The Rule of 30: A Better Way to Save for Retirement

When considering how much to save for retirement, the 10% rule of thumb is outdated, argues actuary Vettese (Retirement Income For Life) in this quirky if uneven survey. Now that defined pension plans are largely a thing of the past, he writes, people need to take on the responsibility (and risk) of planning their own retirement. To explore how to do so, Vettese presents a modern-day parable of a clueless early-30s couple and their retired-actuary neighbor, Jim, who leads them on a “financial odyssey.” Vettese’s lessons come as “Jim” leads the couple through financial planning topics such as identifying a realistic retirement income target, early mortgage payoffs, whether to rent or own, and tax planning: things come down to ditching a flat savings percentage in favor of saving when life is most amenable to it, averaging to about 30%. This is a good lesson in and of itself, but the wise mentor/young mentees model hamstrings the impact: not only does it feel forced, but it proves a significant distraction. And American readers will struggle to connect, as Vettese does calculations using account types and terms that will be unfamiliar and irrelevant. This feels like a missed opportunity. (Oct.)