Posted on 03/24/2014 6:37:38 PM PDT by SeekAndFind
We recently pointed out that starting to save early for retirement is extremely helpful, and also a useful chart showing how much you should have saved at different stages of your career to ensure a comfortable retirement.
To show how these ideas work, we figured out how much money you would have to set aside monthly, starting at different ages, and under different rates of return, to end up with $1,000,000 in savings when you are ready to retire at 65.
Here is how much you would need to save each month at a 6% annual rate of return, starting at different ages.
So if you're 20, and you want to retire a millionaire, you should be socking away $361 per month. If you're starting at 25, that jumps to $499. You can see how as you get older, you need to be saving much, much more:
(Excerpt) Read more at businessinsider.com ...
There are many ways to wealth.
But I point people to http://www.bogleheads.org/. The folks there believe in investing in low expense index funds. They recommend only owning a handful, and reallocating on a regular basis, but not terribly often. They don’t recommend watching the stock market on a daily basis. Just check out their wiki, ask questions at their forum. I think they make sense. If it makes sense to you, try it out.
My son and his wife make about $160K a year and get nowhere because they live in California.
They live in Oklahoma where the cost of living is fairly low. I would love for them to move to this part of Florida since we have no state income tax and real estate taxes are also low. Also no sales tax on food or medicine but mostly to be near the grandchildren.
There are a lot of folks in California who don't make $160K/year. Maybe your son and wife really can't do anything. But do they have cable? Do they buy new cars or used? Do they have the latest cell phones and the expensive plans?
In some ways it was so much easier starting out in the '70s. Credit cards were not ubiquitous. If you wanted something, you saved up for it. Your first car, most likely, was used. Monthly cable bills? Monthly cell phone bills? Unheard of.
(Of course, when we bought our first house in 1980, our FHA mortgage was 14%.)
Making the first million is the hardest, I’m working on my second Million now.
I gave up on the first...
Of course they do ...this is the 21st century.
They live comfortably and are raising two wonderful boys who do not go to government school. -- The irony is they both work for the state. My son is a Fire Department Captain. his wife a lobbyist for CPS. They feel a calling as did I when I was younger.
Very funny...
Who gets 6% rate of return these days?
Save to revisit later
“Here is how much you would need to save each month at a 6% annual rate of return, starting at different ages.”
LOL- Those days are long gone. Now recompute at .1% for something at least useful though not by much.
These days if you want to save 1 million then you are pretty much going to have to Save an actual 1 million.
Nice to dream......
How To Turn $10,000 Into 1.5 Million In As Little As 2 Years!
http://www.solerinvestments.com/Online-Trading/Compound-Interest.htm
I have a friend who turned a million into around a hundred thousand. On his financial trip he turned the million into 10 million then lost it all plus a lot of his orgiginal funds.
He did manage to hang onto a nice house and a Rolls Royce.
I don't care what's written about the stock market. I'm a strong believer in American business making a profit.
I own a good number of shares in the stock of my former employer, a large American manufacturer. The stock hit a high in 07/2007, a low in 03/2009, and a new high this year. If I ignore the intervening years, I have earned an 11% annual compound return for the seven years from 2007 until now.
My husband owns a good number of shares in the stock of his employer, another even larger American manufacturer. That stock hit a high in 05/2008 before it dropped, then recovered to a new high this year. For his stock, it's a 7% annual compound return for the six years from 2008 until now.
You don't invest in the stock market for the short term. I know a lot of people state that values are artificially high right now. But I don't know of a better place for our money right now.
Just my 2 cents.
So true.
When I remarried 17 years ago I got a hard working business woman for a bride who does have her hobbies but she can be fiercely regimented about knocking down bills and expenditures. She retired early but only after we paid off our principle residence.
We probably could have bought and lived in a home three time the cost of what we had, we certainly would have “qualified” for it in the 90s. We kept the one we had, kept it up and had all we needed for a nice suburban newer home.
The key to our retirement will be that we both put away in 401k and other savings over ten percent of what we made and I still do that today even in my last year of work.
It took a long time for me to develop that discipline — I was a guy who needed a choke chain and a leash in my youth, new sports car at 22 — party animal. But doesn’t life have a way of showing us our errors?
Yep - just try to retire with a million bucks when the government takes fifty cents of every dollar in taxes and half the remainder in inflation.
Rotsa Ruck!
That is a fact of life. Except once. In 1776 the rich sacrifice EVERYTHING they had for the betterment of everyone. It just blows my mind. Never happened before, never happened again.
Correction: In 50 years a loaf of bread will cost you 500 Yuan.
The point of the article is that early savings, or starting NOW whatever the day is, will get you a long way with time. Saving is a habit. Not touching it except for capital improvement is a habit. Diversification to avoid down turns is a habit.
I can see you wish they had this one habit in their well behaved life — perhaps they can pick it up because, of course, they never listen to we parents.
Your buy and hold strategy is very sound. The only thing I would consider is some diversification. Anything can happen to one company, remember all those people that had their money in that wonderful company they worked for — Enron.
Not sure I agree with that - sorta depends what you mean, specifically, by “rich.”
To me, these days, that indicates maybe, say... fifty million in the bank or something like that.
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