What Is The Lowest Reasonable Savings Rate

Invert to see what the minimum is at different levels of complexity

Welcome Back. Another week down and crypto has finished with a big rally (BTC ~$117k and ETH ~$3k as I type).

I don’t know if it was related to the run up in crypto or not, but this week there seemed to be a higher than typical amount of people talking about how you really only need to save some very small percent of your earnings and you will be fine in retirement.

It got me thinking. Since one of my favorite concepts is ‘invert’-ing a problem, instead of approaching the whole savings rate by asking ‘how much can I save’, how about inverting it and seeing ‘how little can I save’.

And after playing around a bit seeing how little you could feasibly save, I actually learned a lot about how some of these other guys come up with their numbers as I went from a very simple model to start and then added more and more realism to it.

If you have ever heard all the conflicting advice and rules for retirement (10% rule, 15% rule, 50/30/20 rule, 4% rule, 25x expenses, etc etc) and were surprised there was so many different conflicting rules out there…well this post will help show how (I think after running the numbers) some of those rules came to be.

And hopefully by the end you will have a better understanding of how much you should be saving for retirement.