One of my biggest complaints with retirement planning is that the assumptions are always a bit insane. I’m always reminded that the calculators are run by investment companies and want to show you that you need to put more money into the account they manage.

Between my wife and I, we have a higher than average household income. We’re not in the 1% or anything, but we’re doing very well for people in their early 30s. I contribute 8% to a 401K every year and take advantage of a company match for a 401K and HSA. We also fully fund two IRAs every year, and my wife is in a union with a pension plan.

We own our cars, have no credit card debt and no student loan debt. Our only large debt obligation is our house. But when we bought, we were constantly told that we were shopping for less than “we could afford”. So we ended up with a great house in a great area and are paying down the mortgage pretty quickly.

So why does every retirement calculator assume that my income is going to grow by 2% a year and I’ll need something like 300K every year in retirement? That’s insane. When we retire, we’ll have money set aside for medical expenses, own our home, have no children and have several retirement investment vehicles. If we’re saving 25% or something of our incomes now, why on earth would we need a lot more to live on after retirement? I understand that inflation is inevitable, but if I need that much to live on in retirement, there are going to be riots on the streets from people who weren’t as lucky as us.

The best advice I ever got is that money gives you options. It won’t set you free or make you happy, but it does let you go buy a new something if anything breaks or see a doctor when you’re sick. For that reason, you should always live below your means in any way that you can, because having any kind of savings gives you more options than living paycheck to paycheck. But take retirement & savings calculators with a grain of salt, because those companies have an agenda, too.

The real question, which you address, is what to do when there isn’t the education or opportunities available for people to earn enough to live on, let alone have something extra to save. And financial literacy is an important skill set that we’ve got to teach everybody. I’m amazed at how easy it is to leak money through things like cable or cell phone bills if you’re not careful.