Rule Du Jour: Rule #48 Cut the Burn (Patreon)

For someone who starts investing at 25 and retires at 65, cutting your burn during life by just 1% - ie reducing expenses can have a profound impact—boosting retirement savings by $220,000 and extending spending power by nearly 10 extra years in retirement. You also have more money in the market for more time and it all equals a wealthier future!

• Key Elements:

  • The chart is divided into two main phases: the Saving Phase (ages 25–65) and the Retirement Phase (ages 65–95).

  • There are two curves or areas representing savings trajectories:

    • The orange area labeled “Retirement Savings”

    • The gray area showing “Retirement Savings with 1% less Expenses"

The Big Takeaway

Reducing burn by 1% -ie saving more gives you more spending in retirement plus also an extra ten years of retirement. There are many ways to save 1%

If your annual income or total expenses are $50,000, 1% equals $500/year. If it’s $100,000, 1% equals $1,000/year. Not hard to save that extra 1% per year.

Cooking at home more ($1,200/year) + cheaper vacations ($500/year) + lower investment fees ($450/year) = $2,150/year, far exceeding 1%.

Even smaller changes, like cutting subscriptions ($300/year) + driving less ($600/year) + buying in bulk ($300/year), could total $1,200/year on a $50,000 income.