4 ms·

Get married, save $60,000 a year (including 401k matching, etc), get 8% growth per year, 3% raise per year...that's $1,053,000 by my calculations.

btian 13y ago
$60000 is basically after tax income if your pre-tax income is $120k. Also 8% growth a year is quite a stretch given that risk free rate is 2.64% (10-year treasury yield), and inflation eats 2% a year...
- bluedevil2k 13y ago
  Pre-tax income of $120k would net about $95k in the US for a married man with 2 kids and a house in a tax-free state (Texas, Florida, etc.) 8% growth isn't a stretch, it's the average return for S&P 500 over the past 100 years.
- nilkn 13y ago
  For a single person without a house and without dependents, the after-tax income is actually about $76k in CA and $87k in TX, according to ADP's online calculator.
- runako 13y ago
  A 50% aggregate tax burden is a choice a small fraction of Americans make. As others have pointed out, most Americans have far lower aggregate tax burdens.
icedchai 13y ago
Seems unrealistic, given 35 to 40% will go to taxes, benefits, etc. That leaves less than $2k a month to live on. Is it possible? Yes. Is it likely? No. The average person (American anyway) does not have that sort of self discipline, even if they lived in a cheap enough area to make it feasible. This coming from someone who DOES have the discipline.
johnrob 13y ago
Unfortunately, if you use a 401k you can't touch it for quite a while. Time is an important variable. There's no point in becoming a millionaire at the very end of your life (to use an extreme example).
- jcdavis 13y ago
  401k allows withdrawls at 59.5, which isn't all that late. Anyone planning an earlier retirement is very likely to be investing in normally-taxed accounts in addition (due to 401k caps), which can they draw from before that. Plus Roth IRAs also allow some flexibility in terms of early withdrawls.
- mahyarm 13y ago
  You can use 401k's as a tax deferral even with the penalty if your current income is high enough.

btian 13y ago

$60000 is basically after tax income if your pre-tax income is $120k. Also 8% growth a year is quite a stretch given that risk free rate is 2.64% (10-year treasury yield), and inflation eats 2% a year...

bluedevil2k 13y ago
Pre-tax income of $120k would net about $95k in the US for a married man with 2 kids and a house in a tax-free state (Texas, Florida, etc.) 8% growth isn't a stretch, it's the average return for S&P 500 over the past 100 years.
nilkn 13y ago
For a single person without a house and without dependents, the after-tax income is actually about $76k in CA and $87k in TX, according to ADP's online calculator.
runako 13y ago
A 50% aggregate tax burden is a choice a small fraction of Americans make. As others have pointed out, most Americans have far lower aggregate tax burdens.

icedchai 13y ago

Seems unrealistic, given 35 to 40% will go to taxes, benefits, etc. That leaves less than $2k a month to live on. Is it possible? Yes. Is it likely? No. The average person (American anyway) does not have that sort of self discipline, even if they lived in a cheap enough area to make it feasible. This coming from someone who DOES have the discipline.

johnrob 13y ago

Unfortunately, if you use a 401k you can't touch it for quite a while. Time is an important variable. There's no point in becoming a millionaire at the very end of your life (to use an extreme example).

jcdavis 13y ago
401k allows withdrawls at 59.5, which isn't all that late. Anyone planning an earlier retirement is very likely to be investing in normally-taxed accounts in addition (due to 401k caps), which can they draw from before that. Plus Roth IRAs also allow some flexibility in terms of early withdrawls.
mahyarm 13y ago
You can use 401k's as a tax deferral even with the penalty if your current income is high enough.