I am a retired dentist who made a decision 44 years ago to practice in the USAF. After 30 years in uniform, I worked in the VA healthcare system for another 10 years. My net worth is about $1.5M, including a paid off house. Not really a great net worth compared to my dentist friends. But what I do have is a military pension that is based on a retired colonel rank, a pension from the civilian federal service, a tax free disability pension from a service connected medical issue, and social security. My wife has a pension from her teaching career, and social security. (She’d also get 55% of my two govt pensions if I go first.). We save $5-7K a month, give generously to charity, and to our 4 adult children. I didn’t realize until I started to watch You Tube videos like this just how fortunate we are.
Dr. Steven! Thank you for your service! My dad was in the Air Force - got out and became a DDS. My mom was a teacher. I just had to say something because so many similarities. I actually work in dental to this day 😁
@@ErinTalksMoney Thank you. That’s a lot of coincidence! My wife and I raised 4 great children. It’s obvious your dentist and teacher parents did the same. One thing you might mention as far as wealth accumulation is for a couple to really commit to making their marriage work, including both people pulling towards the same life goals.
Yep - as I noted above the - have's are pensioned and have not's don't. I have a pension with healthy SS and no debt and draw about 2% on 2 million. Don't worry about money because how we lived to get to this point. We live in a nice home but not over the top and have one car. Seldom eat out but do take nice vacations. Retired at 60 (almost 70) and have not concerned myself about money the entire time! Yes - we are very fortunate.
Whenever you see these “studies” or “reports” that you need so much money to retire it’s important to remember the motivation behind them. The financial planning and services industry have huge incentives to fear monger and scare people into saving more as the more people save and seek advice the more these people earn. Retirement is no different than working life where all that matters is income versus expenses. Their expenses tend to drop as they often don’t have mortgages, car payments, work expenses (commuting costs, lunches, work attire), childrens expenses and retirement savings contributions to worry about. If you reduce your expenses you reduce the amount of money you need to survive.
Couldn't agree more. I don't really care what those esperts and studies says, I only care to do whatever I want and have a peace of mind to sleep better without financially worries. I turned 35 yersteday and will hit my FI of 1 M march 2023. I'm the only one did work hard and did sacrifice alot to reach that stage. No gurus, studies or reports will steal my joy to have better sleep, to go to work without worries of being laid off and upgrate a little on my expenses and enjoy more what life has to offer me financially. My porfolio will still growing, after 5 years will start to widrawal 4% to invest in real state. Guys to listen to these folks and keep living life in your own term even if half a milloin is enough for you just go ahead cause you are the one that work hard and pay your own bills.
@@ezmaass I didn't say it was nonsense just that certain people have incentives for scaring the general public and that your finances in retirement are as impacted by your expenses as they are the size of your nest egg. If you have very low monthly expenses because your home is paid off, your cars are paid off and you are used to living frugally do you need a multimillion dollar nest egg? What if all of your expenses are covered by your SS check? What size nest egg do you need then? Calculating what you need in retirement should not be based on meeting a certain income requirement but it should be based on what you need to pay your expenses. All the financial advisor community seems to focus on is building the income when limiting your expenses and paying off your debts is just as affective at meeting your needs.
Agree - However, many more retirees are entering retirement with mortgages, car payments, and credit card debt. Medical expenses also add up due to medicare deductables. I have been retired for ten years but have a pension with no debt. Without pension and no debt, $30K a year in social security - retiring at 60 - need $1.5 million - particularly if you want to travel extensively (overseas).
Marc my friend, the kind of mindset you endorse in your post would cause as much harm than all the fake studies and reports. You need good financial knowledge to achieve retirement, and you're going to learn that from experts and their studies along the way whether you like it or not. And if you have good knowledge, you don't worry about fake studies because you can see them from a mile away. Many people invest to achieve retirement, and you definitely need good knowledge to do that. Don't scoff on anything intellectual the same way some poor people scoff on wealth, because that is how some people stay dumb and poor.
My wife and I are both 54, and between us our net worth is just over $2M not including our home. Trust me Erin we don’t feel wealthy - we own one car, a 2007 Prius, a modest condo, and a decade or so until retirement. My road to investing started when I was 30. My only regret was not starting 5 years prior. 🙁 Those years really make a big difference.
My wife and I are 45 and 47 and we started saving and investing at 23 right after college with our first jobs. We have more than you but we also do not feel rich, but average middle class (very comfortable). A good example is inflation to us is an annoyance vs life changing that causes daily worries. We do feel lucky and blessed!
I know couples with 10+ million net worth that don’t “feel” wealthy. They tell me the neighbors with 50+ million are the wealthy ones. If “feeling” wealthy is the metric, then no one is wealthy.
You don't feel wealthy because you are still pouring money into retirement, which is a very good thing. I would actually bet that if you did the math you likely could retire right now because you have kept a modest lifestyle. It sounds like you are doing great and you never want to really "feel" wealthy because that could get you into trouble with overspending.
Im 61 started at 40 from 0, even with a divorce still managed to save 1.3 mill, not retired yet but feel broke. I invested heavily in tech and pulled out most of it last year at the peak, now slowly buying back in, really scared of this corrupt govt so will not cut down my money tree (job) yet, lol
Quick story. I had an aunt that passed this year at 94 years old. She started her career, with a high school education, in 1950, at rhe age of 23. She retired in 1987, after working for the same store for 37 years. She never made more than $21,000 in a year. She passed with savings in May, after the markets had crashed, with over $1.5 million. You don't need to be rich to invest. She had one fund that she put $6,000 into in 1974, and never added to it. When she passed, it was worth $160,000! Whatever you can save, save and save early! It will grow!
I retired December 31, 2021. What I have found after one year is that you don’t need as much money as they recommend you need to retire. As long as you are debt free and don’t live some crazy jet setting lifestyle, you can retire on far less. My wife passed away last year after she was 62 but before she claimed SS. I was almost at my FRA when she died so I am receiving almost 100% of the SS she would have received at her FRA as a survivor benefit. This comes to $3500 a month. I am letting my SS keep growing until I will be 70 in 3 years. I can pretty much get by on her SS. I have $5,000,000 in qualified retirement accounts. I am just going to let that keep growing until I have to start RMDs. Saving at an early age is absolutely critical. Also, avoiding credit card debt is a must. The point I am making is that Erin is right, you don’t need a million to retire. If you have less than that amount don’t panic you just need to be circumspect with your spending in retirement.
Sorry to hear that you and your wife’s plans didn’t go as hoped. Obviously you won’t spend anywhere near what you have. Retiring early was our goal, and we did with a much smaller but adequate portfolio, seen too many early deaths, time is priceless and can’t be recaptured.
The key is not how much you have saved, it’s your expenses and debt structure, do you have a pension + social security, you don’t even need 1 million to have a great retirement
Well said. My wife, with no debt, and a little geo arbitrage, we live in portugal. We live very well on social security, minor passive income, and are drawing less than 4% from investments. We have much less than the golden million.
@@ronloftis9080 I’m one of those weird people who hate spending and love saving. I am ahead in the retirement game but will probably keep working as long as health allows so I can add even more. If I have too much money when I’m old I’ll give it to relatives.
regarding pension, I would factor that into your net worth at retirement. So I suppose if your pension is 10000/month, you would have 120k a year. If that amount were drawn at 4% from retirement savings, it would be the equivalent to a 3,000,000 retirement account. With the obvious caveat that you can’t pass a pension down to your heirs in the same way you can a retirement account.
Always clean, straight forward explanations on how to achieve financial independence. With inflation and housing costs, not to mention student loans, savings for younger folks can be very difficult yet all so important. Erin, as always, well done!
My message to all the young folks as a 45 year old person saving and investing for the past 22 years: compounding interest growth is almost like the COVID-19 exponential growth charts you have seen recently...it takes off like a rocket....I can't believe how my net worth has grown since the bottom of 2009 when the world was coming to an end....compound interest truly is the 8th wonder of the world! Ignore the media and keep on saving and investing.
You said something that blew my mind. The average person retired in 22 only has 100k in savings. How are they doing it. Is that because of pensions? That number seems so low.
Erin, your comments on Wealthcare Financial goals are spot on. Before I heard your doubts/concerns I immediately recognized the $500K goal by age 25 is impossible for 99% of the population. And if you somehow *could* save $500K by age 25 then the goal for age 40 should be $3M, not $1M.
@@ErinTalksMoney This was why I knew it was from an financial institution. Not only do they want a lot of money up front but they don't want to have to perform to make it increase.
There's a huge difference between $1m net worth and $1m convertible nestegg/retirement savings. If you have $1m net worth where $500k is home equity, vehicles, and other personal property and $500k is in convertible and/or retirement investments/savings, you would basically only have $500k to withdraw that 4% off of in retirement. There's inconsistent use of terminology when people write about what people will need in retirement. Wealthcare Financial says in one quote you used $3m in savings while the graph shows $3m net worth, in contrast, Seeking Alpha specifies savings not net worth. Again, net worth vs net worth ex-property and property equity are vastly different. So, it is not surprising that those with $1m net worth, who have most of that in home equity, would not feel wealthy vice someone with $1m in an investment/retirement account. I also think using average retirement savings as a whole or comparing generational retirement savings isn't accurate, since how generations expect to pay for retirement has changed dramatically from boomers to Zers. We won't really have a clearer picture on Gen Zers savings for about another 10 years I would say, but that cohort reportedly is saving more for retirement than previous generations, or a higher percentage of income toward retirement. That couled be misleading in some aspect depending on relative generational income levels. Another caveat is that Zers also are reportedly expecting to retire a lot earlier than previous generations, which may be delusional.
Well structured argument. I like on your videos how you consistently emphasize the personal. Monetizing your dreams and true lifestyle is the most powerful tool for planning a contented retirement
Honestly, I don't think any of these admonitions to have this much saved to have a proper retirement should sway anyone. No one else knows what your idea of a proper retirement is. I don't want to travel. I honestly don't see a need for me to have a huge sum of money. I just want to putter and visit with family and friends. That doesn't cost a lot. Do I wish I had more? Sometimes mainly for my wife and legacy for the family. I won't need it. Not everyone thinks that would be a good retirement though. They need to save enough to finance their proper retirement. They need to define that retirement not some investment company who only wants you to invest with them. Loved this video. You are so right, personal finance is mainly personal.
Savings rate is an important topic. For folks in their late 20s, it is more important to save 50% or more of pay raises than to start with a super high savings rate. That way over time ones overall savings rate increases to a meaningful size. Saving 10% in on ones 20s is probably good enough, but the bar should rise to 15% and 20% or more in ones 30s and 40s. Bump up that savings rate with every annual pay raise. Some 401k plans have automatic increases available, but no one takes care of your money like you do...
There are basically two buckets when having this discussion. Those with and without pensions. My brother was a school teacher and has a $35,000 pension plus $24,000 social security. His wife has a $20,000 pension and $18,000 in SS. - nearly $100K of income with no debt. Their savings is around $300K . Take the pensions out and they could not retire. Private pensions are basically gone however public sector jobs are still providing. Many that watch these videos do have pensions and should be included in the discussion.
60 and newly retired. 1.2 million in retirement funds, no debt, very small $1200 dollar a month pension (left after health premiums). Just barely enough today. As time goes on we will have to be creative.
Another thing is that is 3 to 4 million in today’s dollars and not inflated future dollars 20, 30 or 40 years away. So when calculating rate of return with 8% doesn’t really reflect the savings needed in your projection. I would recommend 4 to 6 % real rate of return to compensate for the inflation
64, retired, $55,000/year income from pensions and social security. As a single person who doesn't travel, buy lots of toys, or even eat out, I'm looking at having enough income to more than cover my annual expenses. Even though I have millions in the bank, I doubt I'll even touch it. When I was young I looked forward to retiring with a million dollars. Now that I am retired with a couple million, I actually don't have plans for spending it. Maybe for a new car, or appliance, but otherwise my attitude is way different now than it was in my 30's and 40's when I was saving like crazy. So for some a million isn't enough, and for others it's ok, but kinda a pain to manage. Who you are and how you live your life are what impacts it. And as my financial adviser tells me, there are more millionaires living as your neighbors than you might think. We just aren't flashy.
I reached FI a few years ago thanks to saving and inheriting both... and now I'm thinking I need to just keep working to double it over another 15 years. My portfolio is down about 15% as is the market but over the last five years there has been gain. We have been living on a net income matching the median US household income for the last 20 years. It's an easy reference to see if our budgeted cost of living is matching inflation or our budget is creeping. We have been able to reduce our budget when things get rough.
It really isn't about how much you save, it's about how you manage your money. Whether you work to earn income or invest, it still boils down to income vs expenses. Bear market and high inflation conditions are transitory and unsustainable unless you believe total economic collapse is inevitable.
1mil saved would make retirement pretty easy for us. Let's say we make 100k gross. Our net after taking out 10% for 401k and income taxes is about 65k. Wifes SS is 1600 at FRA and mine is 2200 for at total of 3800. 3800 x 12 = 45600. 65k - 45.6k = 19.4k. 19.4k withdraw rate on a 1mil portfolio is 1.94% PLEASE!!! It's not hard to retire. And if your house is paid off, and your cars are paid for. PFFF easy pezey.
How much you need as you know is really dependent primarily on your life style and expenses and the 4% rule 60/40 model is NOT what's best for retirees in my opinion. I took early retirement at 51 and have over $1.6 million in investments and have significant equity in our home but I really don't look at that since non earning asset. Your numbers you threw out are doable...if I waited until I was 60 would likely have $3 million : ) In fact, I believe I will hit $2 million soon....relying on dividends is key...b/c you can still grow your accounts but selling shares in down markets to pay the bills meet the 4% rule puts you at serious risk (sequence of returns) check out lost decade 2000-2010.
It really gets rolling after you hit 750K to 1 million or more. There are months/quarters/years where we have a jump of 220 to 300K in gains. Take some of those gains to backfill the cash bucket or other things and you are living large.
Yep. 12 months to the day, after we hit $1M, I checked the Fidelity account and we were up to $1.4 million. That was kind of surreal. (That has obviously backslid over the last year or so.) But what is more wild than reviewing the large increases that happen over really good years is just looking at a day where the SP500 goes up a rather mundane 50 basis points and thinking to yourself that you made $5k to $7k that day before you even went to work.
Saving the first million is critical. Building the daily habits that get you there are key to building the second million. Career choice, budgeting, etc. can get you there.
Let's see the average retirement savings is $168,000 you tell us but then your going to tell us experts tell us we're going to need 4 million in 20 years? I think those experts are out of touch with society. 4 million is not going to happen for the general population.
Thats crazy lol. A million will still be plenty especially if its tax free. Most people will be living off the interest of their nest egg as well. People expenses should be cheaper in retirement as well. No mortgage, no car payments, etc. Learn to be frugal and your money will last forever :).
Yes, if it's tax free and you have reduced all your expenses, and that million is adjusted for inflation, so represented in today's money. If you are looking at 35 years from now, a dollar amount of $1 million isn't going to cut it.
I tell people that the $1M threshold should be considered an investing launching point and NOT an end goal. At about $1M to $1.5M your investments transition from linear to exponential as the compounding factors kicks in and the critical mass amount of money starts generating real money. That first million can take a long time but it really takes off after that.
I’m 60 and a net worth of 2 million… I spent all my career as a software engineer at ONE company… and I have a pension… the pension is what makes me comfortable retireing early… most young people today do not have a pension …. so I could not retire early even with 2 million without my pension… so younger people to me need much more the 2 million
Awesome video, it just scares me for my 3 teenage kids..... I working hard to instill good saving practices in them but it is hard and the thought of our kids saving that much money is tough. I'm going to continue fighting the good fight and try to give them the best chance to succeed in the future. Thanks for the continuous education.
Times have changed. Look into Gov programs instead of just paying full price for services. Ex. Work and pay $800 for Obamacare or retire early and pay $100 for the same coverage. Young couples that get pregnant now wait to get married. Let Gov pay for college then get married.
Another great video! I feel lucky to have hit and pasted that $1MM mark several years ago, but everything is slowing down in the markets. My main concern is health insurance and medical expenses. We are just starting into our retirement, but when you have a member of your household with MS, you wonder how far you money will go. I get the feeling the my children will have to have at least $2.5 - $5 MM if they want a good retirement. Of the four children, only one is in the position where he might make it. One more MIGHT make it, and the other two will be relying of the kindness of the siblings to get by. I've always tried to tell the kids that their biggest asset they have is TIME, but it took them until their 30's to take it serious. Keep up the great work.
At least you told them something. My parents told me nothing. In fact, I'm the one telling my parents. I can't blame them though. They didn't know anything about investing and unfortunately it's playing out right now. They are working even though they should have retired. Still paying a mortgage, still paying a car payment, still have credit card debt. I too didn't know anything about investing until recently. Seeing their situation made me want to find a way to avoid the apocalypse, so I went looking for answers. We are starting late, but assuming things go well we should be in a better position than my parents. Knowledge and taking action early is key.
Real estate leverage is the best way to achieve a $4M net worth. Each property you buy is a little money factory that can increase your wealth in 6 ways
I'm 31 and I've been wondering what the magic number would be. I'm glad you made this video. I've played around with some numbers before and it seemed like 3-4 million was going to be pretty conservative where I could sleep easy at night in retirement. At 8% average rate of return going forwards, I should be able to hit that by the time I'm 45-52 years old. As many people have said, it's a combination of expenditures and time in the market. I'm playing cards now to hope for a slightly more aggressive return than 8% since if I succeed, the payoff will be quite good and if I fall short, things will be just fine.
As a retired federal employee, the government's matching contributions to my TSP investments over my 31 year career were crucial to my having a secure retirement. I was available to enjoy the compounding effect with a large balance - until the markets took a dive at the start of '22.
well, if you are retired federal employee already, then the market dive at beginning of '22 had realistically no impact on the previous 20+ years, since the markets even at the lowest in '22 is higher than the previous 20+ years.
Don't know if we'll have a million dollars when we retire. BUT!the house is paid off, had a new roof, and I'm working on getting the bathtub replaced. Before we retire
It'd be cool to go one step further and show what a person who retires on a million dollars has to spend each year vs one who saved 3 million. I was surprised I hadn't thought about what my costs would be when I retire. For instance, medical insurance until I'm old enough for medicare, helping kids with a wedding, and other things that a 60 year old needs that a 40 year old doesn't think about.
Focus on how much income you'd like to have in retirement, assuming you didn't have to invest any money. Multiply that by 28 or the number of years you want it to last, whichever is smaller. Now try to invest enough such that you have that amount, adjusted for inflation. Make sure to account for taxes. Where some people go wrong is calculating the cost in after tax dollars then making the amount in pre-tax dollars. Factor in other income like a pension, social security, annuity, side hustle, etc.
We retired with much less than 3 million. We have a paid off home, no debt. We live comfortably, give to our church, travel, help our Children and Grandchildren. The Key, I think, is to be debt free and live with in your means.
First of all, I have to point out that money management isn’t taught in public schools (unless it’s as an elective, and even then, it’s incidental to a larger curriculum). It should be a REQUIRED course. Second, I think it’s important to realize that one’s lifestyle choices heavily affect one’s bottom line. Smoking, regularly eating in restaurants or taking vacations - it’s money spent vs money invested. So a real question that should be factored into all of this, from the beginning, is this: how do you want to live your life? I have friends that have worked 12+ hours a day, 6 or 7 days a week, and made six-figure incomes for years. They don’t seem happy in their nice homes and second marriages. I worked 12+ hours a day for a more modest income, but saved and spent frugally, for the most part. My home and cars are paid for; I have no outstanding debt. I wish I had more money sometimes, but I have to admit I am very blessed to have more than I need, and a relatively secure retirement future.(I also have had the same wife for almost 40 years!) I believe we have to balance lifestyle and money; everything in life carries a cost of some sort. I hate the idea that one “can have it all”; it's a horrible lie. The universe is well-balanced; there is a cause & effect dynamic that can’t be ignored. I know too many people with high incomes and expensive tastes; as more of my peers retire too (I retired at 59 - I’m okay with that) they are going to have to change their spending habits quite a bit. I suspect it’s going to be a painful transition.
How I agree about the schooling. That is an elective in our district, but it does not talk about budgeting, delayed gratification or slow and steady, but how to play with stocks, looking at momentum, on trading. IMHO, a lot of the true financial planning could be part of algebra I or II and some really good examples (aka, if you want to retire at 65 with 1M in current income, how much do you need to save per month to get there.)
I think of you look through the online list of courses for pretty much any high-school district, you'll find courses for financial management. The classes are there, most kids just don't take them because they are too young to relate, and their parents don't prioritize it.
@@danh2716 I misspoke; I apologize. Yes, most high schools have at least one class labeled as “Financial Management” and/or “Home Economics”, but they are not very helpful, from what I’ve seen. It’s been almost a decade now, but the last time I looked at the curriculum and textbooks associated with a high school class I was disgusted. It was largely useless material that skirted around a lot of issues without giving hard and fast rules, like: Learn to live on 80% (or less) of your income so you can save the rest! It was just so full of clichè statements and rudimentary math. A lot of discussion topics for the class, like: what’s better, to work with your hands or your mind? REALLY? I remember laughing my head off at some of the stuff; it wasn’t learning as much as infotainment, which is one step away from complete garbage. But, that was my take on it, and like I said, that was almost ten years ago now. Maybe the textbooks and curriculum are much, much better now.
At 50 I'm still aming for $1M net worth. I'm at $820k right now ($560k liquid). Once I hit that goal I will remove the value of my condo and aim for $1M liquid net worth. It's psychological. If I reach that by 60 and isn't enough to continue my modest lifestyle without work I'll either live on less or work part-time I guess. I am counting the years and can promise I won't be working full -time past 60. I have lost too many friends and family members before they even reached 50. Life is too short to spend it grinding for 40+ years. I should inherit roughly $1M at some point (hopefully later rather than sooner). If it's sooner than hoped though I will take the opportunity to say "peace out" to the working world earlier. So very tired of the grind.
The 4% rule is no longer the golden rule, Many ETFs and dividend Stocks pay well over 6-8%. With that calculation, we can still retire comfortably with 1 Million dollars here in Canada. Considering we don't touch the principle and we have (CPP and OAS) which equates to about 15-20k/yr. Dividend income is taxed at a different rate.
The numbers seem really high here, most people don't live off of $100k per year because few individuals make 6-figures annually so I don't see why that would be required in retirement. Personally, $50k would be comfortable especially since my mortgage can potentially be paid off while I'm in my 30's and my cost of living would be minimal at that point. I'd be curious to see what the actually retirement incomes currently look like
You are spot on about compounding. In our case after paying off the house we then started saving/investing and we hit the first $1M after 10 years. The second million took about 5 and the third was roughly 3 years. That was before the "big" pullback of course. Now on Social Security. We totally ignore this because after WEP (yes $480/month of the SS benefits I EARNED are stolen by the Government because I had the audacity to pay into a private pension in the UK 20 years before I came to the USA).. Anyway. My SS payments will be about $1100/m. Now Medicare currently with a part G coverage for both me and my Wife will be close to $900/m (after tax). Now you can get Part G cheaper if you want to take on more risk but if your health is not so great and you can't afford the risk, then at least one of your SS payments will be completely eaten up by Medicare... And that is at today's rates!!!! When you hear politicians talking about "Medicare for all" just remember that the current costs for Medicare are MUCH higher than for Obamacare with a decent subsidy. There is no income subsidy with Medicare currently. Not saying that couldn't change in the future though, but then again the other party is talking about reducing what it spends on entitlements.
Unless you earn crazy high wages, saving the first million takes a long time and a lot of discipline. Invest wisely and keep saving and that second million comes pretty quickly.
What a lot of people don't talk about is where are you going to retire. I'll need about half or 25k per year because I plan to retire no where near the USA. It doesn't matter how much you need as much, it is all about where you retire.
Most of those that are successful just got started. We did it primarily in a boring 401k and whether the market was up or down, we kept adding to our account every paycheck. It takes 25 years or more for most of us, but one day, you wake up, and you see it has surpassed a million, and you start to breathe a little easier. By then, it is an old habit. You wonder if you even need to save anymore as you see that what you add to the account each year is such an ever-shrinking part of the account growth. That is when you have arrived. Your money now works way harder for you than you do for it. All you need to do is just keep an eye on it and take some of the icing off of the top of the cake every year and enjoy life. -Just my 2 cents.
Knowing this makes me think that 401K/IRA annual limits should be increased significantly to give employees a better chance of a successful retirement.
I think these numbers are a bit high. The vast majority of millennials will never have anywhere near 3 million and that is fine. I plan to retire in 8-10 years in my early 60s with about 1.5 mil, but I could absolutely retire fairly comfortably on less than that. I'm just choosing to save more to enable a higher level of comfort, but it's not essential to retire. A lot of these high retirement numbers are put out by the financial industry because it is in their interest to encourage people to work forever and invest millions with them. Of course more money is better than less money, but you do not NEED millions to retire in comfort. People should ignore the noise and figure out for themselves how much they need for a comfy retirement, based on their individual goals. It may be much less than you think.
Something is going to have to give. Wages are not keeping pace with inflation but the retirement number continues to grow with inflation. Either you are going to need a really big income or you have to really cut back with some austerity to make it to 4 million.
Just using a blanket amount of money - 1 million, 3 million, whatever - is dumb. It's a multiplier of your expenses, it's just tough to estimate those expenses. Tough but not impossible. Do the homework and don't just declare a number.
I had remarked to my Father in law a couple of decades ago that I wanted to have a million before I retired, he said that wasn't necessary. Today, retired with just over a million I can say it is not easy to see a guaranteed path to success over the next 30 years.
For a little perspective on inflation I graduated from college in 1970. The cost of living index has increased by a factor of 7 times. The minimum wage was $1.60 per hour. A good starting salary after graduation was $6,000 a year. My first year of college in 1966 for room, board and tuition was a little over $1200 or about $8500 in todays dollars. It is so important to factor inflation into your retirement planning. The problem is we can only estimate the inflation rate in the future.
I think the bigger question is whether Medicare will still exist when we’re 70. With people living longer and the US slowly becoming an older population the system is at risk of insolvency in the coming decades.
Where I grew up we didn't think much about Healthcare. You either made it, or you didn't. So today my attitude is do the best as I can and let God do the rest. Keep in mind that you are already doing what you need to do to survive by going to work everyday.
40 years from now, $3M equivalent will look like $10M. If you can get 8%/year growth then you need to save $40K/year or $3333/ mth. At 12%, that would be $13000/year or $1100/mth.
$1M is about $50K/yr.. for 20 years, so, $1M indeed isn't what it used to be. But, by the time you retire, you should have eliminated all debts, worked, saved, and invested. Any offspring should be on their own, and the highest expenditures from age 20 to age 50 should all be gone (mortgage, child rearing, fancy car purchases, etc). It still would be hard in today's economy to get by on Less than $40K/yr. Still, in our region, we can live very comfortably on $50K /yr., and I have survived in recent years on
Hitting this mark also has to do with when up and down markets and how old you are at those times. The younger investors, although counterintuitive, need to wish for a multi year recession and plow all that you can into index funds. Watch what happens when the pendulum swings the other way!
Retirement is still a few decades off for me, but I've been steadily building up my 403 b ever since I started working full time. That being said I'm probably not quite on track to end up with $3-4 million when I retire, but that doesn't worry me either. Having talked with quite a few people who've retired, they've all said that as long as you retire debt free and can stick to a budget that you really don't need as much the same amount of money you had when you were working nor di you need as much as many of the experts say you do. Keep in mind many of these experts purposely over-estimate how much you'll need too, that way when you see those high number they project you'll get worried and think you won't make it and order their program or book so you'll get back on track.
Forget the experts and just calculate how much you need. If you were retiring today but don't have any debt, your house is paid off, and you don't have to save or invest, how much would you need to live comfortably while accounting for taxes? If your investments can produce that amount each year, then you are good. If not, calculate how long before you get to that point.
She's probably closer to right then wrong on her estimates. I'm 66, retired and remember the first time I spoke with a professional on this subject about 40 years ago. His advice at that time was I would need 200k to retire comfortably at fra. At the time I laughed and said yeah right. Well his estimate in my opinion was short by close to a million dollars.
Our personal goals are a paid off house and the equivalent of the median household income in fully qualified dividend Income and rental income. Social Security will be a bonus when it comes. We will need to hit a portfolio value of around $3.5M to hit those income goals. By then our overall net worth should be about $5M including the value of our house. On track to hit those goals around age 50, possibly sooner.
Omg this is terrible extreme. In our consumerism society people think they need millions to retire. People are never getting enough stuff, bigger home, bigger car, luxurious vacations, fashion clothes, etc. We should stop and think for a minute if all those things really makes us happy. The happiness is not in possessions or money. Really. All you need is some veggies and a piece of meat daily, good family and friends, some kind of roof above your head and love. You don’t need millions for that.
I agree with your opening statement but not the end. Minimalism is fine for some, but not for me. A modest life style can still include a lot of travel and activity, but does require a little more than you describe. We each have our own wants and desires. Just need to align those with reality
I was talking with somebody about the Lottery. The guy was telling me he wouldn't want to win it because many people who have won the Jackpot are broke within about 5 years and their problems are worse. I told him, "I'll take my chances". I guess the question is to define what is a good savings to "Properly" enjoy your Retirement. If you get $3K/month, less taxes, from Social Security, a paid off home, and 500K saved, I think you can do fine. Speaking Reality, if you don't have your health you need to look at your situation through a whole different lens. If you are Healthy, you are Wealthy. A healthy body affects a healthy mind, which affects a healthy body, which affects a healthy mind.... Learn it, Know it, Live it Spicoli.
I rely solely on my pension and SS to cover my expenses, including my medical insurance premium. What I have saved for retirement is not as important. I have not dipped into my savings and IRA's for 22 years in retirement.
I started my kids with $100 per month Roth IRAs when they started working at 16. All parents should teach their kids about compounding. If they start working while in high school, they can add five to 10 years' compounding before hitting the workforce full time. Beyond the compounding, this sets in place good habits and the expectation tat regular contributions are normal and expected.
If my goal was to go to 3 or 4 million, I would cry. But my reality check goal is to stretch every dollar to last more time, I'm not number oriented.The greatest force in the stock market is not the returns but the spending. If you somehow spend only 1% of your portfolio it doesn't matter its size, you'll never run out of money. Some of us will go beyond frugal in retirement, more towards cheapskate.
I don't think 1 million dollars is realistic for most Americans, let alone 3-4 million! I think the majority of Gen Y & Z will be swamped in student loans and if they save money in their 20s, it will be for a down-payment on a home. I think right now, you can retire on 1 million if you're in your mid-50s and you will get above average social security at 67, have no other debt, live in a lower cost location and live very frugally. You're right that this won't be the case in the future....
I think it would be best in this type of video to clarify what dollars you or the authors are using. Current dollars being the best, and then using “inflation adjusted current dollars” to talk about the future. We recently retired and $1 million is adequate depending on circumstances. $2million is plenty in current dollars. For the younger crowd I suspect Social Security will be less and kick in later than today, so would need to,plan for a Social Security bridge strategy if retiring early. That may require a $2-3 mill portfolio. Saving early is great, but if I had $500k at 25(impossible for me still in school) that would have compounded to huge numbers. We didn’t really start saving till our late 40’s and still came out ok. Obviously real estate can start earlier and is worth some effort. Good topic!
I'm not sure that a comfortable retirement is with in reach for most folks regardless of generation or age. Myself for example, I currently have roughly 320,000 in an employer sponsored Roth 401k. I also have another 30,000 in an IRA. At 47 according to experts I'm very far behind.
Erin? You are having some pretty bad luck with the cold/flu/rona bugs going around this year, well I hope you are feeling 100%, and another great video!! Thanks!
Great to hear! Some day I think I would want to hire you as a YT consultant. You clearly have put so much work into this channel, I bet you have learned a bunch about how to do the whole TH-cam thing in the time you have been at it.
Great discussion, folks always need to keep in mind the difference between present value and future value of money. Keeping one’s retirement time horizon in mind along with the impact of inflation is key to establishing a reasonable fund goal.
Agreed that Weathcare Financial’s benchmarks are not very realistic. Compounding growth isn’t quite that linear. Your benchmarks seem more realistic, provided you can save as much as possible as early as possible. My goal has been $3 million by 60. And at age 34, I’m much more in line with your numbers.
Would the pretax limits on 401Ks be a hinderance in getting you to those amounts? How about income limits on Roths? These make it more difficult. We could also be entering a prolonged period of stagnation in the market, making that 8% ror unrealistic.
You need to combine a Roth IRA and 401k for their limits to be conservative and hit it. But you can go more moderate and do it through a Roth ira at cap for 30 years
A lot of good points that younger people may need more, but I would still say saving $1Million (excluding home) is still a magic number. It may not make you feel wealthy, but it does feel pretty good :) and will inspire someone to keep going if needed.
I was 50 years old when I finally made it to 1M plus a paid off home, decent car, etc. I think her numbers are just a wee bit off. I wonder how much she has earned and saved!
Saving 3 or 4 million is pretty much impossible for me at my current age of 35. Even one million is not realistic for me, since I have very little saved. I would like to shoot for $500,000. If I live a simple and frugal life in retirement and keep doing some side hustles this should be sufficient.
Don't let those huge numbers discourage you. Instead of focusing on a several million dollar retirement savings goal, something that sounds so out of reach, direct your efforts towards your Savings Rate. Start early and try to save 10-15% of your earnings into your Roth 401K and IRA and you'll be fine.
I prefer to measure retirement needs by multiplying estimated retirement savings by 25 (rule of 4%), but the amount that you need to have saved depends on whether or not you have multiple income streams, I'm hoping to get 30% of my monthly retirement income from social security, 20% from pension/annuity, and 50% from investments
The financial industry wants you to have a multi million dollar portfolio so they can take a cut of it. Meanwhile, in the real world retirees with as little as $200,000 typically do not spend down their portfolio. Why, they’re not spending $20,000 a year on vacations, they’re not saving, they only have one car, etc. etc..
Important to note that the IRS publication that said social security trust fund would go “bankrupt” in 2033 also said when that happened, payouts would still occur but at ~76%. If you believe climate change is a thing, I think it’d be a good idea to increase that target number, which is why I’m aiming for $5M.
This is a very well-done video. I'm in the middle of the millennial group and have a target of $3M for retirement. It's probably more than my lifestyle will need, but I agree it's better to be prepared. I wish I could convince more people of the importance of saving early (my earlier self included). One day they will say they couldn't when they really meant they wouldn't give up the new cars and vacays. It's hard but obtainable. Great video breaking it all out. Only difference is I'm less conservative and plan for 10% growth.
Love the hair! Rats! I did it! I hit it! But now all this bad news? I guess I didn't hit it. I don't want to be a naysayer, but honestly, rather than making these enormous sums of savings, how about just not drinking Starbucks Lattes each morning and driving new Teslas? There are other ways to stay afloat! (which, incidentally, is exactly how I beat the high cost of living out here in SF). Most cheaper retirement places around the world will allow one to live comfortably on $2,500 a month which is only 30k a year. That means if you hit your 500K at 25 and want to retire, you could and not work for another 17 years! So then, at 42 go back to work because you've become bored with doing nothing! Inflation isn't as bad as you think however. I personally beat inflation by refusing to pay inflated prices. Rather, inflation keeps me moving - as inflation grows, so does my ability to live off things not subject to inflation. Live off barter, the used merchandise markets, dealing one on one with people, etc. It does work! The best way to fight inflation is not to buy - can you imagine what that will do to prices? By simply saving and investing you are entering into a battle against the economy that you cannot win. There are other options than going that route - if you live on a farm, grow your own food and make your own clothes, and trade with your neighbors, as crazy as that may sound, you are impervious to so much of what goes on around you.
A million is way more than enough if you simply learn a little about the market. Use options and a couple different strategies and you’ll easily make 100,000 a year without reducing your million dollar nest egg.
BTW, your chart shows two lines starting their investing at 35 years of age, but the text says only one person starts saving at 35 years old. Please fix it, it's confusing :) Oh, thanks for the rewinding cassette visual, made me smile.🙂
I am a retired dentist who made a decision 44 years ago to practice in the USAF. After 30 years in uniform, I worked in the VA healthcare system for another 10 years. My net worth is about $1.5M, including a paid off house. Not really a great net worth compared to my dentist friends. But what I do have is a military pension that is based on a retired colonel rank, a pension from the civilian federal service, a tax free disability pension from a service connected medical issue, and social security. My wife has a pension from her teaching career, and social security. (She’d also get 55% of my two govt pensions if I go first.). We save $5-7K a month, give generously to charity, and to our 4 adult children. I didn’t realize until I started to watch You Tube videos like this just how fortunate we are.
Dr. Steven! Thank you for your service! My dad was in the Air Force - got out and became a DDS. My mom was a teacher. I just had to say something because so many similarities. I actually work in dental to this day 😁
how could you not know how fortunate you are with all the dough coming in.. come on now
Well done sir, and thank you for your service to our country and veterans.
@@ErinTalksMoney Thank you. That’s a lot of coincidence! My wife and I raised 4 great children. It’s obvious your dentist and teacher parents did the same.
One thing you might mention as far as wealth accumulation is for a couple to really commit to making their marriage work, including both people pulling towards the same life goals.
Yep - as I noted above the - have's are pensioned and have not's don't. I have a pension with healthy SS and no debt and draw about 2% on 2 million. Don't worry about money because how we lived to get to this point. We live in a nice home but not over the top and have one car. Seldom eat out but do take nice vacations. Retired at 60 (almost 70) and have not concerned myself about money the entire time! Yes - we are very fortunate.
Whenever you see these “studies” or “reports” that you need so much money to retire it’s important to remember the motivation behind them. The financial planning and services industry have huge incentives to fear monger and scare people into saving more as the more people save and seek advice the more these people earn. Retirement is no different than working life where all that matters is income versus expenses. Their expenses tend to drop as they often don’t have mortgages, car payments, work expenses (commuting costs, lunches, work attire), childrens expenses and retirement savings contributions to worry about. If you reduce your expenses you reduce the amount of money you need to survive.
Couldn't agree more. I don't really care what those esperts and studies says, I only care to do whatever I want and have a peace of mind to sleep better without financially worries. I turned 35 yersteday and will hit my FI of 1 M march 2023. I'm the only one did work hard and did sacrifice alot to reach that stage. No gurus, studies or reports will steal my joy to have better sleep, to go to work without worries of being laid off and upgrate a little on my expenses and enjoy more what life has to offer me financially.
My porfolio will still growing, after 5 years will start to widrawal 4% to invest in real state. Guys to listen to these folks and keep living life in your own term even if half a milloin is enough for you just go ahead cause you are the one that work hard and pay your own bills.
plus the $ those crooks make on expense ratios
@@ezmaass I didn't say it was nonsense just that certain people have incentives for scaring the general public and that your finances in retirement are as impacted by your expenses as they are the size of your nest egg. If you have very low monthly expenses because your home is paid off, your cars are paid off and you are used to living frugally do you need a multimillion dollar nest egg? What if all of your expenses are covered by your SS check? What size nest egg do you need then? Calculating what you need in retirement should not be based on meeting a certain income requirement but it should be based on what you need to pay your expenses. All the financial advisor community seems to focus on is building the income when limiting your expenses and paying off your debts is just as affective at meeting your needs.
Agree - However, many more retirees are entering retirement with mortgages, car payments, and credit card debt. Medical expenses also add up due to medicare deductables. I have been retired for ten years but have a pension with no debt. Without pension and no debt, $30K a year in social security - retiring at 60 - need $1.5 million - particularly if you want to travel extensively (overseas).
Marc my friend, the kind of mindset you endorse in your post would cause as much harm than all the fake studies and reports. You need good financial knowledge to achieve retirement, and you're going to learn that from experts and their studies along the way whether you like it or not. And if you have good knowledge, you don't worry about fake studies because you can see them from a mile away. Many people invest to achieve retirement, and you definitely need good knowledge to do that. Don't scoff on anything intellectual the same way some poor people scoff on wealth, because that is how some people stay dumb and poor.
My wife and I are both 54, and between us our net worth is just over $2M not including our home. Trust me Erin we don’t feel wealthy - we own one car, a 2007 Prius, a modest condo, and a decade or so until retirement. My road to investing started when I was 30. My only regret was not starting 5 years prior. 🙁 Those years really make a big difference.
My wife and I are 45 and 47 and we started saving and investing at 23 right after college with our first jobs. We have more than you but we also do not feel rich, but average middle class (very comfortable). A good example is inflation to us is an annoyance vs life changing that causes daily worries. We do feel lucky and blessed!
I know couples with 10+ million net worth that don’t “feel” wealthy. They tell me the neighbors with 50+ million are the wealthy ones. If “feeling” wealthy is the metric, then no one is wealthy.
I am in in the very similar boat as you. Almost exact. Nothing you can do about the past. Just keep moving forward.
You don't feel wealthy because you are still pouring money into retirement, which is a very good thing. I would actually bet that if you did the math you likely could retire right now because you have kept a modest lifestyle. It sounds like you are doing great and you never want to really "feel" wealthy because that could get you into trouble with overspending.
Im 61 started at 40 from 0, even with a divorce still managed to save 1.3 mill, not retired yet but feel broke. I invested heavily in tech and pulled out most of it last year at the peak, now slowly buying back in, really scared of this corrupt govt so will not cut down my money tree (job) yet, lol
Quick story. I had an aunt that passed this year at 94 years old. She started her career, with a high school education, in 1950, at rhe age of 23. She retired in 1987, after working for the same store for 37 years. She never made more than $21,000 in a year. She passed with savings in May, after the markets had crashed, with over $1.5 million. You don't need to be rich to invest. She had one fund that she put $6,000 into in 1974, and never added to it. When she passed, it was worth $160,000! Whatever you can save, save and save early! It will grow!
Love this!!!
I retired December 31, 2021. What I have found after one year is that you don’t need as much money as they recommend you need to retire. As long as you are debt free and don’t live some crazy jet setting lifestyle, you can retire on far less. My wife passed away last year after she was 62 but before she claimed SS. I was almost at my FRA when she died so I am receiving almost 100% of the SS she would have received at her FRA as a survivor benefit. This comes to $3500 a month. I am letting my SS keep growing until I will be 70 in 3 years. I can pretty much get by on her SS. I have $5,000,000 in qualified retirement accounts. I am just going to let that keep growing until I have to start RMDs. Saving at an early age is absolutely critical. Also, avoiding credit card debt is a must. The point I am making is that Erin is right, you don’t need a million to retire. If you have less than that amount don’t panic you just need to be circumspect with your spending in retirement.
Sorry to hear that you and your wife’s plans didn’t go as hoped. Obviously you won’t spend anywhere near what you have. Retiring early was our goal, and we did with a much smaller but adequate portfolio, seen too many early deaths, time is priceless and can’t be recaptured.
The key is not how much you have saved, it’s your expenses and debt structure, do you have a pension + social security, you don’t even need 1 million to have a great retirement
No, you absolutely dont. I will probably have more income in retirement than I have had working if I want.
Well said. My wife, with no debt, and a little geo arbitrage, we live in portugal. We live very well on social security, minor passive income, and are drawing less than 4% from investments. We have much less than the golden million.
@@ronloftis9080 I’m one of those weird people who hate spending and love saving. I am ahead in the retirement game but will probably keep working as long as health allows so I can add even more. If I have too much money when I’m old I’ll give it to relatives.
You are so right!!
regarding pension, I would factor that into your net worth at retirement. So I suppose if your pension is 10000/month, you would have 120k a year. If that amount were drawn at 4% from retirement savings, it would be the equivalent to a 3,000,000 retirement account. With the obvious caveat that you can’t pass a pension down to your heirs in the same way you can a retirement account.
Always clean, straight forward explanations on how to achieve financial independence. With inflation and housing costs, not to mention student loans, savings for younger folks can be very difficult yet all so important. Erin, as always, well done!
My message to all the young folks as a 45 year old person saving and investing for the past 22 years: compounding interest growth is almost like the COVID-19 exponential growth charts you have seen recently...it takes off like a rocket....I can't believe how my net worth has grown since the bottom of 2009 when the world was coming to an end....compound interest truly is the 8th wonder of the world! Ignore the media and keep on saving and investing.
amen!! 🙌
Jim, great job.. I wish more people understood this. Wait til u get in your 60s .
You said something that blew my mind. The average person retired in 22 only has 100k in savings. How are they doing it. Is that because of pensions? That number seems so low.
Erin, your comments on Wealthcare Financial goals are spot on. Before I heard your doubts/concerns I immediately recognized the $500K goal by age 25 is impossible for 99% of the population. And if you somehow *could* save $500K by age 25 then the goal for age 40 should be $3M, not $1M.
seriously, how the heck can an average worker save/invest that much by 25?!?!
@@ErinTalksMoney This was why I knew it was from an financial institution. Not only do they want a lot of money up front but they don't want to have to perform to make it increase.
Home, Cars & Credit Card paid off . With 51 K Social Security and a Million were good to go...
Absolutely!
There's a huge difference between $1m net worth and $1m convertible nestegg/retirement savings. If you have $1m net worth where $500k is home equity, vehicles, and other personal property and $500k is in convertible and/or retirement investments/savings, you would basically only have $500k to withdraw that 4% off of in retirement. There's inconsistent use of terminology when people write about what people will need in retirement. Wealthcare Financial says in one quote you used $3m in savings while the graph shows $3m net worth, in contrast, Seeking Alpha specifies savings not net worth. Again, net worth vs net worth ex-property and property equity are vastly different. So, it is not surprising that those with $1m net worth, who have most of that in home equity, would not feel wealthy vice someone with $1m in an investment/retirement account.
I also think using average retirement savings as a whole or comparing generational retirement savings isn't accurate, since how generations expect to pay for retirement has changed dramatically from boomers to Zers. We won't really have a clearer picture on Gen Zers savings for about another 10 years I would say, but that cohort reportedly is saving more for retirement than previous generations, or a higher percentage of income toward retirement. That couled be misleading in some aspect depending on relative generational income levels. Another caveat is that Zers also are reportedly expecting to retire a lot earlier than previous generations, which may be delusional.
If you can live within your means, the quantity of money doesn't matter.
Well structured argument. I like on your videos how you consistently emphasize the personal. Monetizing your dreams and true lifestyle is the most powerful tool for planning a contented retirement
Honestly, I don't think any of these admonitions to have this much saved to have a proper retirement should sway anyone. No one else knows what your idea of a proper retirement is. I don't want to travel. I honestly don't see a need for me to have a huge sum of money. I just want to putter and visit with family and friends. That doesn't cost a lot. Do I wish I had more? Sometimes mainly for my wife and legacy for the family. I won't need it. Not everyone thinks that would be a good retirement though. They need to save enough to finance their proper retirement. They need to define that retirement not some investment company who only wants you to invest with them.
Loved this video. You are so right, personal finance is mainly personal.
Savings rate is an important topic. For folks in their late 20s, it is more important to save 50% or more of pay raises than to start with a super high savings rate. That way over time ones overall savings rate increases to a meaningful size. Saving 10% in on ones 20s is probably good enough, but the bar should rise to 15% and 20% or more in ones 30s and 40s. Bump up that savings rate with every annual pay raise. Some 401k plans have automatic increases available, but no one takes care of your money like you do...
There are basically two buckets when having this discussion. Those with and without pensions. My brother was a school teacher and has a $35,000 pension plus $24,000 social security. His wife has a $20,000 pension and $18,000 in SS. - nearly $100K of income with no debt. Their savings is around $300K . Take the pensions out and they could not retire. Private pensions are basically gone however public sector jobs are still providing. Many that watch these videos do have pensions and should be included in the discussion.
60 and newly retired. 1.2 million in retirement funds, no debt, very small $1200 dollar a month pension (left after health premiums). Just barely enough today. As time goes on we will have to be creative.
I hope you have a great retirement!
Another thing is that is 3 to 4 million in today’s dollars and not inflated future dollars 20, 30 or 40 years away. So when calculating rate of return with 8% doesn’t really reflect the savings needed in your projection. I would recommend 4 to 6 % real rate of return to compensate for the inflation
64, retired, $55,000/year income from pensions and social security. As a single person who doesn't travel, buy lots of toys, or even eat out, I'm looking at having enough income to more than cover my annual expenses. Even though I have millions in the bank, I doubt I'll even touch it. When I was young I looked forward to retiring with a million dollars. Now that I am retired with a couple million, I actually don't have plans for spending it. Maybe for a new car, or appliance, but otherwise my attitude is way different now than it was in my 30's and 40's when I was saving like crazy. So for some a million isn't enough, and for others it's ok, but kinda a pain to manage. Who you are and how you live your life are what impacts it. And as my financial adviser tells me, there are more millionaires living as your neighbors than you might think. We just aren't flashy.
I reached FI a few years ago thanks to saving and inheriting both... and now I'm thinking I need to just keep working to double it over another 15 years. My portfolio is down about 15% as is the market but over the last five years there has been gain. We have been living on a net income matching the median US household income for the last 20 years. It's an easy reference to see if our budgeted cost of living is matching inflation or our budget is creeping. We have been able to reduce our budget when things get rough.
It really isn't about how much you save, it's about how you manage your money. Whether you work to earn income or invest, it still boils down to income vs expenses. Bear market and high inflation conditions are transitory and unsustainable unless you believe total economic collapse is inevitable.
1mil saved would make retirement pretty easy for us. Let's say we make 100k gross. Our net after taking out 10% for 401k and income taxes is about 65k. Wifes SS is 1600 at FRA and mine is 2200 for at total of 3800. 3800 x 12 = 45600. 65k - 45.6k = 19.4k. 19.4k withdraw rate on a 1mil portfolio is 1.94% PLEASE!!! It's not hard to retire. And if your house is paid off, and your cars are paid for. PFFF easy pezey.
At a 4% withdraw rate I would only need a nest egg of 500k to draw out 20k a year based on the 4% rule.
Love it!
How much you need as you know is really dependent primarily on your life style and expenses and the 4% rule 60/40 model is NOT what's best for retirees in my opinion. I took early retirement at 51 and have over $1.6 million in investments and have significant equity in our home but I really don't look at that since non earning asset. Your numbers you threw out are doable...if I waited until I was 60 would likely have $3 million : ) In fact, I believe I will hit $2 million soon....relying on dividends is key...b/c you can still grow your accounts but selling shares in down markets to pay the bills meet the 4% rule puts you at serious risk (sequence of returns) check out lost decade 2000-2010.
Good luck on hitting $2M soon, that's awesome! 👏
It really gets rolling after you hit 750K to 1 million or more. There are months/quarters/years where we have a jump of 220 to 300K in gains. Take some of those gains to backfill the cash bucket or other things and you are living large.
Yep. 12 months to the day, after we hit $1M, I checked the Fidelity account and we were up to $1.4 million. That was kind of surreal. (That has obviously backslid over the last year or so.)
But what is more wild than reviewing the large increases that happen over really good years is just looking at a day where the SP500 goes up a rather mundane 50 basis points and thinking to yourself that you made $5k to $7k that day before you even went to work.
Those swings are easy to stomach when you are still working or have other income... or if you have so much invested that it doesn't matter.
Saving the first million is critical.
Building the daily habits that get you there are key to building the second million.
Career choice, budgeting, etc. can get you there.
Let's see the average retirement savings is $168,000 you tell us but then your going to tell us experts tell us we're going to need 4 million in 20 years? I think those experts are out of touch with society.
4 million is not going to happen for the general population.
This video made me feel depressed! But I always appreciate you being honest and talking us through the facts. I agree that $1 million is not enough.
$1 million today isn't enough for us to retire today. So work we must. That's not even considering the cost for paying for our own health insurance. 😅
Thats crazy lol. A million will still be plenty especially if its tax free. Most people will be living off the interest of their nest egg as well. People expenses should be cheaper in retirement as well. No mortgage, no car payments, etc. Learn to be frugal and your money will last forever :).
Yes, if it's tax free and you have reduced all your expenses, and that million is adjusted for inflation, so represented in today's money.
If you are looking at 35 years from now, a dollar amount of $1 million isn't going to cut it.
Wow. That $500k metric is insane. What's age 20, like $250k?
I tell people that the $1M threshold should be considered an investing launching point and NOT an end goal. At about $1M to $1.5M your investments transition from linear to exponential as the compounding factors kicks in and the critical mass amount of money starts generating real money. That first million can take a long time but it really takes off after that.
I’m 60 and a net worth of 2 million… I spent all my career as a software engineer at ONE company… and I have a pension… the pension is what makes me comfortable retireing early… most young people today do not have a pension …. so I could not retire early even with 2 million without my pension… so younger people to me need much more the 2 million
Awesome video, it just scares me for my 3 teenage kids..... I working hard to instill good saving practices in them but it is hard and the thought of our kids saving that much money is tough. I'm going to continue fighting the good fight and try to give them the best chance to succeed in the future. Thanks for the continuous education.
Times have changed. Look into Gov programs instead of just paying full price for services.
Ex. Work and pay $800 for Obamacare or retire early and pay $100 for the same coverage.
Young couples that get pregnant now wait to get married. Let Gov pay for college then get married.
Another great video! I feel lucky to have hit and pasted that $1MM mark several years ago, but everything is slowing down in the markets. My main concern is health insurance and medical expenses. We are just starting into our retirement, but when you have a member of your household with MS, you wonder how far you money will go.
I get the feeling the my children will have to have at least $2.5 - $5 MM if they want a good retirement. Of the four children, only one is in the position where he might make it. One more MIGHT make it, and the other two will be relying of the kindness of the siblings to get by.
I've always tried to tell the kids that their biggest asset they have is TIME, but it took them until their 30's to take it serious.
Keep up the great work.
At least you told them something. My parents told me nothing. In fact, I'm the one telling my parents. I can't blame them though. They didn't know anything about investing and unfortunately it's playing out right now. They are working even though they should have retired. Still paying a mortgage, still paying a car payment, still have credit card debt.
I too didn't know anything about investing until recently. Seeing their situation made me want to find a way to avoid the apocalypse, so I went looking for answers. We are starting late, but assuming things go well we should be in a better position than my parents. Knowledge and taking action early is key.
Real estate leverage is the best way to achieve a $4M net worth. Each property you buy is a little money factory that can increase your wealth in 6 ways
It's all in how you live and where you plan to live
I'm 31 and I've been wondering what the magic number would be. I'm glad you made this video. I've played around with some numbers before and it seemed like 3-4 million was going to be pretty conservative where I could sleep easy at night in retirement. At 8% average rate of return going forwards, I should be able to hit that by the time I'm 45-52 years old. As many people have said, it's a combination of expenditures and time in the market. I'm playing cards now to hope for a slightly more aggressive return than 8% since if I succeed, the payoff will be quite good and if I fall short, things will be just fine.
As a retired federal employee, the government's matching contributions to my TSP investments over my 31 year career were crucial to my having a secure retirement. I was available to enjoy the compounding effect with a large balance - until the markets took a dive at the start of '22.
You’ve also have a substantial defined pension benefit.
well, if you are retired federal employee already, then the market dive at beginning of '22 had realistically no impact on the previous 20+ years, since the markets even at the lowest in '22 is higher than the previous 20+ years.
Don't know if we'll have a million dollars when we retire. BUT!the house is paid off, had a new roof, and I'm working on getting the bathtub replaced. Before we retire
It'd be cool to go one step further and show what a person who retires on a million dollars has to spend each year vs one who saved 3 million. I was surprised I hadn't thought about what my costs would be when I retire. For instance, medical insurance until I'm old enough for medicare, helping kids with a wedding, and other things that a 60 year old needs that a 40 year old doesn't think about.
Focus on how much income you'd like to have in retirement, assuming you didn't have to invest any money. Multiply that by 28 or the number of years you want it to last, whichever is smaller. Now try to invest enough such that you have that amount, adjusted for inflation.
Make sure to account for taxes. Where some people go wrong is calculating the cost in after tax dollars then making the amount in pre-tax dollars. Factor in other income like a pension, social security, annuity, side hustle, etc.
We retired with much less than 3 million. We have a paid off home, no debt. We live comfortably, give to our church, travel, help our Children and Grandchildren. The Key, I think, is to be debt free and live with in your means.
First of all, I have to point out that money management isn’t taught in public schools (unless it’s as an elective, and even then, it’s incidental to a larger curriculum). It should be a REQUIRED course. Second, I think it’s important to realize that one’s lifestyle choices heavily affect one’s bottom line. Smoking, regularly eating in restaurants or taking vacations - it’s money spent vs money invested. So a real question that should be factored into all of this, from the beginning, is this: how do you want to live your life? I have friends that have worked 12+ hours a day, 6 or 7 days a week, and made six-figure incomes for years. They don’t seem happy in their nice homes and second marriages. I worked 12+ hours a day for a more modest income, but saved and spent frugally, for the most part. My home and cars are paid for; I have no outstanding debt. I wish I had more money sometimes, but I have to admit I am very blessed to have more than I need, and a relatively secure retirement future.(I also have had the same wife for almost 40 years!) I believe we have to balance lifestyle and money; everything in life carries a cost of some sort. I hate the idea that one “can have it all”; it's a horrible lie. The universe is well-balanced; there is a cause & effect dynamic that can’t be ignored. I know too many people with high incomes and expensive tastes; as more of my peers retire too (I retired at 59 - I’m okay with that) they are going to have to change their spending habits quite a bit. I suspect it’s going to be a painful transition.
How I agree about the schooling. That is an elective in our district, but it does not talk about budgeting, delayed gratification or slow and steady, but how to play with stocks, looking at momentum, on trading. IMHO, a lot of the true financial planning could be part of algebra I or II and some really good examples (aka, if you want to retire at 65 with 1M in current income, how much do you need to save per month to get there.)
well, my public schools taught money management as part of core curriculum throughout K-12.
@@hanwagu9967 You were, luckily, in an exceptional district. Most have put aside basic stuff like that to focus on other fluffy material.
I think of you look through the online list of courses for pretty much any high-school district, you'll find courses for financial management.
The classes are there, most kids just don't take them because they are too young to relate, and their parents don't prioritize it.
@@danh2716 I misspoke; I apologize. Yes, most high schools have at least one class labeled as “Financial Management” and/or “Home Economics”, but they are not very helpful, from what I’ve seen. It’s been almost a decade now, but the last time I looked at the curriculum and textbooks associated with a high school class I was disgusted. It was largely useless material that skirted around a lot of issues without giving hard and fast rules, like: Learn to live on 80% (or less) of your income so you can save the rest! It was just so full of clichè statements and rudimentary math. A lot of discussion topics for the class, like: what’s better, to work with your hands or your mind? REALLY? I remember laughing my head off at some of the stuff; it wasn’t learning as much as infotainment, which is one step away from complete garbage. But, that was my take on it, and like I said, that was almost ten years ago now. Maybe the textbooks and curriculum are much, much better now.
At 50 I'm still aming for $1M net worth. I'm at $820k right now ($560k liquid). Once I hit that goal I will remove the value of my condo and aim for $1M liquid net worth. It's psychological.
If I reach that by 60 and isn't enough to continue my modest lifestyle without work I'll either live on less or work part-time I guess.
I am counting the years and can promise I won't be working full -time past 60. I have lost too many friends and family members before they even reached 50. Life is too short to spend it grinding for 40+ years.
I should inherit roughly $1M at some point (hopefully later rather than sooner). If it's sooner than hoped though I will take the opportunity to say "peace out" to the working world earlier. So very tired of the grind.
The 4% rule is no longer the golden rule, Many ETFs and dividend Stocks pay well over 6-8%. With that calculation, we can still retire comfortably with 1 Million dollars here in Canada. Considering we don't touch the principle and we have (CPP and OAS) which equates to about 15-20k/yr. Dividend income is taxed at a different rate.
Depends a lot on where you live. Cost of living varies a lot in the US.
absolutely!
The numbers seem really high here, most people don't live off of $100k per year because few individuals make 6-figures annually so I don't see why that would be required in retirement. Personally, $50k would be comfortable especially since my mortgage can potentially be paid off while I'm in my 30's and my cost of living would be minimal at that point. I'd be curious to see what the actually retirement incomes currently look like
Excellent job!
Great content!
(And I don’t say that often!)
You are spot on about compounding. In our case after paying off the house we then started saving/investing and we hit the first $1M after 10 years. The second million took about 5 and the third was roughly 3 years. That was before the "big" pullback of course. Now on Social Security. We totally ignore this because after WEP (yes $480/month of the SS benefits I EARNED are stolen by the Government because I had the audacity to pay into a private pension in the UK 20 years before I came to the USA).. Anyway. My SS payments will be about $1100/m. Now Medicare currently with a part G coverage for both me and my Wife will be close to $900/m (after tax). Now you can get Part G cheaper if you want to take on more risk but if your health is not so great and you can't afford the risk, then at least one of your SS payments will be completely eaten up by Medicare... And that is at today's rates!!!! When you hear politicians talking about "Medicare for all" just remember that the current costs for Medicare are MUCH higher than for Obamacare with a decent subsidy. There is no income subsidy with Medicare currently. Not saying that couldn't change in the future though, but then again the other party is talking about reducing what it spends on entitlements.
Unless you earn crazy high wages, saving the first million takes a long time and a lot of discipline. Invest wisely and keep saving and that second million comes pretty quickly.
What a lot of people don't talk about is where are you going to retire. I'll need about half or 25k per year because I plan to retire no where near the USA. It doesn't matter how much you need as much, it is all about where you retire.
absolutely! Where are you planning on retiring?
@@ErinTalksMoney Splitting time between Europe, Asia, and the US
Most of those that are successful just got started. We did it primarily in a boring 401k and whether the market was up or down, we kept adding to our account every paycheck. It takes 25 years or more for most of us, but one day, you wake up, and you see it has surpassed a million, and you start to breathe a little easier. By then, it is an old habit. You wonder if you even need to save anymore as you see that what you add to the account each year is such an ever-shrinking part of the account growth. That is when you have arrived. Your money now works way harder for you than you do for it. All you need to do is just keep an eye on it and take some of the icing off of the top of the cake every year and enjoy life. -Just my 2 cents.
Knowing this makes me think that 401K/IRA annual limits should be increased significantly to give employees a better chance of a successful retirement.
Lol they are estimating 120k a year in expenses. Is this to pay for a 2nd or 3rd house?
I think these numbers are a bit high. The vast majority of millennials will never have anywhere near 3 million and that is fine. I plan to retire in 8-10 years in my early 60s with about 1.5 mil, but I could absolutely retire fairly comfortably on less than that. I'm just choosing to save more to enable a higher level of comfort, but it's not essential to retire. A lot of these high retirement numbers are put out by the financial industry because it is in their interest to encourage people to work forever and invest millions with them. Of course more money is better than less money, but you do not NEED millions to retire in comfort. People should ignore the noise and figure out for themselves how much they need for a comfy retirement, based on their individual goals. It may be much less than you think.
Great video. Thank you!
Something is going to have to give. Wages are not keeping pace with inflation but the retirement number continues to grow with inflation. Either you are going to need a really big income or you have to really cut back with some austerity to make it to 4 million.
You have to be invested. Wages won’t cut it and you’ll need your money to work for you.
Just using a blanket amount of money - 1 million, 3 million, whatever - is dumb. It's a multiplier of your expenses, it's just tough to estimate those expenses. Tough but not impossible. Do the homework and don't just declare a number.
I had remarked to my Father in law a couple of decades ago that I wanted to have a million before I retired, he said that wasn't necessary. Today, retired with just over a million I can say it is not easy to see a guaranteed path to success over the next 30 years.
For a little perspective on inflation I graduated from college in 1970. The cost of living index has increased by a factor of 7 times. The minimum wage was $1.60 per hour. A good starting salary after graduation was $6,000 a year. My first year of college in 1966 for room, board and tuition was a little over $1200 or about $8500 in todays dollars. It is so important to factor inflation into your retirement planning. The problem is we can only estimate the inflation rate in the future.
Same age James - I remember the $1.60/hr!!
I think the bigger question is whether Medicare will still exist when we’re 70. With people living longer and the US slowly becoming an older population the system is at risk of insolvency in the coming decades.
Good luck!!!
Where I grew up we didn't think much about Healthcare. You either made it, or you didn't. So today my attitude is do the best as I can and let God do the rest. Keep in mind that you are already doing what you need to do to survive by going to work everyday.
40 years from now, $3M equivalent will look like $10M. If you can get 8%/year growth then you need to save $40K/year or $3333/ mth. At 12%, that would be $13000/year or $1100/mth.
$1M is about $50K/yr.. for 20 years, so, $1M indeed isn't what it used to be. But, by the time you retire, you should have eliminated all debts, worked, saved, and invested. Any offspring should be on their own, and the highest expenditures from age 20 to age 50 should all be gone (mortgage, child rearing, fancy car purchases, etc). It still would be hard in today's economy to get by on Less than $40K/yr. Still, in our region, we can live very comfortably on $50K /yr., and I have survived in recent years on
Hitting this mark also has to do with when up and down markets and how old you are at those times. The younger investors, although counterintuitive, need to wish for a multi year recession and plow all that you can into index funds. Watch what happens when the pendulum swings the other way!
Retirement is still a few decades off for me, but I've been steadily building up my 403 b ever since I started working full time. That being said I'm probably not quite on track to end up with $3-4 million when I retire, but that doesn't worry me either. Having talked with quite a few people who've retired, they've all said that as long as you retire debt free and can stick to a budget that you really don't need as much the same amount of money you had when you were working nor di you need as much as many of the experts say you do. Keep in mind many of these experts purposely over-estimate how much you'll need too, that way when you see those high number they project you'll get worried and think you won't make it and order their program or book so you'll get back on track.
Forget the experts and just calculate how much you need. If you were retiring today but don't have any debt, your house is paid off, and you don't have to save or invest, how much would you need to live comfortably while accounting for taxes? If your investments can produce that amount each year, then you are good. If not, calculate how long before you get to that point.
She's probably closer to right then wrong on her estimates. I'm 66, retired and remember the first time I spoke with a professional on this subject about 40 years ago. His advice at that time was I would need 200k to retire comfortably at fra. At the time I laughed and said yeah right. Well his estimate in my opinion was short by close to a million dollars.
Hi Erin, another amazing video. Thanks for all you do to make them.
I suspect your channel will continue to grow in the upcoming year!
Jeff
Thanks Jeff!
FYI there's a big-ass typo within the links in your description 😛
Our personal goals are a paid off house and the equivalent of the median household income in fully qualified dividend Income and rental income. Social Security will be a bonus when it comes.
We will need to hit a portfolio value of around $3.5M to hit those income goals. By then our overall net worth should be about $5M including the value of our house. On track to hit those goals around age 50, possibly sooner.
I am glad that you mentioned Geo-arbitrage as that is what I did. I doubled my net worth in one year and plan to do it again. 😊
Omg this is terrible extreme. In our consumerism society people think they need millions to retire. People are never getting enough stuff, bigger home, bigger car, luxurious vacations, fashion clothes, etc. We should stop and think for a minute if all those things really makes us happy. The happiness is not in possessions or money. Really. All you need is some veggies and a piece of meat daily, good family and friends, some kind of roof above your head and love. You don’t need millions for that.
I agree with your opening statement but not the end. Minimalism is fine for some, but not for me. A modest life style can still include a lot of travel and activity, but does require a little more than you describe. We each have our own wants and desires. Just need to align those with reality
I was talking with somebody about the Lottery. The guy was telling me he wouldn't want to win it because many people who have won the Jackpot are broke within about 5 years and their problems are worse. I told him, "I'll take my chances".
I guess the question is to define what is a good savings to "Properly" enjoy your Retirement. If you get $3K/month, less taxes, from Social Security, a paid off home, and 500K saved, I think you can do fine.
Speaking Reality, if you don't have your health you need to look at your situation through a whole different lens. If you are Healthy, you are Wealthy. A healthy body affects a healthy mind, which affects a healthy body, which affects a healthy mind.... Learn it, Know it, Live it Spicoli.
I agree, health is everything!!
I rely solely on my pension and SS to cover my expenses, including my medical insurance premium. What I have saved for retirement is not as important. I have not dipped into my savings and IRA's for 22 years in retirement.
I started my kids with $100 per month Roth IRAs when they started working at 16. All parents should teach their kids about compounding. If they start working while in high school, they can add five to 10 years' compounding before hitting the workforce full time. Beyond the compounding, this sets in place good habits and the expectation tat regular contributions are normal and expected.
I LOVE this!!!! 👏👏👏
If my goal was to go to 3 or 4 million, I would cry. But my reality check goal is to stretch every dollar to last more time, I'm not number oriented.The greatest force in the stock market is not the returns but the spending. If you somehow spend only 1% of your portfolio it doesn't matter its size, you'll never run out of money. Some of us will go beyond frugal in retirement, more towards cheapskate.
Whether it's now or in retirement, my goal is to live within my means. The larger my means, the more flexibility I have in lifestyle.
If no one can afford it then no one buys it. People retire on social security all the time. Reality hits and budgets adjust. No big mystery.
I don't think 1 million dollars is realistic for most Americans, let alone 3-4 million! I think the majority of Gen Y & Z will be swamped in student loans and if they save money in their 20s, it will be for a down-payment on a home. I think right now, you can retire on 1 million if you're in your mid-50s and you will get above average social security at 67, have no other debt, live in a lower cost location and live very frugally. You're right that this won't be the case in the future....
I think it would be best in this type of video to clarify what dollars you or the authors are using. Current dollars being the best, and then using “inflation adjusted current dollars” to talk about the future.
We recently retired and $1 million is adequate depending on circumstances. $2million is plenty in current dollars. For the younger crowd I suspect Social Security will be less and kick in later than today, so would need to,plan for a Social Security bridge strategy if retiring early. That may require a $2-3 mill portfolio.
Saving early is great, but if I had $500k at 25(impossible for me still in school) that would have compounded to huge numbers. We didn’t really start saving till our late 40’s and still came out ok. Obviously real estate can start earlier and is worth some effort.
Good topic!
I'm not sure that a comfortable retirement is with in reach for most folks regardless of generation or age. Myself for example, I currently have roughly 320,000 in an employer sponsored Roth 401k. I also have another 30,000 in an IRA. At 47 according to experts I'm very far behind.
Erin? You are having some pretty bad luck with the cold/flu/rona bugs going around this year, well I hope you are feeling 100%, and another great video!! Thanks!
I kinda did have a bad spell - got sick in November, and then again in December. (But I filmed this video last week, so I am all better now 😊)
Great to hear! Some day I think I would want to hire you as a YT consultant. You clearly have put so much work into this channel, I bet you have learned a bunch about how to do the whole TH-cam thing in the time you have been at it.
I have definitely learned A LOT, I knew NOTHING when I started....and I still have a lot to learn! 😊
Great discussion, folks always need to keep in mind the difference between present value and future value of money. Keeping one’s retirement time horizon in mind along with the impact of inflation is key to establishing a reasonable fund goal.
Agreed that Weathcare Financial’s benchmarks are not very realistic. Compounding growth isn’t quite that linear.
Your benchmarks seem more realistic, provided you can save as much as possible as early as possible.
My goal has been $3 million by 60. And at age 34, I’m much more in line with your numbers.
Good luck!!!
So much can happed before retirement that long term predictions are subject to a lot of uncertainty.
Great video to share with the kids, thanks, Erin. Have a great weekend.
Thanks for sharing Phil! Have a great weekend! 😊
I need to step up my retirement savings.
Would the pretax limits on 401Ks be a hinderance in getting you to those amounts? How about income limits on Roths? These make it more difficult. We could also be entering a prolonged period of stagnation in the market, making that 8% ror unrealistic.
You need to combine a Roth IRA and 401k for their limits to be conservative and hit it. But you can go more moderate and do it through a Roth ira at cap for 30 years
A lot of good points that younger people may need more, but I would still say saving $1Million (excluding home) is still a magic number. It may not make you feel wealthy, but it does feel pretty good :) and will inspire someone to keep going if needed.
you are right, $1 M still feels like a darn good number!
I was 50 years old when I finally made it to 1M plus a paid off home, decent car, etc. I think her numbers are just a wee bit off. I wonder how much she has earned and saved!
Saving 3 or 4 million is pretty much impossible for me at my current age of 35. Even one million is not realistic for me, since I have very little saved. I would like to shoot for $500,000. If I live a simple and frugal life in retirement and keep doing some side hustles this should be sufficient.
if you have a frugal lifestyle, $500,000 could very well be more than enough!
500k is not bad at all. Lots of people don’t even have 50k when they retire nowadays.
I could probably easily retire on 1 million. I would live cheap in the middle of nowhere.
Got to make that first million to make any multiple. Time to get those dollars working
Don't let those huge numbers discourage you. Instead of focusing on a several million dollar retirement savings goal, something that sounds so out of reach, direct your efforts towards your Savings Rate. Start early and try to save 10-15% of your earnings into your Roth 401K and IRA and you'll be fine.
I prefer to measure retirement needs by multiplying estimated retirement savings by 25 (rule of 4%), but the amount that you need to have saved depends on whether or not you have multiple income streams, I'm hoping to get 30% of my monthly retirement income from social security, 20% from pension/annuity, and 50% from investments
In today's dollars I'd say it's 2M.
The financial industry wants you to have a multi million dollar portfolio so they can take a cut of it. Meanwhile, in the real world retirees with as little as $200,000 typically do not spend down their portfolio. Why, they’re not spending $20,000 a year on vacations, they’re not saving, they only have one car, etc. etc..
Important to note that the IRS publication that said social security trust fund would go “bankrupt” in 2033 also said when that happened, payouts would still occur but at ~76%.
If you believe climate change is a thing, I think it’d be a good idea to increase that target number, which is why I’m aiming for $5M.
This is a very well-done video. I'm in the middle of the millennial group and have a target of $3M for retirement. It's probably more than my lifestyle will need, but I agree it's better to be prepared. I wish I could convince more people of the importance of saving early (my earlier self included). One day they will say they couldn't when they really meant they wouldn't give up the new cars and vacays. It's hard but obtainable. Great video breaking it all out. Only difference is I'm less conservative and plan for 10% growth.
Great video, Erin. Keep up the amazing work. I really like your supporting charts and tables you use in your videos.
Love the hair! Rats! I did it! I hit it! But now all this bad news? I guess I didn't hit it. I don't want to be a naysayer, but honestly, rather than making these enormous sums of savings, how about just not drinking Starbucks Lattes each morning and driving new Teslas? There are other ways to stay afloat! (which, incidentally, is exactly how I beat the high cost of living out here in SF). Most cheaper retirement places around the world will allow one to live comfortably on $2,500 a month which is only 30k a year. That means if you hit your 500K at 25 and want to retire, you could and not work for another 17 years! So then, at 42 go back to work because you've become bored with doing nothing! Inflation isn't as bad as you think however. I personally beat inflation by refusing to pay inflated prices. Rather, inflation keeps me moving - as inflation grows, so does my ability to live off things not subject to inflation. Live off barter, the used merchandise markets, dealing one on one with people, etc. It does work! The best way to fight inflation is not to buy - can you imagine what that will do to prices? By simply saving and investing you are entering into a battle against the economy that you cannot win. There are other options than going that route - if you live on a farm, grow your own food and make your own clothes, and trade with your neighbors, as crazy as that may sound, you are impervious to so much of what goes on around you.
A million is way more than enough if you simply learn a little about the market. Use options and a couple different strategies and you’ll easily make 100,000 a year without reducing your million dollar nest egg.
BTW, your chart shows two lines starting their investing at 35 years of age, but the text says only one person starts saving at 35 years old. Please fix it, it's confusing :) Oh, thanks for the rewinding cassette visual, made me smile.🙂