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10% of retirees have $1M+ in savings

finance.yahoo.com

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Re: 10% of retirees have $1M+ in savings

#51

Post by staticman2 »

marcusverus wrote: post #45
altacc wrote: post #9

Finance news is for rich people and this article proves it, talking like it's a choice whether you retire with $1 million or not. If you're thinking you're not rich but still interested in finance, then you're probably rich! ;) The article breezes past that the median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000.

> 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…

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.

Re: 10% of retirees have $1M+ in savings

#52

Post by marcusverus »

staticman2 wrote: post #51
marcusverus wrote: post #45

Earlier quoted context omitted.

> 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…

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'…

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.

Re: 10% of retirees have $1M+ in savings

#54

Post by DecentRecruiter »

snakeyjake wrote: post #37
altacc wrote: post #9

Finance news is for rich people and this article proves it, talking like it's a choice whether you retire with $1 million or not. If you're thinking you're not rich but still interested in finance, then you're probably rich! ;) The article breezes past that the median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000.

A McDonald’s worker who starts today aged 18 who makes $15/hr and joins the McDonald’s 401k plan and contributes 4% of their income to it and works at McDonald’s for 50 years never receiving a raise should expect to have very close to $1 million by the age of 68. And that’s just 4%. McDonald’s has a 6% match.

In 50 years, $1 million will be worth around $225,000 (assuming 3% inflation).

Re: 10% of retirees have $1M+ in savings

#55

Post by staticman2 »

marcusverus wrote: post #52
staticman2 wrote: post #51

Earlier quoted context omitted.

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'…

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.

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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