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Old 02-01-2016, 05:00 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,923,045 times
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Quote:
Originally Posted by mathjak107 View Post
with dividends at 2% and dividends typically representing 1/3 of the s&p's gains...
Dividends seem to be closer to 50% than 33 1/3%:

Show Me the Money: Why Dividends Matter - Bloomberg Business

Which would alter some of your calculations quite a bit.

I really think most seniors would take those old 5% passbook savings rates these days as opposed to current alternatives. Robyn
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Old 02-01-2016, 05:09 PM
 
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perhaps but don't forget growth has been stagnant the last 16 of the 25 years so dividends account for 46% but going back farther they averaged about 1/3 .

we expect sluggish growth the next few years but after that no one knows . there is always stuff not even on the radar that makes what we all think a given , change course so growth may actually revert back to the mean again and be not to shabby. but i still think it is prudent to plan around 3-4% for a balanced portfolio and at the worst be pleasantly surprised if things normalize back . .

5% passbook accounts though failed to keep up with inflation and taxes . inflation and rates tend to follow each other . cd's have had negative real returns 1/3 of the time the last 45 years and 50% of the time when inflation and taxes were figured . so over long periods of time they generally will not cut it for anyone who needs a draw rate over 2% . sure 5% looks great today but that is only because inflation is so low .

Last edited by mathjak107; 02-01-2016 at 05:26 PM..
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Old 02-02-2016, 03:46 AM
 
6,353 posts, read 5,156,240 times
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Quote:
Originally Posted by golfingduo View Post
You prove my point. The top third make decent income. The rest still struggle day to day. They will never be able to make that lofty goal of 1 million.

Let's understand all going on here. This site is colored by the group experience. Most of us here and I am included in this have decent income and are contemplating what retirement should look like for themselves. By most I mean at least 50%. A great many come here for answers on how to make it on less than 3k a month income in retirement. You can scan the threads here. How many in the last 4 days have been started with SS as a base?

The point here is the vast majority will not make that. There are too many variables. Too many twists and turns with pits and vipers along the way. A good many people make it though. Enough to make it seem like the American Dream is alive and well. I am sorry to say that it isn't as rosey as that. There are a lot of people just struggling.
I know - we can't all be in the top third. But any given individual, unless they are physically or mentally handicapped or has a truly rotten streak of luck, has a very good shot at making it into the top third - if they try. There are educational, work, and family choices that point that direction. Get married; stay married; learn a set of useful skills; have both spouses in the work force until you can afford to have only one; buy a below average priced house in an above average neighborhood (for the schools); you know the rest. It doesn't work for everyone, but I am talking about getting into the *top third*, not the top 1% or 10% or even 25%.
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Old 02-02-2016, 07:50 AM
 
29,772 posts, read 34,856,103 times
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Quote:
Originally Posted by Larry Siegel View Post
I know - we can't all be in the top third. But any given individual, unless they are physically or mentally handicapped or has a truly rotten streak of luck, has a very good shot at making it into the top third - if they try. There are educational, work, and family choices that point that direction. Get married; stay married; learn a set of useful skills; have both spouses in the work force until you can afford to have only one; buy a below average priced house in an above average neighborhood (for the schools); you know the rest. It doesn't work for everyone, but I am talking about getting into the *top third*, not the top 1% or 10% or even 25%.
You offer some good advice. If followed it is hard not to make it into the top third if you factor in the geography of where to work.
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Old 02-02-2016, 10:24 AM
 
12,825 posts, read 20,132,535 times
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Quote:
Originally Posted by Giesela View Post
I have tried this several times and for some of us middle (I guess) income types there are no tax loopholes or help. I have paid full taxes, no write offs or loopholes most of my life. I never meet the deductible. A lot of that is being single, no kids. We singles underwrite a lot for everybody else's married with kids lives* which would be somewhat fine if it were at least recognized but no no, everyone will argue its not true. And as Ohio peasant said - people can be quite vicious about your single status. I've had it happen more than once.

I'm not sure the origin of the 1,000,000 but I know its been out there awhile. Honestly I would feel more comfortable with 3,000,000 retiring at 60 today. I think the Suzy Orman's of the world haven't changed the number because (1) it's not as catchy and (2) people are going to just give up.

I myself won't get to a million. I'm losing the money I have saved in this market and am wondering what to do. This is very bad timing.

I think for a lot of us tail end baby boomers and younger we got caught right in the crack between the assumption that everyone would have a good pension and the rush to 401k/savings/being without a pension. Growing up pensions were it and I didn't consider it would be different for me for a long time. I started hearing about pension funds and 401ks at some point in my.....30s? but they seemed very exotic and complicated.

People in say, their 40s, 30s now know much more about funding their own retirement. 2 and 3 stripe Airman at work have it al figured out.

*
The High Price of Being Single in America - The Atlantic
Late / Disco Boom and younger got caught in the gap you mentioned plus as noted by Serious Conversation the post 1987 rebound / runup until the crash of 00 was the place to be market wise, whereas, since then, while there has been a rise, it has not been a 4 - 5X rise. Similar comments vis a vis real estate - the rise from the late 70s into the 00s was way more than any rise since then.
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Old 02-02-2016, 02:01 PM
 
13,879 posts, read 7,391,112 times
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Quote:
Originally Posted by Larry Siegel View Post
I know - we can't all be in the top third. But any given individual, unless they are physically or mentally handicapped or has a truly rotten streak of luck, has a very good shot at making it into the top third - if they try. There are educational, work, and family choices that point that direction. Get married; stay married; learn a set of useful skills; have both spouses in the work force until you can afford to have only one; buy a below average priced house in an above average neighborhood (for the schools); you know the rest. It doesn't work for everyone, but I am talking about getting into the *top third*, not the top 1% or 10% or even 25%.
The top-20% is $111K household income.

A lot of us got the memo and paid attention to it: Get your education, establish your career, pick a like-minded spouse and get yourself into a stable marriage, then think about reproducing.

There's no reason why a dual income couple that follows these steps can't make the top third. That doesn't require professional jobs or management track jobs. That's plumber, electrician, HVAC, elementary school teacher.

Forest Gump and Mrs Forest Gump bagging groceries for minimum wage are never going to get there. Few single mothers have much of a shot. There is an enormous penalty for screwing off in K-12 and an even bigger penalty for having children with an irresponsible bum.
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Old 02-02-2016, 04:07 PM
 
1,294 posts, read 1,416,069 times
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Quote:
Originally Posted by Robyn55 View Post
Keeping in mind that my husband and I and my parents did exactly what you're planing to do - I would be VERY careful. My parents went into their retirement with a lot of inflation and a lousy investment environment in about 1970 or so. My husband and I - 20 years later - were dealing with a disinflationary environment and much better investment returns.

It's like in Forrest Gump - Life Is Like A Box of Chocolates:

The wildcard for people in their 40s these days IMO is especially health care costs. Medicare costs - although far from cheap - are more predictable than Obamacare costs - or any medical system that might come after Obamacare. Robyn.

Everything you mentioned are things everyone should plan for whether retiring early or not. Without getting into too many details; my retirement income will be from sources that are a lot more predictable then mutual funds. I also based my retirement on getting much worse returns then the average. For example, I currently have an investment that will eventually account for 40% of my retirement income. To be safe I assumed that this investment will underperform for life after I retire and only give me 75% of what my average rate of return has been. This way I'm already prepared for bad returns and won't have to worry about it.

In regards to health insurance my job offers a $700/month (inflation adjusted) stipend for health insurance until I qualify for Medicare. That amount alone will let me purchase a good insurance plan for me and my wife. So if I retire at 45, I'm guaranteed to get that for 20 years. This will make sure I don't have any hardships regarding health insurance costs. Retiring in your 40's is not a decision that you make on a whim. Like you said, it should be done with careful consideration. I meticulously planned for every factor for my retirement because I definitely don't plan on ever working after I retire.
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Old 02-02-2016, 11:42 PM
 
6,353 posts, read 5,156,240 times
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Quote:
Originally Posted by TuborgP View Post
You offer some good advice. If followed it is hard not to make it into the top third if you factor in the geography of where to work.
Agreed; good point. If you are one of the best in your field, go where the competition is (New York for finance, LA for entertainment, SF for tech, etc.); if you are not one of the best, go where the competition *isn't*. And if you're not getting by, consider it a market signal that you're in the wrong line of work.
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Old 02-03-2016, 07:45 AM
 
7,899 posts, read 5,031,079 times
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Quote:
Originally Posted by golfingduo View Post
Robyn awesome links. The information there puts some of what we are experiencing today into perspective. ...
In desperate defense of the big-picture acceptability of the 1966-1982 morass, the second article cited in Robyn's post mentions this: "Most likely, the amount you save will have a far greater impact on your ending portfolio balance than a few extra basis points of investment performance". This is absolutely horrible financial advice!

The whole point of long-term investment is compound interest, where we gain returns atop of returns atop of returns, so that some decades after we start, our portfolios become self-sustaining; they grow annually by a much greater amount than we could possibly earn (or save) as employees, even if we are "highly compensated" employees. In other words, the objective of investment is to become a "capitalist", where one gets more money not from labor, but for the mere privilege of already having money. Then, retirement becomes a choice. If one enjoys one's job, if it's an amusing social-outlet, a chance to meet interesting people, to go on business-travel to fascinating places, then one keeps working. Otherwise one retires, because from a financial point of view, the salary itself becomes inconsequential.

This is all contingent upon (1) starting early in life, in a lucrative profession, (2) fanatical savings over the course of many decades, and (3) success as an investor. It's that third item that went totally wrong in the 1970s, and threatens to do so again.


Quote:
Originally Posted by mathjak107 View Post
perhaps but don't forget growth has been stagnant the last 16 of the 25 years...

we expect sluggish growth the next few years but after that no one knows . ...
We've been hearing about expectations of "sluggish growth" more or less relentlessly since 1999. Why? What has fundamentally gone wrong... in the US, in Europe, in Japan, and for that matter, pretty much everywhere?
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Old 02-03-2016, 08:03 AM
 
Location: Wisconsin
17,018 posts, read 17,335,191 times
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Quote:
Originally Posted by DelightfulNYC View Post
A million per couple is hard if you have a stay at home wife.

But once you hit 50 your can put 24k a year in your 401K and employers can match up to 16k.

If you do all equities and have an employer giving you the 16K match and work till 67 you can most likely get to one million even starting at 50 if you have a strong bull market.
Wow, when my husband and I were 50 we had one child who had just started college and a second child a few years away from college. We certainly did not have any extra money to save for retirement at that time (and we also did not have any "employer matches" to make it easier).


Of course, your kids may already have graduated from college by the time that you hit 50.
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