Posted on 03/14/2006 6:22:52 PM PST by Tolerance Sucks Rocks
Take heart--some of them achieve this prior top their high-school graduation!
Put it this way, $2.5K a year for 45 years at 8% interest would leave you with $1 million in the bank.>>>>>>>>>>>>>
And what will that buy after 45 years of inflation which the government tries to hide by juggling the figures? I am only 61 years old and I remember when a person who had one tenth of that in the bank at any age would have thought that work was purely voluntary for them. A projected lifetime of earnings back then amounts to one good year now.
That's why they're called SHEEPLE.
A million to a million five in today's money is a hell of a lot for one person to survive on for 15 years.
If you really want to see fear of choice, ask a senior about when new Medicare plan that are choosing. You see some real fear. I know men who were corporate managers who are scared to death of selecting a Medicare plan. They don't want to investigate and make a decision. It's scary.
That amount can be figured, with a few assumptions:
Average inflation: 3.5% (that's been the rate from 1915-present)
Amount Needed to Retire Comfortably in 2006 Dollars: $50,000 (just for starters...substitute your own number if you like)
Inflation Multiplier: 4.8 (I believe multiplying today's amount times this number will get you a comparable amount 45 years from now, but it's been awhile, someone may want to check that calculation).
If we use $50K as the base amount, you'd need around $240K annually to retire at the same level of spending in 45 years. So if your investment is yielding a 6% return, you'd actually need $4 million in the bank to live on interest alone.
Given all this, a 25 year old planning to retire in 45 years with a goal of $4 million in the bank will need to contribute $10,349 annually and achieve an 8% return.
(Obviously, drawing on the principle as well as the interest/yield would require less savings.)
A million to a million five in today's money is a hell of a lot for one person to survive on for 15 years.>>>>>>>>>
Of course it is! My question was how much is it going to be worth 45 years from now! When I was a lad one hundred thousand was a hell of a lot for one person to survive on for 15 years!
Over 45 years from now I would assume that your contributions would increase as your salary increased.
Over 45 years from now I would assume that your contributions would increase as your salary increased.>>>>>
That might be the case if salaries were increasing as fast as inflation but in this area they are far from keeping up with inflation. The average wage earner here has less buying power with each passing year.
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