

62.5% payout is doable, supported by a 20% contribution with 6.526% yield;

DEFAULT RETIREMENT: COASTING is a stretch at yield of 7.75% but the standard retirement can be had via 10% contribution with 5.740% yield,
or 20% contribution with 4.345% yield

EARLY RETIREMENT at age-62 is doable via 10% contribution with 6.553% yield, or 20% contribution with 5.220% yield;

at age-57 is doable at 20% contribution with 6.150% yield;

at age-52 is doable at 30% contribution with 6.274% yield;

at age-47 is doable at 50% contribution with 6.288% yield;

HIGHER PAYOUTS at FRA (age-67, and instead of the 45% default)

62.5% payout is doable, supported by a 10% contribution with 6.707% yield,
or 20% contribution with 5.380% yield;;

80% payout is doable, supported by a 20% contribution with 6.156% yield;

INTERESTING: This scenario overlaps with the earlier 0X @25, because one pathway through 0X @25
actually creates 2X savings when it passes through age 35. The very first table in this posting,
showing different ways of doing the ten year sprints, mentions 18.727% contributions at 4.532% yield,
as the point where both scenarios agree. Hence the extreme similarities at contributions of 20% (close to 18.727%).

DEFAULT RETIREMENT: COASTING requires a yield of 6.035%; a **5.00%** contribution with 5.342% yield will also work;

This is the only exception to use of Table A/B data, made here because we do not need to contribute as much as 10%.

EARLY RETIREMENT at age-62 is in reach for most, at 10% contribution with 5.371% yield;

at age-57 is doable at 10% contribution with 6.037% yield, or 20% contribution with 5.156% yield;

at age-52 is doable at 10% contribution with 6.793% yield, or 20% contribution with 5.976% yield;

at age-47 is a stretch at 20% contribution with 6.996% yield, or 30% contribution with 6.363% yield;

at age-42 is a challenge, at 50% contribution with 6.979% yield,
or 70% contribution with 6.233% yield;

HIGHER PAYOUTS at FRA (age-67, and instead of the 45% default)

80% payout is doable, supported by a 10% contribution with 6.316% yield;

115% payout is doable, supported by a 20% contribution with 6.462% yield;

150% payout is tougher, supported by a 30% contribution with 6.550% yield;

220% payout is tougher yet, supported by a 50% contribution with 6.654% yield;

290% payout is around the upper limit, supported by a 70% contribution with 6.714% yield;

DEFAULT RETIREMENT: COASTING to FRA becomes EASY. You only need a yield of 4.379%, to bypass all further contributions!

EARLY RETIREMENT at age-47 is easy at 10% contribution with 5.528% yield;

at age-42 is doable at 10% contribution with 6.209% yield;

at age-37 is still doable at 10% contribution with 7.178% yield.

The main reason to NOT retire before 47, would be discomfort with the higher investment yields required.

HIGHER PAYOUTS at FRA (age-67, and instead of the 45% default) are another alternative;

80% payout is very easy, supported by a 10% contribution with 5.035% yield;

150% payout is doable, supported by a 20% contribution with 6.138% yield;

220% payout is tougher, requiring a 30% contribution with 6.745% yield;

290% payout is tougher yet, requiring a 50% contribution with 6.782% yield;

360% payout is around the upper limit, requiring a 70% contribution with 6.806% yield;

We do not see any incentive for the sacrifice required for ultra high payouts, absent any ability to retire early. While beyond the scope of this posting, it would be interesting to identify such scenarios.

We found one scenario, age-37 retirement with the payout adjusted up to 70.34% to compensate for 30 years of lost raises, which was simply out of reach, even with 8X, and investigated higher starting savings amounts at age-35.

12.5X @35 is workable: 40.00% contrib requires 6.984% yield

13X @35 makes it easier: 20.00% contrib requires 6.941% yield

14X @35 is home free: ZERO contrib requires 6.711% yield.

But unless you had an unexpected, exceptional combination of investment growth and contributions in those first 10 years, it is just not feasible to amass this much ... so Age 37 retirement with the full adjustment, is all but impossible.

For perspective, a 10 year sprint at 8% Yield --

would provide savings of 12.853X at age 35.

Even the late starter (0X saved at Age-35) has SOME latitude for early retirement or higher payout, but at increased sacrifice.

With 8X saved by age-35, you can retire easily at age-42, or with a bit of a stretch on yield, at age-37,

OR take three to four times the standard Payout if you keep working until Full Retirement Age.

Even 8X has its limits, however.

Below: Supporting information.

To find the currently calculated value for C=Y: SEE the

Given this "C=Y" value, you know that for either (C or Y) to be less than that value, the other must be greater, and that as one moves farther away from C=Y, so must the other, in the opposite direction. Typical runs of the calculator at about 50% payout goal, produce "C=Y" values in the 7's, (possibly 6's or 8's), for a 25-year-old just beginning their savings buildup with a career time horizon of about 40 years. This number climbs with the extra effort of trying to save enough in a shorter time, or trying to save for a more generous payout in the same time, or trying to handle assumed higher inflation.

In fact, we were able to calculate the "C=Y" values for each of the 10-year savings sprints, and they are:

Sprint Task: 2X 4X 8X ------ ------ ------ Difficulty: 12.317 18.016 24.778

**Find the C=Y Value**

Note that this information will not be present on a fresh
**
NesteggCycle.com Calculator** screen.

It appears or refreshes AFTER each run of the calculator [after you click on the grey **CALCULATE** button].

Click the **SHOW PLOTTED TRADEOFF** button, which will appear just to the right of the grey **CALCULATE** button.
This will bring up a new tab in the browser, showing a plotted curve of contributions versus required yields for this scenario.
This is an instructive visual in its own right, but for now,
scroll down below the plot until you see a chart of X and Y values on the left side of the screen.
Locate the row where the two side by side values are the same.
That is the value you want.

**Setting a Reasonable GOAL Salary Replacement percentage:**

A "reasonable default" GOAL salary replacement is 50 (percent) but play with this and do some
homework as to your own personal expectations for retirement.
If your salary is at or above the Social Security taxable maximum, $160,200 in 2023, Social Security benefits might
replace about 20 percent of your salary or less. If your salary is very low, Social Security might replace close to 80 percent.

For a more detailed discussion of these replacement rates,
**
this article** shows
a range of salaries and approximate replacement rates from Social Security benefits, but
your most reliable information comes from your own individual benefit projection report,
from the Social Security Administration (SSA).

**Broad Contribution Range, to get yields for contributions of 10% & 20%**

This is the default report provided by our software, presenting the yields required for contributions of:

2.5%, 5.0%, 10%, 20%, 40% and 80% of salary.

**Custom Contribution Range, in general**

Starting at top left of the light grey main area of the calculator screen, scan down to "Annual INFLATION% (best guess):"

The next row will contain the big grey CALCULATE button, and to its left, you will see " Contribution Range:" and then "Broad".

Click on "Broad". A dropdown list will appear. In this list, click on "Custom".

A grey screen will overlay the calculator, with a message,

"Custom: Read tooltips for 2 colored boxes between Custom and CALCULATE. Enter your 2 Values before clicking on CALCULATE"

and an "OK" button. Click the "OK" button.

There will now be a new
ivory colored data entry box,
and a new
sky-blue data entry box,
to the left of CALCULATE.

Type any Contribution percentage value of interest, with up to 2 decimal places, into the ivory box.

Type any Step percentage value of interest, with up to 2 decimal places, into the sky-blue box.

Enter only digits and optionally the decimal point. Do NOT enter the "%" character.

When the CALCULATE button is clicked,

your report will present five contributions incremented UP from your central value,
and five incremented DOWN,
and will calculate the required investment Yield% for each contribution shown.

By adjusting the size of the Step, you can focus as narrowly or as broadly as you want, around the central value.

**Custom to Validate your own Contribution**

Enter the amount you are actually Contributing, or interested in contributing, into the ivory box.

Enter any reasonable Step amount into the sky-blue box.

Start with steps of about 10% of your central amount;

Thus if centered on 15%, you might try steps of 1.5%.

You'd see your 15%, as well as 16.5% and UP, as well as 13.5% and DOWN.

Adjust to larger or smaller steps as needed, to find the information you want.

The object is to see the Yield required for your contribution, and evaluate whether you are earning that much.

IF you are NOT, you will need to do some combination of: contribute more, re-invest into something that earns more,
and/or lower your GOAL salary replacement expectations.

**Custom 45 x 5 to get the data for Supplement tables.**

Type 45 into the ivory box, and 5 into the sky-blue box.
This provided the 30%, 50% and 70% Contributions we needed in tables A-Supp and B-Supp.

**Custom 1.05 x 0.20 followed by manual extrapolation to get yield at ZERO contribution (COASTING)**

Type 1.05 into the ivory box, and 0.20 into the sky-blue box. Also be sure to select "Low-C_Extend".

This gets you very close to ZERO contribution. You need to manually do the extrapolation from 0.05% to zero%.

Take the Yield difference between contribs of 0.25 and 0.05, then add 1/4 of THAT, to the yield value at 0.05.

**Custom 1.00 x 0.10 to get yield at 1% contribution (proxy for COASTING)**

Type 1.00 into the ivory box, and 0.10 into the sky-blue box. Also be sure to select "Low-C_Extend".

Use this for scenarios starting with ZERO savings. We cannot use ZERO contributions here,
so we arbitrarily use a very small contribution of 1%.

**To TOP of page**

Before jumping into very early retirement however, be aware that you could be in for a surprising and subtle shortfall,

This is the loss of purchasing power from all the missed working years where one's salary would have grown faster than inflation.

The Fidelity assumptions stipulate that raises were 1.5% above inflation, so in THIS CASE, we lose 1.5% of salary growth per year of salary not taken.

Although we are getting COLAs that stabilize our purchasing power once retired, that purchasing power is reduced,

when compared with working until full retirement (age-67 in this discussion).

Should extremely early retirees accept the standard 45% payout, or, strive for adjusted higher payouts to compensate for the salary raises missed?

CAUTION: especially at earliest retirement ages, this makes for a considerably more difficult savings task, which may not always be attainable!

This 1.5% shortfall comes to a bit more than 7.7% per five years of missed raises before age-67.

While you could probably choose to ignore this difference at age-62, or even age-57, it would want to be taken into account for earlier retirements.

In place of the 45% Payout default, use instead: 45% times 1.015 ^ (Years of missed raises):

A B C D Ret_Age 67 - A 1.015 ^ B 45% x C 67 0 1.00000 45.00% 62 5 1.07728 48.48% 57 10 1.16054 52.22% 52 15 1.25023 56.26% 47 20 1.34686 60.61% 42 25 1.45094 65.29% SEE Example below. 37 30 1.56308 70.34%

Column A: Retirement age, 42

Column B: Number of years of missed raises: 67 minus 42 = 25

Column C: Adjustment for B years loss of 1.5%-above-inflation salary raises:

1.015 ^ B, which means 1.015 to the 25-th power, here: 1.45094

Column D: Salary Replacement needed, for same retirement payout as if worked thru to FRA, here: 65.29% instead of 45%

Assume 100K starting salary. Any starting amount will work. The round number just makes the math a little easier for demo.

This grows to 188380 per year in 17 working years, from age 25 to age 42 (16 raises of 4.0375%/yr)

1.040375 ^ 16 = 1.8838; and 1.8838 times the 100K is 188380 per year.

Take 45% of the 188380 per year: Initial retirement payout at 42 is: 84771 / year

By Age-67, that 84771 will compound (with 25 years of 2.5% COLA's) to:

1.025 ^ 25 = 1.853944; 1.853944 * 84771 = 157160.69 / year ... still based on 45% of age 42 salary.

1.040375 ^ 41 = 5.06741; and 45% of this 506741 gives retirement pay of: 228033.45 / year

SO,

228033.45 / 157160.69 = 1.45096

which is extremely close to the predicted value, 1.015 ^ 25 = 1.45094 from the table just above.

To bring the retirement payout up to this same amount on the lower age-42 salary, we must multiply it by this factor,

meaning we need a payout of 1.45094 times 45%, or 65.29%.

To help visualize this, some early retirement age entries in Tables A and A-Supp

provide an alternate

directly under the original entry for that retirement age:

Age 42 ...... ./Pay 65.29% ......

* Scenario (the Leftmost column) What you GET after you Retire, and When it Starts Paying OTHER Columns: Alternate ways to PAY for this retirement scenario Each is a combination of Salary Contribution (Contrib) and Investment Return. These fall along a continuum. You can always find intermediate solutions with the Calculator. * Difficulty The point where your retirement is properly funded with a Contribution rate that is exactly the same as the Yield you are getting: Contrib=Yield, or "C=Y". This seems to be a nice "Index of Difficulty" for ranking different scenarios. * Int at 20% Contrib Contribute exactly 20% of your income? - The Yield (Int, Interest Rate) you'd need. * Int at 10% Contrib Contribute exactly 10% of your income? - The Yield (Int, Interest Rate) you'd need. * Int at ZERO Contrib IF you want to COAST - to make NO more contributions after the 10 year sprint, This is how much Yield (Int, Interest Rate) you need your investments to earn. When savings started as ZERO (no sprint), we used contributions of 1% rather than 0%. In Tables A-Supp and B-Supp, the concept is similar, except that here, we focus on the more difficult scenarios, so we replace the 20%/10%/0% contribution columns with 70%/50%/30% contribution columns. As before, the data shown in each column, is the investment yield required to make the retirement succeed with that amount of contribution. More contribution requires less yield. Some scenarios appear in BOTH A and A-Supp, or in B and B-Supp to show the whole contribution spectrum. There are a few most-challenging scenarios which appear ONLY in the -Supp tables.

Table A: The PAYOUT is Always 45% (except where "./Pay" is shown) AND we Vary the Retirement Age Scenario: Difficulty 20% Contrib 10% Contrib 0% Contrib ------------ 0X at age 25: Age 67 7.314% 4.332% 6.401% 12.970@1% Age 62 7.984% 5.161% 7.291% 14.407@1% Age 57 8.725% 6.016% 8.274% 16.211@1% Age 52 9.607% 6.986% 9.460% 18.645@1% 0X at age 35: Age 67 8.434% 5.354% 7.826% 16.109@1% Age 62 9.420% 6.541% 9.188% 18.611@1% Age 57 10.627% 7.927% 10.896% 22.188@1% ------------ 2X at age 35: Age 67 6.376% 4.345% 5.740% 7.750% Age 62 7.042% 5.220% 6.553% 8.456% Age 57 7.794% 6.150% 7.447% 9.274% Age 52 8.725% 7.251% 8.532% 10.301% 4X at age 35: Age 67 5.303% 3.692% 4.730% 6.035% Age 62 5.833% 4.420% 5.371% 6.562% Age 57 6.402% 5.156% 6.037% 7.132% Age 52 7.065% 5.976% 6.793% 7.795% Age 47 7.915% 6.996% 7.743% 8.640% 8X at age 35: Age 67 4.028% 2.819% 3.545% 4.379% Age 57 4.815% 3.932% 4.494% 5.135% Age 47 5.716% 5.119% 5.528% 5.984% Age 42 6.326% 5.904% 6.209% 6.539% ./Pay 65.29% 7.931% 7.529% 7.861% 8.219% Age 37 7.214% 7.051% 7.178% 7.309% ./Pay 70.34% 9.926% 9.760% 9.925% 10.094%

Table B: The Retirement Age is Always 67, and we Vary the PAYOUT Scenario: Difficulty 20% Contrib 10% Contrib 0% Contrib ------------ 0X at age 25: Pay 45% 7.314% 4.332% 6.401% 12.970@1% Pay 62.5% 8.005% 5.321% 7.361% 13.893@1% Pay 80% 8.532% 6.053% 8.076% 14.585@1% 0X at age 35: Pay 45% 8.434% 5.354% 7.826% 16.109@1% Pay 62.5% 9.269% 6.526% 8.999% 17.310@1% ------------ 2X at age 35: Pay 45% 6.376% 4.345% 5.740% 7.750% Pay 62.5% 7.168% 5.380% 6.707% 8.584% Pay 80% 7.776% 6.156% 7.433% 9.221% Pay 115% 8.691% 7.292% 8.505% 10.171% 4X at age 35: Pay 45% 5.303% 3.692% 4.730% 6.035% Pay 80% 6.668% 5.393% 6.316% 7.453% Pay 97.5% 7.151% 5.975% 6.865% 7.952% Pay 115% 7.559% 6.462% 7.322% 8.371% Pay 150% 8.225% 7.243% 8.064% 9.053% Pay 185% 8.759% 7.862% 8.651% 9.600% Pay 220% 9.205% 8.373% 9.139% 10.055% 8X at age 35: Pay 45% 4.028% 2.819% 3.545% 4.379% Pay 80% 5.355% 4.405% 5.035% 5.749% Pay 115% 6.220% 5.405% 5.983% 6.634% Pay 150% 6.866% 6.138% 6.683% 7.291% Pay 185% 7.384% 6.719% 7.239% 7.818% Pay 220% 7.817% 7.199% 7.701% 8.257% Pay 290% 8.516% 7.969% 8.443% 8.966% Pay 360% 9.072% 8.575% 9.027% 9.526%

Table A-Supp: The PAYOUT is Always 45% (except where "./Pay" is shown) AND we Vary the Retirement Age Scenario: Difficulty 70% Contrib 50% Contrib 30% Contrib 0X at age 25: Age 52 9.607% 2.918% 3.961% 5.613% Age 47 10.736% 3.801% 4.898% 6.681% Age 42 12.319% 4.892% 6.103% 8.137% Age 37 14.842% 6.489% 7.949% 10.518% ./Pay 70.34% 17.034% 8.466% 10.170% 13.154% 0X at age 35: Age 67 8.434% 0.886% 2.086% 3.908% Age 62 9.420% 2.004% 3.191% 5.038% Age 57 10.627% 3.127% 4.347% 6.295% Age 52 12.266% 4.420% 5.738% 7.911% Age 47 14.825% 6.206% 7.753% 10.423% 2X at age 35: Age 52 8.725% 3.847% 4.854% 6.274% Age 47 10.016% 5.247% 6.288% 7.747% 4X at age 35: Age 47 7.915% 4.554% 5.346% 6.363% Age 42 9.166% 6.233% 6.979% 7.908% 8X at age 35: Age 42 6.326% 4.683% 5.121% 5.623% ./Pay 65.29% 7.931% 6.192% 6.672% 7.222% Age 37 7.214% 6.476% 6.694% 6.928% ./Pay 70.34% 9.926% 9.024% 9.304% 9.603%

Table B-Supp: The Retirement Age is Always 67, and we Vary the PAYOUT Scenario: Difficulty 70% Contrib 50% Contrib 30% Contrib 2X at age 35: Pay 115% 8.691% 3.932% 4.956% 6.354% 4X at age 35: Pay 150% 8.225% 4.552% 5.431% 6.550% Pay 185% 8.759% 5.241% 6.101% 7.191% Pay 220% 9.205% 5.810% 6.654% 7.720% Pay 255% 9.589% 6.293% 7.125% 8.170% Pay 290% 9.926% 6.714% 7.535% 8.564% 8X at age 35: Pay 220% 7.817% 5.279% 5.951% 6.745% Pay 290% 8.516% 6.136% 6.782% 7.538% Pay 360% 9.072% 6.806% 7.431% 8.160%