I’m in a similar place to you, and I’ve resigned to it being an impossible feat. I’m pretty close to the number for 40, but the curve is flattening. There’s no way I retire at 65 with enough to survive to 80.
Those numbers were established during boomer economy years and assume a few things that aren’t true anymore:
infinite 7-9 percent stock market growth, but the modern market crashes every decade or so now.
linear year over year wage increases that outpace inflation. Really is either flat wages or OP situation of huge jumps. The former makes saving impossible, the latter throws the x percent by decade curve off.
you should count your home equity in that number, but fewer people own homes, or are underwater on them for far longer.
the x/decade number assumes a certain amount of income from social security, but that’s likely to be stolen by the time we retire.
those numbers were made before the entire American population was crushed with debt. Student loans and medical, even just modern insurance premiums dig deep into the ability to hit retirement goals.
Basically, good luck OP. We’re all going to work till we die.
Yeah, boomer math was my #1 theory for why this isn’t working. This sounds like post WWII advice in a post 9/11, post financial-crisis, post-pandemic world.
You omitted post-college affordability and post housing affordability.
The housing issue is actually so bad it’s making things simpler; people will just save for retirement instead as housing isn’t even in the same galaxy as most people’s wages.
“Higher ed” will probably go the same direction and just be reserved for a few elites. Since degrees don’t guarantee you much over experience the equation of self/vocational education will become the model (my nightmare is public education disappears and you have to go to your corporate “college” program.
The people I know who've given up on housing affordability unfortunately are not shifting in to retirement. They're so hopeless they blow their money on hobbies because they don't foresee any possible path to homeownership or retirement and value a few bucks here and there on discretionary spending more.
infinite 7-9 percent stock market growth, but the modern market crashes every decade or so now.
My savings into index funds has seen an average growth of 9% a year for the past three years. 11% since the start of this year. Granted I jumped in at the bottom of the corona dip.
Yeah, and you’ll lose a shitload when the next crisis pops off in a few years, taking a few more years to recover that loss. The 401k management firms only ever seem to rebalance quarterly or semi annually, so there’s no way to react to those downturns in time to mitigate.
I got hit by 9/11, 2008, and Covid, plus I’ve seen my SS benefits reduced a couple times.
You know, that’s what they say, and it makes sense. You can’t play the market. But I’m not saying play the market. I’m saying that when crises come up, the indexes should rebalance before those crises flush our savings, rather than 3 months later.
Send to me that’s what the rich people with big portfolios seem to do. The market tanks, they all move somewhere safer.
I’m saying that when crises come up, the indexes should rebalance before those crises flush our savings, rather than 3 months later.
I don’t even know what that means. Market crashes don’t flush anyone’s savings. You only lose money if you start selling when they’re going down. You don’t. You just hold and wait untill it comes back up again. It has always came back up again no matter how deep it dips.
When you hear stories about people losing their savings during market crashes it’s either people who got nervous watching the value of their investments going down and they started selling at a loss or they were invested into individual companies that went bankrupt.