Stephen Wolfram, of Mathematica and WolframAlpha fame, used his natural language analysis tools to crunch through a huge set of Facebook data. The results are some interesting visualizations, including a series of charts about how the popularity of a topic varies with age. For example, both men (blue) and women (red) post increasingly more about career and money topics between ages 15 and 30. After that, interest levels stay pretty much constant for the next 30 years. I suppose it’s because virtually all of us are still working until then. 🙁

Here’s the chart for family and friends; I wonder if the drop in the 20s is due to a focus on finding a partner? Other than that, the gap between men and women seems pretty constant.

A growing gender differential occurs in terms of health-related topics. No wonder us guys don’t live as long. 😉

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Behavioral economists are constantly trying to find ways to convince us do the “right” things like save for retirement. Why is it so hard to give up short-term perks for larger, long-term rewards? For example, take my True Cost of Holiday Shopping calculator and this Warren Buffett anecdote from a 2011 WSJ article:

Warren Buffett is one rare—and extreme—example. When he was a young man, according to Alice Schroeder’s biography “The Snowball,” Mr. Buffett often asked, “Do I really want to spend $300,000 for this haircut?” He was thinking about the vast amount of money he wouldn’t have decades in the future because of the small outlay he might make in the present.

I think it’s fair to say that most people don’t think like that. (It appears he did get haircuts at least once in a while.) According to Stanford researchers, one big reason is because we struggle to identify with our future selves. The researchers are quoted in this Wired article:

To people estranged from their future selves, saving is like a choice between spending money today or giving it to a stranger years from now.

In their study, they used advanced virtual reality goggles make some people see older versions of themselves. Afterwards, the test subjects who saw their elderly avatars stated they would save twice as much as those who didn’t. Merrill Edge, the brokerage arm of Bank of America, has created an online version of this aging process called Face Retirement. It takes your picture via webcam and ages your face to help you better visualize “old” you. I got to see myself at age 47 to 107, in 10-year increments.

Will it work? I’m not sure. My wife says I just look like a zombie, especially at 107. Maybe there would be more shock value if it showed me eating dog food or something.

Here’s yet another retirement rule-of-thumb, this time by Fidelity Investments.

[…] the average worker may replace 85 percent of his pre-retirement income by saving at least 8 times his ending salary. In order to reach the 8X level by age 67, Fidelity suggests workers have saved about 1 times their salary at age 35, 3 times at age 45, and 5 times at age 55.

As usual, these number are based on a long list of assumptions. Start saving at age 25, retire at 67, nice gradual income growth, nice gradual portfolio growth, and so on:

The company’s 8X savings guideline is based on a hypothetical worker saving in a workplace retirement plan, such as a 401(k), beginning at age 25, working and saving continuously until 67, and living until 92.

• The employee will make continuous annual salary contributions to a workplace plan beginning at 6 percent and escalating 1 percent per year until 12 percent, plus receive an ongoing 3 percent annual employer contribution during their career.
• The calculation assumes a lifetime hypothetical average annual portfolio growth rate of 5.5 percent.
• Social Security payments are factored into the replacement income ratio of 85 percent.
• The employee’s income grows by 1.5 percent per year over general inflation with no breaks in employment or savings.

Focusing on the positive, these age-based targets are meant to be more helpful when setting goals than big, scary numbers. Also, these rules reinforce the idea that starting early is very important as it gives compounding time to work.

But again, we see the same-old assumption that you will constantly spend a certain % of your working income. Why? The implicit acceptance that spending should be linked to salary keeps you from ever getting ahead. Think about it; Your spending can be completely independent of salary. Instead, you earn more, you spend more, and the hamster wheel goes ’round and ’round:

Image credit to Polyp.org.uk and FOEI.

The reason why I write is that working 40+ hours a week for 40+ years is unacceptable to me. Retirement rules should be based on your spending, not salary. Salary is important, but your spending determines how much money you need to save. Your spending is also much more under your control than most people admit. 25 times your annual spending; That’s my guidepost.