LogFAQs > #980056478

Kuuko posted...

When you look at people estimating annual S&P500 returns you'll see numbers between 7%-12%. Depending on the specific timeframe you pick. And the low side of 7% factors in inflation. So yes roughly 7% is safely your expected "real returns".

As much as inflation is talked about now, it's usually more like 3% or less each year. The federal government targets 2%.

Im more just talking about how money buys less over time rather than inflation as it currently works. For example, my parents took out about $34,000 in loans to build their house (which has 3 bedrooms, 2 bathrooms, and a full basement, all cinder block and brick on the outside, best insulated Ive seen) in 1988, and that probably wouldnt even come close to building a starter home now.

So its less about the money itself than it is what you can expect to buy with a given amount of money by the time you retire versus what you could buy with it now.