[whack]

I believe the guideline is that in order to enjoy a $X/year retirement income (adjusted annually for inflation), you need a nest egg of $25X. So if you'd like to retire with $100k/year, $2.5M would do it. And even less if you are willing to factor in social security income.

If you adopt a buy-and-hold investment strategy over the course of 20-30 years, with a good mix of index funds, the above should be easily within reach.

[1ba9115454]

Not sure it's safe to assume the stock market will go up and up. Perhaps it will, but where does that money come from?

[whack]

The S&P 500 has a PE ratio of ~20. Which means that for every $20 of stocks that you earn, your portfolio of companies are generating $1 in yearly profit. These profits alone represent a ~5% ROI. That's where the money comes from.

[cko]

Sounds good, though 100k in 25 years would be like 30k in purchasing power.

[throwaway8800]

Wouldn't it be more like $60K?

[cko]

If you believe in the 2% inflation figure put forth by the government, yes. So let's say it's $60k, before taxes. Seems like a bummer, do you think?

[throwaway8800]

Yes, it would be a bummer if you think you are getting $100K. But I'm hoping that people who are competent with their savings have some understanding of inflation's effects on their savings.