[koolba]

> but people working average mid-life jobs at average salaries who consistently save $100/month or more can amass significant retirement wealth over 30-40 years.

You’re off by at least a factor of ten.

40 years of $100/month savings at a generous 5% compounding is $148,242. And that’s in future dollars. Drop it to 4% and you’re down $116,606.

The real formula to consider is what percentage of your monthly spending you are savings. If it’s 100%, then every month worked is one month of retirement. If it’s 50% then two months of working is one month of retirement. If you live frugally and save 400% of your spend, each month counts as four retired months.

It’s a simple fraction with the numerator as your net savings and the denominator your total spending. And lowering the denominator scales things much faster.

[WorkerBee28474]

5% is not generous. 5% is conservative. 10% is historical for the S&P 500. 12% is generous.

[scoofy]

7% is historical for S&P500, but that's with 3% average inflation. His point is that 5% real returns are, in fact, generous.

[NoLinkToMe]

No he said 5% 'is in future dollars', i.e. not inflation adjusted to a present value... When in reality the nominal S&P500 returns are 10% leading to the same 'future dollars'. That is conservative.

Plus if 7% real returns (after a 3% inflation) is the historical average, how is 5% real returns generous? That's still conservative even if he meant to claim a 5% real return.

[whamlastxmas]

Especially generous if you account for official inflation numbers doing a terrible job at representing income to cost of living ratio