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by marcusverus 821 days ago
> The article breezes past that the median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000.

Anyone who tells you that the middle class should expect a meager retirement is an ignoramus who should be ignored at all costs.

The median household income is ~75K/year. If this household started saving (from zero!) at age 35, saved 10% per year and got a 6% return for 30 years, they would have ~$600K saved for retirement by 65.

The simple truth is almost everyone can retire in reasonable comfort and with peace of mind if they follow a few simple rules: - Avoid high-interest debt like the plague. - Get in the habit of saving 10% as early as possible - Have an emergency fund in cash, but don't keep more than ~3 months expenses in cash. Invest! - Use tax-advantaged vehicles like 401K/IRA - Invest in broad-based funds with low fees (ex: VO, VOO) - Don't pick individual company stocks. If you must, never invest more than 5% of your portfolio. If you do, know that you're not "investing", you're gambling! - Don't try to time the market. Dollar cost average. Buy and hold. - When you hit 100K, meet with a financial advisor who is a fiduciary and who charges by the hour. Not a stock salesman, not a portfolio manager, an advisor. Heed their advice. Check in every 5 years.
3 comments
Fire-Dragon-DoL 820 days ago
Also, usually the problem I encounter is that people need all that money to live "middle class" level, and the expenses are all upfront.

Don't get me wrong, I agree with you. They could pass onto the 50K wedding and repeated very expensive holidays.

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staticman2 820 days ago
Who exactly is projecting 6% returns? Vanguard is projecting 10 year returns of 5.2% U.S. returns before inflation and 8.1% international stocks before inflation. At 2% inflation that's 4.56% real returns if you assume 2% inflation and went 50/ 50 on U.S. and international stock. (Non inflation adjusted returns tell you nothing about readiness for retirement so should be avoided).

And that's at 100% stock, which isn't recommended before retirement.

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marcusverus 820 days ago
6% is the average inflation-adjusted annual return of the US market over the last 150 years.

The specific rate of return will of course vary, year to year and decade to decade but the fact remains that cushy nest eggs aren't only for the rich. Middle class folks can retire in relative comfort and without making drastic sacrifices in the short term.

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staticman2 819 days ago
Price to earnings ratio's are about twice what they were historically, https://www.multpl.com/shiller-pe

which would suggest 3% inflation adjusted returns. This isn't a serious prediction, just an observation that it takes a lot of optimism to tell people they'll get 6% returns because of their preferred data point.

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Fire-Dragon-DoL 820 days ago
10% before or after taxes? I'm in Canada, so the difference is enormous.
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