4 ms·

This is not quite right, as I see it. If you save 10% of your income, you need to work 51 years to get to a safe amount of money for retirement (25x your annual

This is not quite right, as I see it. If you save 10% of your income, you need to work 51 years to get to a safe amount of money for retirement (25x your annual expenses). If you start at 20, that puts you at 71 years old. Note: This math assumes you're going to earn ~5% in the invested savings each year (after inflation), and that you can withdraw 4% of your invested sum each year in retirement.

WildUtah 10y ago
You're not going to earn 5% after inflation. Maybe 2.5%. But retiring at 71, you can withdraw a lot more than 4% per annum, also. Maybe try a new set of assumptions.
- thedufer 10y ago
  That's a very pessimistic view of the economy. Why do you expect the future to be so much worse than the past? The S&P 500 has averaged 7%/year (after inflation) over the past 80+ years.
  - WildUtah 10y ago
    Current 30 year bond rates and the performance of stocks in the 21st century are significantly less lucrative than in previous decades. The end of exponential population growth as the Earth has already filled beyond its carrying capacity predictably eliminates all sources of growth except productivity growth. Previous generations could depend on a population and resource extraction growth boost of 2-5% per year, but that will pull back to negative drag as population of first world peoples shrinks and affordable oil production drags. That 7% growth is now equivalent to 2% in the conditions today's people will retire into.
    - thedufer 10y ago
      > Current 30 year bond rates and the performance of stocks in the 21st century are significantly less lucrative than in previous decades. I'm just eyeballing this, but after adjusting for inflation neither recent stock nor bond yields look out of the ordinary, historically speaking. There are always reasons to expect growth to go down, and other reasons to expect it to go up. It isn't clear to me why cherrypicking solely from the former group is supposed to be convincing.
- Animats 10y ago
  Merely keeping up with inflation has been tough since about 2007.
  - WildUtah 10y ago
    US inflation adjusted short term bonds and notes have occasionally carried zero and even negative interest rates over the past decade.
- the_gastropod 10y ago
  The annualized returns for the past decade (which includes the 2nd worst recession in American history) in the S&P500 was 6.95%. I'm not sure where you're getting this 2.5% figure? And given this 2.5% figure, how can you suddenly withdraw MORE money than 4%? If you can't earn 4% reliably, withdrawing over 4% puts you at risk of running out of money unless you know at what age you will die (unlikely).

WildUtah 10y ago

You're not going to earn 5% after inflation. Maybe 2.5%. But retiring at 71, you can withdraw a lot more than 4% per annum, also. Maybe try a new set of assumptions.

thedufer 10y ago
That's a very pessimistic view of the economy. Why do you expect the future to be so much worse than the past? The S&P 500 has averaged 7%/year (after inflation) over the past 80+ years.
- WildUtah 10y ago
  Current 30 year bond rates and the performance of stocks in the 21st century are significantly less lucrative than in previous decades. The end of exponential population growth as the Earth has already filled beyond its carrying capacity predictably eliminates all sources of growth except productivity growth. Previous generations could depend on a population and resource extraction growth boost of 2-5% per year, but that will pull back to negative drag as population of first world peoples shrinks and affordable oil production drags. That 7% growth is now equivalent to 2% in the conditions today's people will retire into.
  - thedufer 10y ago
    > Current 30 year bond rates and the performance of stocks in the 21st century are significantly less lucrative than in previous decades. I'm just eyeballing this, but after adjusting for inflation neither recent stock nor bond yields look out of the ordinary, historically speaking. There are always reasons to expect growth to go down, and other reasons to expect it to go up. It isn't clear to me why cherrypicking solely from the former group is supposed to be convincing.
Animats 10y ago
Merely keeping up with inflation has been tough since about 2007.
- WildUtah 10y ago
  US inflation adjusted short term bonds and notes have occasionally carried zero and even negative interest rates over the past decade.
the_gastropod 10y ago
The annualized returns for the past decade (which includes the 2nd worst recession in American history) in the S&P500 was 6.95%. I'm not sure where you're getting this 2.5% figure? And given this 2.5% figure, how can you suddenly withdraw MORE money than 4%? If you can't earn 4% reliably, withdrawing over 4% puts you at risk of running out of money unless you know at what age you will die (unlikely).