[eli_gottlieb]

I'm already very frugal (haven't failed to put away 20% of my monthly income in savings for... quite a while now), have a Roth IRA to which I make maxed-out yearly contributions, have savings and investment accounts outside of that... blah blah blah. My net worth is embarrassingly large for my age.

Thing is, unless I hit it big with something, that's going to eventually leave me the choice between being a financially somewhat secure singleton and driving myself right back into the Broke Zone by trying to actually have a family.

The fact remains that I cannot expect to be a millionaire by the time I'm 40, especially not if I want a family, and living in a van to make a below-poverty-line income and lifestyle sustainable is... giving up.

[derekp7]

Just to get some numbers out there, for people in our income range. Assuming you are able to save 25,000 a year, get 8% return on investments, and pay a marginal tax rate of 28% on the investment returns, you will have a shade over 1 Mil in 20 years. To make it a bit more realistic, if you save 15,000 per year and get 6% returns annually, it will take about 33 years. So you can either retire at 41 or 53 (assuming 1 Mil is enough to retire on).

Now if your investments can grow tax deferred (such as 401k), that puts the two "millionare" ages at 39 and 48, respectivelly. Of course, tax deferred just gives you the advantage of taxes not getting in the way while your fund is growing -- you still have to pay taxes on it when you withdraw. But if at that time you have all your assets (house, car, etc) paid for, you can live on a lower monthly income. So if you are married by that time, and keep your withdraws to less than 70,000 a year, you only pay 15% tax. Oh, and you have to wait till your mid 50's to start taking out of 401k without paying a 10% penalty. (which is why a smart strategy is to use 401k as just one of several investment saving strategies).

The real benefit of 401k is if your employer matches funds. This can essentially double your contributions. And since there is a built in rule that keeps you from taking it out till you are close to retirement age, it lessens the chance that you will take it out early and blow through it when you are younger.

[eli_gottlieb]

Again: I'm a graduate student. $15k/year USD is most of my annual income.

Mind, about 5,000 NIS/month netto is a pretty reasonable lower-middle class salary for a grad-student in Haifa, but it's not "save up for retirement and kids" money.

So let's just assume your post applied to everyone who actually does have a full-time development job earning nice huge sums of money and somehow finding low rents somewhere.

[derekp7]

yeah, my post was general (I just replied to your last post, didn't infer context from your previous one). But anyway, the numbers still work out at any income level -- if you invest 20% if your income at 8% for 23 years, you can then live off the savings for the next 40 years (assuming you withdraw from your savings 80% of your income level, which is the amount you were living off previously, and that the savings still nets you 8% annually). So if you are making 20,000, and invest 4,000 a year (20%), your are living off of 16,000. Then after 23 years, you can withdraw 16,000 from savings for the next 40 years.

This is simplified ignoring taxes, and also not counting for inflation (you'd want to work for 30 years to be able to draw enough extra to cover inflation -- however your contributions will be increasing during that 30 years since hopefully your pay goes up faster than inflation).

[GuiA]

> I'm already very frugal (haven't failed to put away 20% of my monthly income in savings for... quite a while now)

Try to bump it up by a few percent every month (cook at home, buy less useless shit, sell stuff to buy stuff, etc.). On a developer salary, you can easily put 50%+ aside every month if you're without kids/mortgage.

[eli_gottlieb]

I'm going to reply this above, too, but did you notice where I said graduate student?

Yeah, we don't get paid the kind of money where we can save 50% every month.

[pnathan]

Lots of people in the 24-30 zone are having kids and doing reasonable well. You do have to find a job that pays reasonable.