4 ms·

If we assume they have three million now, in 40 years when they have 20 years of retirement left, assuming it sees a 5% annual rate of return, they will have $2

If we assume they have three million now, in 40 years when they have 20 years of retirement left, assuming it sees a 5% annual rate of return, they will have $21 million. Are you suggesting that they actually need ~$21 million for a 20 year retirement?

hiatus 3y ago
I'm saying the article is saying they need 3 million before entering retirement.
- randomdata 3y ago
  Yes, that's right. Assuming a typical lifespan, they will have 20 years left in ~40 years. Assuming a 2% inflation rate, $3 million in 40 years is equivalent to ~$600,000 today. A 60 year old holding $600,000 today does not seem like that high of a bar.
  - JohnPrine 3y ago
    He means the article is saying they will need $3 million in today's dollars to retire
    - randomdata 3y ago
      The needs of retirement should scale with inflation, so that means you also need $3 million today (in today's dollars) – which is rather high. $600,000 is not too far off what is the minimum recommended amount of saving to retire for 20 years on today, so it seems they simply adjusted that figure for inflation and then forgot that the income used to build up those savings also goes up with inflation.
      - coldtea 3y ago
        $600,000 for 20 years is 30K per year. They'd get by on those for the next 20 years if they were to retire today?
        jandrewrogers 3y ago
        > $600,000 for 20 years is 30K per month I do believe that would be 30k per year.
        coldtea 3y ago
        Yes, fixed.
        randomdata 3y ago
        $30K per month, even 40 years from now based on 2% inflation, is equivalent to $13k per month today. You'd have to try really hard to not get by on that. I assume you mean $30k per year. The recommended is more like $700,000, and that factors in your pension, but we're just using approximate figures here. Still, $30k per day today is quite doable for a retiree. What are you going to spend your money on, exactly? You've already purchased everything you need by that point in life, so you're just in maintenance mode.
        coldtea 3y ago
        For starters, that's the "point in life" where most medical emergencies arrive.
        randomdata 3y ago
        That's true. As a non-American I forget that you have to worry about such things. The $3 million is in line with what I would expect will be needed in 40 years, sans healthcare costs. It is, adjusted for inflation, in line with what is recommended today where healthcare is provided to all. So, it seems it seems that figure assumes that US healthcare will be 'free' in 40 years?
  - antisthenes 3y ago
    > A 60 year old holding $600,000 today does not seem like that high of a bar. Gen Z isn't 60 years old today. They don't have 600k, and for them, it is a high bar.
    - randomdata 3y ago
      That's right. They have ~40 years left to acquire $3 million before they have 20 years left, assuming the typical human lifespan. Which, adjusted for inflation, is the same as someone who saved $600,000 over the past 40 years.
      - coldtea 3y ago
        So, like, not so many people, and even less going forward? https://fortune.com/recommends/banking/57-percent-of-americans-cant-afford-a-1000-emergency-expense/ https://fortune.com/recommends/banking/57-percent-of-america...
        jandrewrogers 3y ago
        That article is misleading clickbait. Per the US government (BLS), the median household has ~$1,000 per month left over after all ordinary expenses. That is, after car payments on their BMWs, healthcare, iPhones, etc. The median American can afford to save considerable money but they tend to spend it on lifestyle flexes instead.
        randomdata 3y ago
        I am not sure what emergency savings has to do with retirement savings. Retirement savings are often not very liquid, so they wouldn't be available to use in an emergency, typically. And certainly some people never did manage to save $600,000 over the past 40 years, but it remains that the bar does not seem that high. Even the lowest bar will not be met by some people, but that doesn't mean the bar is high.
        coldtea 3y ago
        You think those without $1000 emergency savings have retirement savings, but they just aren't liquid enough? In any case, if you want the categories separated, here you are: In 2019, about half of American households had no savings in retirement accounts, according to the Survey of Consumer Finances (SCF). These accounts include individual retirement accounts; Keogh accounts; certain employer-sponsored accounts, such as 401(k), 403(b), thrift savings accounts; and pensions. https://usafacts.org/data-projects/retirement-savings https://usafacts.org/data-projects/retirement-savings

hiatus 3y ago

I'm saying the article is saying they need 3 million before entering retirement.

randomdata 3y ago
Yes, that's right. Assuming a typical lifespan, they will have 20 years left in ~40 years. Assuming a 2% inflation rate, $3 million in 40 years is equivalent to ~$600,000 today. A 60 year old holding $600,000 today does not seem like that high of a bar.
- JohnPrine 3y ago
  He means the article is saying they will need $3 million in today's dollars to retire
  - randomdata 3y ago
    The needs of retirement should scale with inflation, so that means you also need $3 million today (in today's dollars) – which is rather high. $600,000 is not too far off what is the minimum recommended amount of saving to retire for 20 years on today, so it seems they simply adjusted that figure for inflation and then forgot that the income used to build up those savings also goes up with inflation.
    - coldtea 3y ago
      $600,000 for 20 years is 30K per year. They'd get by on those for the next 20 years if they were to retire today?
      - jandrewrogers 3y ago
        > $600,000 for 20 years is 30K per month I do believe that would be 30k per year.
        coldtea 3y ago
        Yes, fixed.
      - randomdata 3y ago
        $30K per month, even 40 years from now based on 2% inflation, is equivalent to $13k per month today. You'd have to try really hard to not get by on that. I assume you mean $30k per year. The recommended is more like $700,000, and that factors in your pension, but we're just using approximate figures here. Still, $30k per day today is quite doable for a retiree. What are you going to spend your money on, exactly? You've already purchased everything you need by that point in life, so you're just in maintenance mode.
        coldtea 3y ago
        For starters, that's the "point in life" where most medical emergencies arrive.
        randomdata 3y ago
        That's true. As a non-American I forget that you have to worry about such things. The $3 million is in line with what I would expect will be needed in 40 years, sans healthcare costs. It is, adjusted for inflation, in line with what is recommended today where healthcare is provided to all. So, it seems it seems that figure assumes that US healthcare will be 'free' in 40 years?
- antisthenes 3y ago
  > A 60 year old holding $600,000 today does not seem like that high of a bar. Gen Z isn't 60 years old today. They don't have 600k, and for them, it is a high bar.
  - randomdata 3y ago
    That's right. They have ~40 years left to acquire $3 million before they have 20 years left, assuming the typical human lifespan. Which, adjusted for inflation, is the same as someone who saved $600,000 over the past 40 years.
    - coldtea 3y ago
      So, like, not so many people, and even less going forward? https://fortune.com/recommends/banking/57-percent-of-americans-cant-afford-a-1000-emergency-expense/ https://fortune.com/recommends/banking/57-percent-of-america...
      - jandrewrogers 3y ago
        That article is misleading clickbait. Per the US government (BLS), the median household has ~$1,000 per month left over after all ordinary expenses. That is, after car payments on their BMWs, healthcare, iPhones, etc. The median American can afford to save considerable money but they tend to spend it on lifestyle flexes instead.
      - randomdata 3y ago
        I am not sure what emergency savings has to do with retirement savings. Retirement savings are often not very liquid, so they wouldn't be available to use in an emergency, typically. And certainly some people never did manage to save $600,000 over the past 40 years, but it remains that the bar does not seem that high. Even the lowest bar will not be met by some people, but that doesn't mean the bar is high.
        coldtea 3y ago
        You think those without $1000 emergency savings have retirement savings, but they just aren't liquid enough? In any case, if you want the categories separated, here you are: In 2019, about half of American households had no savings in retirement accounts, according to the Survey of Consumer Finances (SCF). These accounts include individual retirement accounts; Keogh accounts; certain employer-sponsored accounts, such as 401(k), 403(b), thrift savings accounts; and pensions. https://usafacts.org/data-projects/retirement-savings https://usafacts.org/data-projects/retirement-savings