Current Events > So how does Retirement actually work?

(+) Yeah! (+)

Because I have no idea how people are supposed to amass 1mil+

I've been saving 14% of each paycheck for a few years and every retirement calculator I use says that If I keep doing this until I'm 65 I'll have very close to that

However

14% of my monthly until I'm 65 even figuring in an annual raise of 2% and interest, shouldn't be anywhere near that

Unless interest is just fucking wild on retirement accounts. What am I not understanding here?

It's a myth

Social Security plus investing into a Roth IRA, plus 401k, etc.

Wife and I are in our late 40's and already have several hundred thousand dollars saved towards retirement

It doesn't

for people our age it doesn't

CasualGuy posted...

Because I have no idea how people are supposed to amass 1mil+

They say the best way to make a 1mil+ is to start with a million

I've had either a TSP or 401k since I was 16, in my mid 30s now and I've got about 300 grand in it. I'm down about 20k from my all time peak in 2021 but at my age it really isn't worth paying attention to for another decade. I just check in on it once or twice a year, like just now.

Apparently I'm pretty ahead of the curve so if I keep this up I'll be sitting pretty if I survive to retirement.

Your retirement party and funeral are the same for most people now

Theres a lot of variables and your circumstances can change.

A couple of years ago I didnt think I would ever get to retire. Now Im in a position where I could retire at around 45 and be fairly comfortable, or work for longer to be more comfortable.

Euripides posted...

Social Security plus investing into a Roth IRA, plus 401k, etc.

Wife and I are in our late 40's and already have several hundred thousand dollars saved towards retirement

One of my friends told me her parents saved up over $1mil and it still isn't anywhere near enough.

Retirement? In This economy?

We will be working until we are dead

[LFAQs-redacted-quote]


Well I got bad news for you, buster.

You dont just accumulate money. Most of the money you make is going to be capital gains.

You work until you die

I'm pretty much expecting to work forever at least part time even with my TSP and investments. Hopefully as a subject matter expert so I don't have to push buttons or boring shit.

CasualGuy posted...

Unless interest is just fucking wild on retirement accounts. What am I not understanding here?

It's a powerful tool depending on what you're investing in. Hopefully you have it mostly in stocks. Especially an index fund that tracks the whole market or a portion like the S&P 500.

GeminiDeus posted...

One of my friends told me her parents saved up over $1mil and it still isn't anywhere near enough.

Why not? If you have a million dollars you should be able to live comfortably just on the interest (plus your SS money)

Euripides posted...

Why not? If you have a million dollars you should be able to live comfortably just on the interest (plus your SS money)

I'll try asking her about it tomorrow. We haven't talked about it since some time last year.

Euripides posted...

Why not? If you have a million dollars you should be able to live comfortably just on the interest (plus your SS money)

We dont know what their cost of living is. Its possible lifestyle creep got to them and they need $100k per year to live comfortably, which a $1 million nest egg isnt enough to support.

you're either rich or you get bored 2 years later and go back to work

CasualGuy posted...

Unless interest is just fucking wild on retirement accounts. What am I not understanding here?

Well, it kind of has been. For instance if you used one of the basic index funds (SPY) since 1994, contributing $445 a month would have net you right around $1 million through September 2023 according to portfoliovisualizer.

Will it generate the same value over the next 30 years? I have no idea. Stay tuned. If not, oh well. Life's uhhh ... about the journey over the destination or something, right?

Homeownership helps.

Imagine you're paying $2,000 in rent for 30 years.

Imagine instead you saved $30,000 as a downpayment toward a $300,000 house. At an interest rate of 7.5 percent on that mortgage, you're paying $2,000 toward your mortgage every month for 30 years.

As a renter for 30 years, you'll have a stack of receipts. As a homeowner, paying the same amount, you'll have a home worth potentially more than $300,000, which is a big step toward getting a million dollar net worth.

Also, if you're paying $2,000 in rent now, you'll be paying more next year, and every year after. The thing about paying $2,000 on a mortgage is that you'll be paying that $2,000 for 30 years.

^^^THIS

I'm 48 and about to downsize my house and have no mortgage. Gonna start investing those mortgage payments into retirement investments

[LFAQs-redacted-quote]

Well if you have a 401k, ideally that would be invested in similar boring S&P index/mutual funds. So just $445 a month in general. Of course $445 in 1994 would have been way more than $445 today.

Giacomo_Hawkins posted...

Homeownership helps.

Imagine you're paying $2,000 in rent for 30 years.

Imagine instead you saved $30,000 as a downpayment toward a $300,000 house. At an interest rate of 7.5 percent on that mortgage, you're paying $2,000 toward your mortgage every month for 30 years.

As a renter for 30 years, you'll have a stack of receipts. As a homeowner, paying the same amount, you'll have a home worth potentially more than $300,000, which is a big step toward getting a million dollar net worth.

Also, if you're paying $2,000 in rent now, you'll be paying more next year, and every year after. The thing about paying $2,000 on a mortgage is that you'll be paying that $2,000 for 30 years.

I have to pay neither rent nor mortgage, but Ill still be buying somewhere as my rent wont get paid for me once I retire. It just means that at the moment Im saving so that I can buy in cash.

Glob posted...

I have to pay neither rent nor mortgage, but Ill still be buying somewhere as my rent wont get paid for me once I retire. It just means that at the moment Im saving so that I can buy in cash.

Military?

However you find yourself in this situation, setting aside money you would otherwise be spending on rent or mortgage in anticipation of buying a house when you retire is a good idea.

Most people will still be working at least part time for their retirement

Retirement?? Were you born in the 70s?? Unless you're born pre-85ish and didn't luck out in the parental lottery, you're not retiring.

Giacomo_Hawkins posted...

Military?

However you find yourself in this situation, setting aside money you would otherwise be spending on rent or mortgage in anticipation of buying a house when you retire is a good idea.

Education. But my employer pays rent and utilities for me. In fact, I actually get paid 5 hundred dollars per month by my landlord to live in my apartment as a result of an arrangement we have.

Crimsoness posted...

It's a myth

this

you either inherit a shitload of money, win the lottery, get horribly disabled in an accident and sue for millions, or you just keep working forever until you die.

might as well find a job you enjoy and avoid debt as much as possible

Retirement doesn't exist for younger folks.

Honestly with how things have been, it's probably better to find a job that has a decent pension, like government work. I don't know how other states are, but I work for the state of California and their retirement plan is a formula that gives you a percentage of your salary as your pension (it can reach 100% but you'd have to retire at age 67+ and fuck that). You won't be living like a king, but if you get a high enough paying position, your retire won't be too bad.

You finally get caught up on your video game backlog