One million dollars! New update but not so new.....#109

[Deleted]

Feb 14, 2020 17:17:14 GMT -5 hoops902 said:

Feb 13, 2020 19:36:50 GMT -5 @logicnow said:

But in some ways it is.  $1 Million in 401K can indefinitely withdraw ~12,200/yr tax free.

Wiki says the poverty threshold for a single person was $11,700 in 2005.  

So it is a lot, as anyone with $1M is indefinitely no longer at risk of having to live in poverty. 


Add SS (which wouldn't be taxable at this level), assume that is the average $1,500/mo, so that would be a retirement income of $30K to any age.  

If you are a couple, that all gets double to $60K/yr income.  That is $75K pre-retirement, median household income in this country.  Since you only need 80% for retirement (remember that $75K had taxes, including SS/Medicare that you no longer have to pay), and guess what, you just succeed at using the 401K, as planned, to create a tax free retirement at the same quality of life from your working years ($60K/yr, inflation adjusted).  Because honestly, saving that $1M over a 40 year career isn't hard on a $75K income (only $550/mo @ at 6% return, which is a 9% market minus 3% inflation), or 8.8% of your income including company match, which most plans are 6% individual contribution to get a 3% company match.  

Seems 401K's were designed correctly and are a HUGE tax benefit.  The math shows how horrible everyone is at just doing the simplest of savings and that you just have to do it for your career.

You have to do it for your career, but the average person isn't waking up on Day 1 of a 40 year career making $75k.  You're also talking about HAVING $1M in TODAY'S DOLLARS...which means STARTING 40 years ago when the median household income was less than $20,000/year.  It's a lot different putting away $6600/year on $75k than having to put away $6600/year making $20k in 1980 in order to get started for 40 years of contributing (and we all know those early years are the most important to compounding)

Sorry, I'm going to disagree, I corrected for inflation in my example. So saving 6% of your salary would get you to the million mark in today's dollars no matter what year you started.  Obviously if you started 60 years ago, you wouldn't hit the # on statements, but you would have the same buying power in 2000 that $1 Million gives you today in 2020.

(only $550/mo @ at 6% return, which is a 9% market minus 3% inflation)

The S&P 500 has returned an average return just as I state, look various 40 year period on this site and you will see I was very reasonable (https://dqydj.com/sp-500-return-calculator/).  The 6% return adjusted for inflation is achievable.

but the average person isn't waking up on Day 1 of a 40 year career making $75k.

STEM majors do, that is what I pay to recruit them.  That is what I made my first job out of college when adjusted for inflation. Even if you don't, most households would if both people making ~$30K saved prior to marriage and salary growth, thus making it even worse that more households don't achieve this milestone.


Finally, I did it in ~20 years with a ~20% savings rate (3% was always from my company).
    Year 1:  0% (locked out of plan)
    Year 2:  18%
    Year 3-7:  16%
    Years 7-now:  25% then a linear fall to 12% (yeah high income but those hard dollar limits suck)

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.      
    

[Deleted]

Feb 14, 2020 13:31:31 GMT -5 haapai said:

Feb 13, 2020 19:36:50 GMT -5 @logicnow said:

We all seem to have agreed not to ever do any such math, which strikes me as illogical. 

Because it is to hard to do, the game is so complex what do you use as discount factors. 

I'm struggling with that very choice today (pay 24% Federal + 6% State for a Roth 401K or do pre-tax).  I did the math, if I'm pushed out of the workforce (yes I have health issues) anytime before age ~55, the pre-tax is the best as my draw down like in the example can keep me in the 15% tax bracket (I'll use long term capital gains on my after tax brokerage account) and I may move to a income-tax free state to save the state 6%.  If I don't retire until 65, then RMD at 70 (yes I haven't updated yet to the new 72) would put me in a higher tax bracket than the 24%.  But all of that assumes a 8% ROI on my portfolio, higher-Roth wins, lower-pretax wins.

So there is just far to many variables and they change the game on top of that.  I'm using pre-tax as that guarantees my standard of living for the future, while it "could" end up costing me much more in taxes.  But just like having bonds in a portfolio, sometimes you give up gains to provide stability. 

[Deleted]

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.      
    

Says the high income guy with no kids....

[teen persuasion]

Feb 14, 2020 13:31:31 GMT -5 haapai said:

Feb 13, 2020 19:36:50 GMT -5 @logicnow said:

But in some ways it is.  $1 Million in 401K can indefinitely withdraw ~12,200/yr tax free.

Wiki says the poverty threshold for a single person was $11,700 in 2005.  

So it is a lot, as anyone with $1M is indefinitely no longer at risk of having to live in poverty. 


Add SS (which wouldn't be taxable at this level), assume that is the average $1,500/mo, so that would be a retirement income of $30K to any age.  

If you are a couple, that all gets double to $60K/yr income.  That is $75K pre-retirement, median household income in this country.  Since you only need 80% for retirement (remember that $75K had taxes, including SS/Medicare that you no longer have to pay), and guess what, you just succeed at using the 401K, as planned, to create a tax free retirement at the same quality of life from your working years ($60K/yr, inflation adjusted).  Because honestly, saving that $1M over a 40 year career isn't hard on a $75K income (only $550/mo @ at 6% return, which is a 9% market minus 3% inflation), or 8.8% of your income including company match, which most plans are 6% individual contribution to get a 3% company match.  

Seems 401K's were designed correctly and are a HUGE tax benefit.  The math shows how horrible everyone is at just doing the simplest of savings and that you just have to do it for your career.

Believe me, I wasn't throwing shade on the amount.  (I mentally moved a decimal over when you doing the one-million-401(k) math.)  It's throwing home equity into the mix and counting Roth and trad accounts equally that bugs me.  Some of those account balances should be discounted heavily (or the other accounts grossed-up) when attempting to weigh them. 

We all seem to have agreed not to ever do any such math, which strikes me as illogical. 

I don't think we've agreed not to do the math.  I think the math is highly individual, based on other factors (will you have a pension) that change the calculation enormously.  So it's left for the reader to do as an exercise.

I've done the math for us.  Looks like traditional won't be a tax bomb, because we won't get a pension, and because we are planning to RE, giving lots of time for Roth conversions. We're currently at 35% Roth to 65% traditional, and all bonds are in traditional (reducing growth there, relative to the Roths). Converting/withdrawing 4% of the entire total is equivalent to 6% of the traditional balances, so should at least contain that side's growth, if not actually shift the balance to Roth over time (reducing future RMDs). So we can keep the ordinary income managed, also keeping taxable SS managed. Possibly near zero federal tax.

So, for us, traditional doesn't need to be discounted.

[Rukh O'Rorke]

Feb 14, 2020 20:05:44 GMT -5 minnesotapaintlady said:

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.      
    

Says the high income guy with no kids....

Thanks for this pithy statement.

[Deleted]

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.

Last week I went over the latest financial projections with my advisor and the Monte Carlo Simulation guru. I laughed when he told me my bottom line (which I already knew, of course). It's absurdly high and it's $800K over where it was when I retired in 2014.

But- I try to stay humble. If, for example, I exclude the chunks I took out and invested after 2 house sales (mine in NJ after we moved to a LCOL area and didn't need most of the equity, and DH's, which sold a year later) and accumulate that at 6%, it's about half my current assets. Selling when the market is good is luck, or the grace of God or both. So is staying healthy (to some extent) and having marketable skills.

I know people can squander large amounts- my Ex was penniless a few years after getting $100K out of the divorce while I put mine down on a house that I later sold at a $200K profit- but it's not just what YOU do.

[tskeeter]

Feb 14, 2020 10:11:39 GMT -5 Rukh O'Rorke said:

Feb 14, 2020 8:44:59 GMT -5 buystoys said:

Yay!  Doesn't it feel grand?

Yeppers!

And looks like it will last for a bit. No sudden downturn as yet

Although - in some ways it's making things a little more difficult on the day to day, ironically. Gotta keep my eye on the prize and head in the game - BS at work is really wearing me down. I can't walk away yet - I live in a HCOL area and this money would evaporate quickly if I stopped bringing home the roasted eggplant strips on the regular. I wish a million meant the same thing as a million when I was a kid!! 

But the fantasy of walking away from everything - at a languid, measured pace in slow motion with the big explosion behind me - is sooooo tempting. But I got to hit the 2 million mark with paid off house/paid off student loans to be really secure/maintain current life. That seems like a very long way off and I honestly don't think I'll make it. We'll see how long I last!

I know I have options at this level of savings, and I'm very grateful about that! I think the nomad in a camper van life is at least secured right now - but it would be a stretch - honestly. I'm 6.8 years away from earliest social security and almost 10 years out from medicare. The vast majority of my investments are in protected retirement vehicles. Although I can access current employers plan if I separate - rule of 55 - there is only 30-odd k in there.  Still got the rocking horse winner whispering in my ear "there must be more money! there must be more money!" 

Thankfully - the market is still kicking in today. And I still have the steady paycheck and benefits. 

Gotta keep moving!

Actually, two million is reasonably close.  Remember your rule of 72.  At 12%, an amount doubles in six years.  With no additional contributions.  Continue your current contributions, and reduce the growth rate projection to about 10% and I ballpark that you’d reach two mill in a bit over five years.  Unless the market tanks badly.

[tskeeter]

Feb 14, 2020 10:18:51 GMT -5 Rukh O'Rorke said:

Feb 13, 2020 19:36:50 GMT -5 @logicnow said:

But in some ways it is.  $1 Million in 401K can indefinitely withdraw ~12,200/yr tax free.

Wiki says the poverty threshold for a single person was $11,700 in 2005.  

So it is a lot, as anyone with $1M is indefinitely no longer at risk of having to live in poverty. 


Add SS (which wouldn't be taxable at this level), assume that is the average $1,500/mo, so that would be a retirement income of $30K to any age.  

If you are a couple, that all gets double to $60K/yr income.  That is $75K pre-retirement, median household income in this country.  Since you only need 80% for retirement (remember that $75K had taxes, including SS/Medicare that you no longer have to pay), and guess what, you just succeed at using the 401K, as planned, to create a tax free retirement at the same quality of life from your working years ($60K/yr, inflation adjusted).  Because honestly, saving that $1M over a 40 year career isn't hard on a $75K income (only $550/mo @ at 6% return, which is a 9% market minus 3% inflation), or 8.8% of your income including company match, which most plans are 6% individual contribution to get a 3% company match.  

Seems 401K's were designed correctly and are a HUGE tax benefit.  The math shows how horrible everyone is at just doing the simplest of savings and that you just have to do it for your career.

roughly 15% of my liquid assets are in Roth, maybe 1% in HSAs.

Most is in 401ks but I am not too worried about that - as long as I don't have to withdraw in a penalty+taxes situation. As you state, there is a measure of control you can exert on how much to take out at any given time and what the tax consequences may be.

I'll anticipate some taxes, but hoping to keep it at a minimum and transfer some at very low tax rates into taxable account as I go along. All depends on other income if I semi-retire and what yearly expenses may be. But all bridges I am unfortunately not yet ready to cross.  

You might consider pushing even more of your portfolio into a Roth, if you can.  You are probably using retirement contributions to reduce your tax rate.  As a result, you may find the same thing that we did.  When we retired, federal income taxes increased from about 15% to about 22%.  And it will get worse when we have to take RMD’s.  Not only will we be paying higher income tax rates, but we will be paying income taxes on nearly all of our SS, and high income surcharges on our Medicare benefits.

[tskeeter]

Feb 14, 2020 20:05:44 GMT -5 minnesotapaintlady said:

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.      
    

Says the high income guy with no kids....

The no kids part is really true.  I estimated what would happen if you took the roughly $225K that the USDA says it costs to raise a child and converted the cost of two kids into investment in a retirement account.  If you saved for retirement instead of raising kids, by the time the second kid would graduate college, the retirement account would be worth about $5 million.  And you’d be about 50 years old.  With the opportunity to continue your retirement savings for another 10 or 15 years.

Making the decision to raise a family has an incredible impact on your personal finances.  

Signed
A DINK living in an altered financial reality

[Deleted]

Feb 14, 2020 23:59:16 GMT -5 Rukh O'Rorke said:

Feb 14, 2020 20:05:44 GMT -5 minnesotapaintlady said:

Says the high income guy with no kids....

Thanks for this pithy statement.

Ok, first I said I wasn't very grounded.  Second, while I understand the in-ability to reach the million dollar mark, I don't understand the save nothing. So because you can only save $100/mo instead of $500/mo you decide to just "enjoy" the $100/mo on stupid stuff then complain when you live life broke, when you would end up with $50k, $100K, $200K in your 40s, 50s, 60s respectively.  

Ironically, savings becomes addictive, once you learn the delayed gratification and just how much of that "stuff" is a waste of money you tend to focus on the items that matter more (time spend doing something versus the next latest gadget).

[Deleted]

Feb 15, 2020 8:11:43 GMT -5 @athena53 said:

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

 but it's not just what YOU do.

One exception to this that I tell young people curious about the "best" investment (stocks, real estate, bit coin).  I tell then that while lots of items are out of your control, there is one guarantee  --> If you do NOTHING, you will have nothing 20-30-40 years later.  The one common item I see in my peer group is everyone that did SOMETHING, while all different, all achieved some level of success toward the goal.  

[Gardening Grandma]

Feb 14, 2020 20:05:44 GMT -5 minnesotapaintlady said:

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.      
    

Says the high income guy with no kids....

Indeed.  I was a single parent of two during most of my working years.  I did save the max I could.  But, even now, many years later DH's IRA is twice that of mine.  He was married to a high earner and had no kids.

Sure it's easy - for some...

[Works4me]

Feb 15, 2020 13:18:36 GMT -5 @logicnow said:

Ok, first I said I wasn't very grounded.  Second, while I understand the in-ability to reach the million dollar mark, I don't understand the save nothing. So because you can only save $100/mo instead of $500/mo you decide to just "enjoy" the $100/mo on stupid stuff then complain when you live life broke, when you would end up with $50k, $100K, $200K in your 40s, 50s, 60s respectively.  

Ironically, savings becomes addictive, once you learn the delayed gratification and just how much of that "stuff" is a waste of money you tend to focus on the items that matter more (time spend doing something versus the next latest gadget).

Yeah, all that useless stuff like a roof overhead, food to eat, clothes and shoes to wear...

[tskeeter]

Feb 15, 2020 15:45:16 GMT -5 Gardening Grandma said:

Feb 14, 2020 20:05:44 GMT -5 minnesotapaintlady said:

Says the high income guy with no kids....

Indeed.  I was a single parent of two during most of my working years.  I did save the max I could.  But, even now, many years later DH's IRA is twice that of mine.  He was married to a high earner and had no kids.

Sure it's easy - for some...

Yes, it was easier for some of us.  Because, at least in our case, we made a conscious decision not to raise a family.  

For the majority of people, their lives are largely the product of the decisions they made.  There is a long, long string of decisions that we have the opportunity to make that can make our lives easier or more difficult.  To graduate high school, to go to college, to select a field of study that will provide a good income, to borrow for a college education or to find other ways to finance a college education, to choose an employer who will provide relatively stable employment with opportunities to advance, to select a spouse whose values contribute to life success, to raise a family, to plan and prepare for our future, to manage our risk factors effectively, etc.

[MN-Investor]

Feb 15, 2020 18:41:08 GMT -5 tskeeter said:

For the majority of people, their lives are largely the product of the decisions they made.  There is a long, long string of decisions that we have the opportunity to make that can make our lives easier or more difficult.  To graduate high school, to go to college, to select a field of study that will provide a good income, to choose an employer who will provide relatively stable employment with opportunities to advance, to select a spouse whose values contribute to life success, to raise a family, to plan and prepare for our future, to manage our risk factors effectively, etc.

Unfortunately, our lives are also a product of circumstances beyond our control. The chronic disease which prevents you from holding a full time job, an autistic child for whom you will always be responsible, a wonderful spouse who turns out to be not-so-wonderful, your wonderful job in Smalltown USA which goes away when the plant closes and there are very few other jobs in that area, etc.

Basically, unless you know all of the circumstances of a person's financial life, don't make a judgement. It's easy, for example, to tell a young unmarried mother to move from a small town where the jobs are limited to a large city, but that may ignore the fact that she has financial support and free child care from relatives in that small town with little big city prospects if she only has a high school education.

[djAdvocate]

Feb 13, 2020 11:30:55 GMT -5 Rukh O'Rorke said:

Rukh O'Rorke net worth as of today!


$1,003,215.60

the first million is always the hardest.

unless you are Trump.

[countrygirl2]

You might consider pushing even more of your portfolio into a Roth, if you can. You are probably using retirement contributions to reduce your tax rate. As a result, you may find the same thing that we did. When we retired, federal income taxes increased from about 15% to about 22%. And it will get worse when we have to take RMD’s. Not only will we be paying higher income tax rates, but we will be paying income taxes on nearly all of our SS, and high income surcharges on our Medicare benefits.


Yep, that is happening to us. That's why I told hubs we need to watch exactly what point to cut off, if we earn to much with increased surcharges and taxes not really worth it.  We took $35k out of a 401k this year because the income was down with spending on the rent house, hoping it doesn't bite to hard, but likely our last chance. Actually we took out $35k and paid $3500 in federal taxes.  Hubs is going to need a vehicle in the next few years, putting it in savings until he does.  He is wanting to drive his long as he can. 150k and still running great, but we wanted to have the money for one. I had to buy one, son paid me enough for my truck to cover my car so even.  

Ours is in pretty safe stuff but if the market totally tanked would hurt us too.

[countrygirl2]

I can tell you, you are likely to spend even more in retirement then when working, as you have all day to do so.  Ask us how we know, LOL!

[Rukh O'Rorke]

Feb 15, 2020 13:18:36 GMT -5 @logicnow said:

Feb 14, 2020 23:59:16 GMT -5 Rukh O'Rorke said:

Thanks for this pithy statement.

Ok, first I said I wasn't very grounded.  Second, while I understand the in-ability to reach the million dollar mark, I don't understand the save nothing. So because you can only save $100/mo instead of $500/mo you decide to just "enjoy" the $100/mo on stupid stuff then complain when you live life broke, when you would end up with $50k, $100K, $200K in your 40s, 50s, 60s respectively.  

Ironically, savings becomes addictive, once you learn the delayed gratification and just how much of that "stuff" is a waste of money you tend to focus on the items that matter more (time spend doing something versus the next latest gadget).

Who are you lecturing?

[justme]

Feb 15, 2020 13:18:36 GMT -5 @logicnow said:

Feb 14, 2020 23:59:16 GMT -5 Rukh O'Rorke said:

Thanks for this pithy statement.

Ok, first I said I wasn't very grounded.  Second, while I understand the in-ability to reach the million dollar mark, I don't understand the save nothing. So because you can only save $100/mo instead of $500/mo you decide to just "enjoy" the $100/mo on stupid stuff then complain when you live life broke, when you would end up with $50k, $100K, $200K in your 40s, 50s, 60s respectively.  

Ironically, savings becomes addictive, once you learn the delayed gratification and just how much of that "stuff" is a waste of money you tend to focus on the items that matter more (time spend doing something versus the next latest gadget).

It's addictive to you. And I say that as a saver. I don't know if I'd say it's addictive to me, I just have a strong overriding logical side that realizes spending all my money is bad and can realistically plan for long term goals.

I am lucky enough to have a job that pays decent in a not so expensive city that allows me to save a bit. My 401k savings is more than double what it was 10 years ago, but I don't know if it would be that much if I wasn't meeting all my basic needs from the start.

Hell I'm paying more for my mortgage to live downtown than I would elsewhere. My friend lives 30 mins from here in a bigger spot and actually paid off his mortgage over a year ago. I'd probably be paying at least 300 less a month if I was ok living 20 minutes from here (fuck that shit).




Now that I've said that....





Yay Rukh hitting $1 million!!!! I hit 100k a few months ago and it was crazy to start to see how the money was growing faster than my contributions. I can't imagining how that would be with $1 million - but I very much hope to follow in your footsteps at some point!

[Rukh O'Rorke]

Feb 16, 2020 1:18:07 GMT -5 justme said:

Feb 15, 2020 13:18:36 GMT -5 @logicnow said:

Ok, first I said I wasn't very grounded.  Second, while I understand the in-ability to reach the million dollar mark, I don't understand the save nothing. So because you can only save $100/mo instead of $500/mo you decide to just "enjoy" the $100/mo on stupid stuff then complain when you live life broke, when you would end up with $50k, $100K, $200K in your 40s, 50s, 60s respectively.  

Ironically, savings becomes addictive, once you learn the delayed gratification and just how much of that "stuff" is a waste of money you tend to focus on the items that matter more (time spend doing something versus the next latest gadget).

It's addictive to you. And I say that as a saver. I don't know if I'd say it's addictive to me, I just have a strong overriding logical side that realizes spending all my money is bad and can realistically plan for long term goals.

I am lucky enough to have a job that pays decent in a not so expensive city that allows me to save a bit. My 401k savings is more than double what it was 10 years ago, but I don't know if it would be that much if I wasn't meeting all my basic needs from the start.

Hell I'm paying more for my mortgage to live downtown than I would elsewhere. My friend lives 30 mins from here in a bigger spot and actually paid off his mortgage over a year ago. I'd probably be paying at least 300 less a month if I was ok living 20 minutes from here (fuck that shit).




Now that I've said that....





Yay Rukh hitting $1 million!!!! I hit 100k a few months ago and it was crazy to start to see how the money was growing faster than my contributions. I can't imagining how that would be with $1 million - but I very much hope to follow in your footsteps at some point!

Thanks justme!

Im sure you’ll outpace me soon enough!!

I’ve really been a late bloomer here. Didn’t start saving till I was 34ish.

Now im in a great position. large kitty, high salary, in 10 years I could be rich!!

But too tired, I won’t make it to 10 years-which would be 65 for me. I’m looking for the earliest workable exit.

[jerseygirl]

Good for you starting to save at 34!
We were busy paying for private high school and college for our kids then. Didn’t really start until 55, then packed it in. I also worked for a small biotech and got options plus bought shares at about $4. The options were underwater for 5 years. Got 2 orphan drugs approved and company was bought out by an Irish pharma. Shares were bought at $48 and I made almost $1 million!!!
I worked for 2 pharma companies that were bought by Irish companies. The tax rate for US companies around 35% and in Ireland about 15%, the difference pays for research.
Hopefully with Trump reducing corporate taxes more small biotechs will stay in US. Sad to see breakup of highly functioning successful US teams who bring unique drugs that really make a difference in people’s lives,

[hoops902]

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

Feb 14, 2020 17:17:14 GMT -5 hoops902 said:

You have to do it for your career, but the average person isn't waking up on Day 1 of a 40 year career making $75k.  You're also talking about HAVING $1M in TODAY'S DOLLARS...which means STARTING 40 years ago when the median household income was less than $20,000/year.  It's a lot different putting away $6600/year on $75k than having to put away $6600/year making $20k in 1980 in order to get started for 40 years of contributing (and we all know those early years are the most important to compounding)

Sorry, I'm going to disagree, I corrected for inflation in my example. So saving 6% of your salary would get you to the million mark in today's dollars no matter what year you started.  Obviously if you started 60 years ago, you wouldn't hit the # on statements, but you would have the same buying power in 2000 that $1 Million gives you today in 2020.

(only $550/mo @ at 6% return, which is a 9% market minus 3% inflation)

The S&P 500 has returned an average return just as I state, look various 40 year period on this site and you will see I was very reasonable (https://dqydj.com/sp-500-return-calculator/).  The 6% return adjusted for inflation is achievable.

but the average person isn't waking up on Day 1 of a 40 year career making $75k.

STEM majors do, that is what I pay to recruit them.  That is what I made my first job out of college when adjusted for inflation. Even if you don't, most households would if both people making ~$30K saved prior to marriage and salary growth, thus making it even worse that more households don't achieve this milestone.


Finally, I did it in ~20 years with a ~20% savings rate (3% was always from my company).
    Year 1:  0% (locked out of plan)
    Year 2:  18%
    Year 3-7:  16%
    Years 7-now:  25% then a linear fall to 12% (yeah high income but those hard dollar limits suck)

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.      
    

This can't be true...by definition the AVERAGE person, or even the average household, can't wake up on Day 1 of their career making MORE than the MEDIAN household income.  It may not be HARD to do for any individual, but the average person isn't doing it, nor could they.  

[Deleted]

Feb 14, 2020 18:31:56 GMT -5 @logicnow said:

STEM majors do, that is what I pay to recruit them.  That is what I made my first job out of college when adjusted for inflation. Even if you don't, most households would if both people making ~$30K saved prior to marriage and salary growth, thus making it even worse that more households don't achieve this milestone.


Finally, I did it in ~20 years with a ~20% savings rate (3% was always from my company).
    Year 1:  0% (locked out of plan)
    Year 2:  18%
    Year 3-7:  16%
    Years 7-now:  25% then a linear fall to 12% (yeah high income but those hard dollar limits suck)

I'm not very grounded as I'm astounded more people aren't wealthy as it really has been easy.      
    

I'm a STEM major!  I'm not even close to 75K yet and probably will never hit it before I retire.  My Ex is making about that as a math major working IT for a large company, but he's been there 24 years.  But, your percentages reminded me that I've been tracking that.  I didn't work 2003 through most of 2005 and don't know how much I put into retirement each year before then, just that I had 80K in my IRAs in 2004. 

So, obviously I know how to save and I've been doing it my entire working life, but it's been very HARD, especially with kids and college funds.  I'm nowhere near 1 million in retirement accounts.

[thyme4change]

Feb 16, 2020 18:18:27 GMT -5 jerseygirl said:

Good for you starting to save at 34!
We were busy paying for private high school and college for our kids then. Didn’t really start until 55, then packed it in. I also worked for a small biotech and got options plus bought shares at about $4. The options were underwater for 5 years. Got 2 orphan drugs approved and company was bought out by an Irish pharma. Shares were bought at $48 and I made almost $1 million!!!
I worked for 2 pharma companies that were bought by Irish companies. The tax rate for US companies around 35% and in Ireland about 15%, the difference pays for research.
Hopefully with Trump reducing corporate taxes more small biotechs will stay in US. Sad to see breakup of highly functioning successful US teams who bring unique drugs that really make a difference in people’s lives,

I didn't even have babies until I was 34. I saved a bunch before having babies, and let that money work for me while I was busy paying for all that kid shit. Time is a friend when saving. That is why large student debts are so dangerous.

Luckily, I am old enough that state schools were heavily subsidized when I went to school, so with no discussion and no stigma, I got a good education for not too much money, and the state and feds have gotten payback on that, as I got a good job and pay all my taxes.

[phil5185]

"""This can't be true...by definition the AVERAGE person, or even the average household, can't wake up on Day 1 of their career making MORE than the MEDIAN household income. It may not be HARD to do for any individual, but the average person isn't doing it, nor could they.

I'm a STEM major! I'm not even close to 75K yet""

It is true.  My grandson is a senior in engineering, that's what he was offered - plus a sign-on bonus plus moving expenses. He starts in June.

[Deleted]

Feb 17, 2020 11:37:30 GMT -5 phil5185 said:

"""This can't be true...by definition the AVERAGE person, or even the average household, can't wake up on Day 1 of their career making MORE than the MEDIAN household income. It may not be HARD to do for any individual, but the average person isn't doing it, nor could they.

I'm a STEM major! I'm not even close to 75K yet""

It is true.  My grandson is a senior in engineering, that's what he was offered - plus a sign-on bonus plus moving expenses. He starts in June.

That still doesn't make it the AVERAGE.

We just visited the college of science and engineering at U of Minnesota on Friday and even they're not saying that in their marketing brochures.  They have the average at 60K which means a lot are less than that.  Yeah, you have people starting there, but don't make it sound like that's the average. 

[hoops902]

Feb 17, 2020 11:37:30 GMT -5 phil5185 said:

"""This can't be true...by definition the AVERAGE person, or even the average household, can't wake up on Day 1 of their career making MORE than the MEDIAN household income. It may not be HARD to do for any individual, but the average person isn't doing it, nor could they.

I'm a STEM major! I'm not even close to 75K yet""

It is true.  My grandson is a senior in engineering, that's what he was offered - plus a sign-on bonus plus moving expenses. He starts in June.

It's not true, by definition that means he makes above average.  The fact that SOMEONE does it, or even a lot of people do it, does not make it "average".  I'm not arguing that nobody can do it, I'm arguing that the classification of this as something the "average" person can do is false...because the premise is that the average person simply makes 75k/year....which they don't.

This logic is essentially that the average person makes significantly more than the average person.  Or substitute "household" for "person" if you like.  

[phil5185]

"" because the premise is that the average person simply makes 75k/year....which they don't."""

logicnow  stated STEM majors, not average persons.

[tskeeter]

Feb 16, 2020 12:52:36 GMT -5 Rukh O'Rorke said:

Feb 16, 2020 1:18:07 GMT -5 justme said:

It's addictive to you. And I say that as a saver. I don't know if I'd say it's addictive to me, I just have a strong overriding logical side that realizes spending all my money is bad and can realistically plan for long term goals.

I am lucky enough to have a job that pays decent in a not so expensive city that allows me to save a bit. My 401k savings is more than double what it was 10 years ago, but I don't know if it would be that much if I wasn't meeting all my basic needs from the start.

Hell I'm paying more for my mortgage to live downtown than I would elsewhere. My friend lives 30 mins from here in a bigger spot and actually paid off his mortgage over a year ago. I'd probably be paying at least 300 less a month if I was ok living 20 minutes from here (fuck that shit).




Now that I've said that....





Yay Rukh hitting $1 million!!!! I hit 100k a few months ago and it was crazy to start to see how the money was growing faster than my contributions. I can't imagining how that would be with $1 million - but I very much hope to follow in your footsteps at some point!

Thanks justme!

Im sure you’ll outpace me soon enough!!

I’ve really been a late bloomer here. Didn’t start saving till I was 34ish.

Now im in a great position. large kitty, high salary, in 10 years I could be rich!!

But too tired, I won’t make it to 10 years-which would be 65 for me. I’m looking for the earliest workable exit.

Rukh, I came to the same conclusion about the time I was 40.  After another in a years long series of 70 - 90 hour work weeks, I realized that I wasn’t going to be able to work like that forever.  That’s when I started to develop a strategy to be able to exit the workforce at 55.

These days, with shrinking staff sizes and ever increasing employer demands, how many of us will have the stamina to work demanding jobs until full retirement age?  Especially in light of the likelihood that full retirement age will increase in order to stabilize Social Security.

Another factor is the propensity of businesses to push older, higher salary employees out the door.  Once you reach 50, the risk that you’ll find yourself on an “early retirement” list increases dramatically.  It’s nice to be in a position where you can take a less demanding job that pays less, or even retire.  I was glad to have options when my boss was forced out and my new boss expected me to do five days worth of work, much of which I had never done before, in 24 hours.