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The modern rule of thumb, given lower expectations for growth baked into the market, is you need 15 times your gross pay.
Fifteen times.
Start saving now.
Most people will never save that much. People are surviving without saving that much. Many people just live off of social security. Some move in with their kids. Some rent a room out in their home.
It really depends on perspective. What interest rate can you get on a million? Let's say you only get 2%. That means someone could earn 20,000 a year off the interest. There are plenty of people out there living off of 20,000 or less right now, you just have to lower your expenses by the time you retire.
You take 20,000 a year in interest plus the average social security payment of 1,294 a month. That is 35, 528 a year and many people live on that or less. Now, lets says you have paid your home off. Then you can easily live off that amount. There are many single people in this country that live off this amount and they still have to pay rent or mortgage.
2% interest and 2.5% inflation ----> NEGATIVE 0.5 % real interest!!!
2% interest and 2.5% inflation ----> NEGATIVE 0.5 % real interest!!!
The inflation garbage only applies if a person keeps the same bills. Many people do major cuts in their budgets.
Regardless of inflation their still getting 20,000 a year that can go towards bills. What many people do is lower the amount of bills they have. The person getting 20,000 a year in interest would be better off than the person just getting social security.
I know what you are saying, but almost no one is saving a million. Many people just live off their social security, they have found a way to do it regardless of inflation.
I'm not sure young people have the luxury of being able to rely on social security in 30 years.
That money is going toward student loans for many young people. In some cases more than that actually.
If we can't rely on social security then there are going to be millions of homeless people. People will work until they physically or mentally can't do it, then they will become homeless.
Few people will save enough outside of social security to survive.
The inflation garbage only applies if a person keeps the same bills. Many people do major cuts in their budgets.
Regardless of inflation their still getting 20,000 a year that can go towards bills. What many people do is lower the amount of bills they have. The person getting 20,000 a year in interest would be better off than the person just getting social security.
I know what you are saying, but almost no one is saving a million. Many people just live off their social security, they have found a way to do it regardless of inflation.
This is true. People simply don't need as much money as they think they need.
This is true. People simply don't need as much money as they think they need.
Many people find out what really makes them happy by this age. Most don't need to live in luxury to be happy. Maybe a good book from the library, talking with friends and family and a cup of coffee are all that's needed to make many people happy.
My paycheck is $1180. How am I supposed to save $880 a month?
Of course, your paycheck is a function of your W4, so you control the size of your paycheck. My point is, your paycheck isn't enough information.
Let's do this at a gross level.
What is your gross compensation, your state tax rate, dollar value of deductions.
Then, let's work on your "fixed" costs. What is your monthly mortgage (or rent)? Other "fixed" payments such as car payments, child support, medical & dental, etc?
What is your annual bill for utilities, property taxes, etc?
How much do you spend on food? gasoline? entertainment?
Cable bill? phone bill? etc?
Give us a broad picture & perhaps we can help you save more money.
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