A few days ago I posted what I felt was an amusing fable: http://www.independentpenguin.com/schrodingers-retirement/ . I wrote it tongue-in-cheek referencing the traditional retirement planners use of salary (instead of spending) and the famous Schroedinger’s Cat physics thought experiment.
Of course, the truth of the matter is that Schroedinger can base his needs on spending instead of income, he has free choice, and doesn’t even need to look in the envelope if he doesn’t want to.
That’s the truth.
So it was with great
horror amusement sense of deja-vu that I read this article from Fidelity (that was sent by our HR department): https://www.fidelity.com/viewpoints/personal-finance/8X-retirement-savings . You see, the point number 6 of the Fidelity article is literally an embodiment of Schroedinger’s Retirement!
Oh, they name the worker Lily instead of Schroedinger. And her envelope contains her raise. But here is the relevant quote:
Perhaps ironically, the faster your salary grows and the more you earn, the more you need to have saved …
For example, if Lily were to get no real salary growth (keeping up with inflation only), she would need only $279,000 (in today’s dollars), or 7X her ending salary of $40,000. If that salary grows at a modest 1.5% annual rate after inflation, she will need $577,000, or 8X her higher ending salary.
There is a big difference between Schroedinger (who lets the company decide when he can retire), Lily (who lets her salary determine when she can retire), and the Independent Penguin.
The Independent Penguin doesn’t have to open the envelope.