I am watching this program on CNBC and they have this one person on who states that assuming you start working at age 22, a 4% average return, you will need to save 15% of your yearly salary for each year until age 55 to retire comfortably. . .
Figure it out for yourself http://www.moneychimp.com/calculator/compound_interest_calculator.htm And if you're only averageing 4% you're getting hosed.
even if he meant 4% real intrest, you are getting hosed. Another part that doesn't make sense from his asserition, is he doesn't mention how much the person makes. Don't you thinkthat should be factored in?? duh...
The people on CNBC were wrong in stating a set amount. There will be some people, that dont know any better, who will walk away thinking that if they save 15% a year in a money market account then they will be able to retire comfortably. The fact of the matter is that we simply dont know how much we will need until we get to that point in life. So the real answer is as much as possible, as soon as possible and using aggressive methods. What I mean by aggressive methods is mutual funds that do not contain bonds but are pure equities. I dont mean to throw some small-med cap stocks in there individually. The only equities I feel that are appropriate for retirement accounts are unproblematic large-cap domestic dividend paying stocks and mutual funds. Nope no Ford or GM. Of course, if your a little bit older and nearing retirement, you may desire more conservative methods. I say if your under 40, then go all equities.
It depends on the risk. Compoundable, low-risk 4% real is a stellar return, in my book. If you say there is better out there, I'm glad to hear it - what is it? [quoteAnother part that doesn't make sense from his asserition, is he doesn't mention how much the person makes. Don't you thinkthat should be factored in?? duh... [/QUOTE] Exactly.
Wifey and I are screwed...any winning lottery numbers I can buy? oh well, I guess we will stick to trading
Start at birth. Why wait until 22 years of age? I believe the real threat to my security is unexpectable and unpredictable events. Imagine if there is a civil war in the USA? I imagine an accident and losing my legs. I give no consideration to retiring at age 65. I might not be alive at 65 years of age. I believe wealth (actually life management skills) management skills to be my retirement plan. Not the money but the skill. The ability to exit losers of any type and hold winners of any type. The concept is just as valid in life as in trading. I recall a few days ago someone saying "Hook N. Sinker made some good deals." That person talks as if my success is in the past. Success in not in the past. Success is happening now. All I do is get rid of the bad deals. What remains is pretty good. My neighbors can not seem to figure it out. I do not know why.
When you talk in % terms it doesnt matter what the person makes. There is evidence to show that most people in their retirement years require about 75% of their earnings in the year before retirement. I havent done the numbers, but presumably, if you save 15% of your income every year (regardless of the $$ amount of your income), and invest conservatively, you will have enough saved at age 65 to live on about 75% of your previous salary.