3 ms·
I honestly thought about this, back then when stock market had 'predictable returns.' Imagine $100K ($25k X4) in a retirement account for 40 years.
by itswindy 15y ago
I honestly thought about this, back then when stock market had 'predictable returns.' Imagine $100K ($25k X4) in a retirement account for 40 years.
- chrisjsmith 15y agoYou might be dead before you get to spend it.
- itswindy 15y agoIt has a lot to do with the peace of mind as well: "OK, I have to work till 60, but then I'm going to be pretty comfortable" Inflation obviously takes a bite but it takes the same bite even if you put $5k a year when you're 40.
- ianterrell 15y agoAt 6% APR after 40 years it would be over $1 MM.
- arethuza 15y agoDiscount that $1M with 40 years of inflation to give some idea of what the purchasing power might be and it doesn't look quite so impressive.
- ianterrell 15y agoLet's use historical data instead of back of the envelope guesswork. Over the last 40 years (1970-2010) the average S&P 500 return has been 11.61%, while inflation has been 4.4%. Past performance not necessarily but usually predicting future performance, but, with those rates... Over the next 40 years $100k would grow to $8.1 MM in future bucks, or $1.45 MM in 2011 dollars. http://www.moneychimp.com/features/market_cagr.htm http://www.moneychimp.com/features/market_cagr.htm for returns, http://www.moneychimp.com/articles/econ/inflation_calculator.htm http://www.moneychimp.com/articles/econ/inflation_calculator... for inflation, and http://apps.finra.org/Calcs/1/Savings http://apps.finra.org/Calcs/1/Savings for savings calculations.
- arethuza 15y agoSomehow I don't expect the next 40 years to look a lot like the last 40 years.