Back when i had jobs that had 401k plans, all the calculators said i needed over $1 million to retire at age 70. Meanwhile i was living paycheck to paycheck trying to put something in there. How tf am i supposed to squirrel away 7 figures when i have mever made $40,000 in a year?
How tf am i supposed to squirrel away 7 figures when i have mever made $40,000 in a year?
Compound investment is supposed to do a lot of the heavy lifting. At a 7% rate of return, your money doubles every 10 years. So, assuming you set aside $6k of that $40k/year ($500/mo), starting at age 22, you’d have $1M at age 60 and $2.2M at age 70
But here’s the trick… You’re looking down the barrel of 40 years of inflation. So, if you’re earning $40k in year one (let’s say, the year 2000) and you’ve been on the job for 25 years without getting a raise, inflation has reduced the real value of that income by roughly one half.
On the flip side, let’s assume you’re keeping up with inflation (and that $500 you’re setting aside is increasing at the same rate). Then the math gets more complicated and I can’t help you anymore. But the point is you get to $1M sooner, simply because $1M in 2060 is worth a lot less than $1M in 2000.
Had a broker explain that - at my current rate of savings - I’d be looking at a $4M retirement account by age 62. But then he dumped some ice water over my head when he noted “That’s only going to be worth around $1.1M in modern dollars by then”. Suggested I actually up my savings, because $1M only really feels like a lot until you try to live on it for the rest of your life.
I am lucky if i have $300 in my bank account after all my expenses each month, and i live in a cheap town working a 9-5 job. I have no health insurance and have had to cash out multiple 401k’s to cover emergency expenses in the past 4 years. Saving for the future is an absolute joke since i can’t even afford to live today.
Yeah, that fucking sucks. In theory, there’s a tax benefit to retirement savings. But in practice, it only matters to people with giant incomes to take advantage of the percentage tax discounts.
Back when i had jobs that had 401k plans, all the calculators said i needed over $1 million to retire at age 70. Meanwhile i was living paycheck to paycheck trying to put something in there. How tf am i supposed to squirrel away 7 figures when i have mever made $40,000 in a year?
Compound investment is supposed to do a lot of the heavy lifting. At a 7% rate of return, your money doubles every 10 years. So, assuming you set aside $6k of that $40k/year ($500/mo), starting at age 22, you’d have $1M at age 60 and $2.2M at age 70
https://www.bankrate.com/banking/savings/save-a-million-calculator/
But here’s the trick… You’re looking down the barrel of 40 years of inflation. So, if you’re earning $40k in year one (let’s say, the year 2000) and you’ve been on the job for 25 years without getting a raise, inflation has reduced the real value of that income by roughly one half.
On the flip side, let’s assume you’re keeping up with inflation (and that $500 you’re setting aside is increasing at the same rate). Then the math gets more complicated and I can’t help you anymore. But the point is you get to $1M sooner, simply because $1M in 2060 is worth a lot less than $1M in 2000.
Had a broker explain that - at my current rate of savings - I’d be looking at a $4M retirement account by age 62. But then he dumped some ice water over my head when he noted “That’s only going to be worth around $1.1M in modern dollars by then”. Suggested I actually up my savings, because $1M only really feels like a lot until you try to live on it for the rest of your life.
I am lucky if i have $300 in my bank account after all my expenses each month, and i live in a cheap town working a 9-5 job. I have no health insurance and have had to cash out multiple 401k’s to cover emergency expenses in the past 4 years. Saving for the future is an absolute joke since i can’t even afford to live today.
Yeah, that fucking sucks. In theory, there’s a tax benefit to retirement savings. But in practice, it only matters to people with giant incomes to take advantage of the percentage tax discounts.
I guess the other retirement option is just say fuck it and start doing crimes. Clearly, that’s now the fast track to prosperity. Find some guy with a loaded bitcoin wallet and torture him in a basement.
And that’s just one’s savings without kids.
Having kids, and returning to multi-generational homes might be the only way one is retiring these days.
Good luck on that one.
My wife and I have no kids and live with family and we’re still dubious on retiring 😹😿
(granted part of this is due to losing all our money*2 during covid when some local businesses shuttered)