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Their fixed costs keep rising. When you are 22, you think that $100,000 a year (rising with inflation) is heaps. But by 30, you buy your first yacht, and it tak
by wisty 17y ago
Their fixed costs keep rising. When you are 22, you think that $100,000 a year (rising with inflation) is heaps. But by 30, you buy your first yacht, and it takes $50,000 a year just to keep it in the dock.
- Retric 17y agoWhile that's true, the cause of this is a salary that compounds faster than inflation. If you make 10% more each year it's almost impossible to retire anywhere near the salary you had 5 years ago without saving a huge percentage of your income. EX: Ignoring inflation, if you get a 10% rase a year and get a 10%ROI on your investments every year then you need to save 40% of your income to for 35 years to retire on what you made 5 years before you retired. (Assuming you can live safely on 4.5% of your capital / year)