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Old 01-12-2017, 05:41 PM
 
Location: SoCal
13,294 posts, read 6,369,679 times
Reputation: 9932

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It depends how thrifty and frugal the person is.
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Old 01-12-2017, 05:55 PM
 
4,005 posts, read 3,229,616 times
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Quote:
Originally Posted by bpollen View Post
Most people can't save $100/month in their early twenties. I didn't have $100/mo in expendable income until I was about 30....and I was fairly frugal.

But let's take a look at that $100/month, saved for 35 years (age 30 to 65). Invested in the stock market, a mutual fund:

If you invest $100/month for 35 years, and get 10% pre-retirement interest (a risky %, but let's go with that), compounded monthly, you'll have about $383,000 by age 65. Not nearly enough to retire, unless you are getting your Social Security supplement. With SS and your savings and Medicare, and assuming your house is paid off, you can have a gross income of about $45,000 to age 95. (I assumed a conservative 4% post-retirement interest on savings.)

One should be able to save more than $100/mo in later years, but will likely miss some of the savings in the earlier years (medical bills, kids, catastrophes, life). You can delay retirement, IF you have that choice. That is really up to employers.

But to save $100/month in the young years is impossible for millions. Or if they do, they will never own a home, which is a very important asset to have in one's senior years.

This is why Social Security and Medicare were created. Even with the savings, that senior that worked and saved for decades would have to live in poverty or close to it, depending on any number of variables, including cont'd interest being earned on savings, health problems, house & car repairs, living longer than expected, recessions (or lack of them), if it weren't for Social Security and Medicare.
And thats why millions dont do it. Because they tell themselves that they cant. Cant save $100? Then save $50, $25, whatever they can do. The point is to get started and invest consistently, every single month. You say they would then only have $383,000 to retire on. Not enough to retire on? Theres millions who dont have 1/10th of that and are retired. Millions would be THRILLED to have over a quarter of a million in the bank to retire on.

Its all about attitude. If you say you cant do it, then indeed you cant. If you think you can do it, you will.
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Old 01-12-2017, 06:21 PM
 
33,046 posts, read 22,092,919 times
Reputation: 8970
Quote:
Originally Posted by LHS79 View Post
It ain't rocket science and the book The Millionaire Next Door explains it quite nicely.


I am 55, never made more than $50k/year but have a $1 mil net worth (and my house is paid for).


HOW?


I do the things my dad taught us at a young age:


1. LIVE BELOW YOUR MEANS
2. Never finance a depreciating asset (cars, boats etc..)
3. Save 10% of your income NO MATTER WHAT every year.
4. Never forget #1


What I see at work are lower-paid folks w/ new SUV's, buying lunch every day (not brown bagging), Starbucks every day, latest fancy I-Phone etc.....


And of course the lower-income folks seem to have the most kids- go figure.

I did not notice any <$20k burger flippers in MND.

11 million renters spend at least half their income on shelter - they can't live below their means.
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Old 01-12-2017, 06:25 PM
 
33,046 posts, read 22,092,919 times
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Quote:
Originally Posted by cmarlin20 View Post
A low income person can start by buying a SFR, then graduate up to a duplex, fourplex.

I live in Southern California, I've seen lots of money made in RE. Leverage is great for rentals, in my area there is not shortage of tenants, rents keep increasing. I understand some areas are higher risk, the problem in my area is the high entry fee. I do know people with low income (for So Cal) do enter the market.

If one thinks its not possible, it won't be possible. I see too many people suffering from their own negativity.

Where I live, an annual income of $70,000 is needed to buy a SFR. A low income person is SOL.
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Old 01-12-2017, 06:40 PM
 
Location: S.W. Florida
2,223 posts, read 939,219 times
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My late Father in law never made more than $20.00 an hour during his entire working career,54 of which were with the same company. We were shocked when going through his affairs to find out how much he had accumulated. He was always generous but never foolish with his money. He gave away a lot of money to people in need,even paying funeral expenses for a relative. Because of the wisdom he exhibited during his lifetime,his widow will never have to worry about money.
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Old 01-12-2017, 06:56 PM
 
Location: Los Angeles area
14,018 posts, read 17,759,876 times
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Definitions and relativity

Quote:
Originally Posted by Curious Investor View Post
I read somewhere that about 40% of working Americans make less than $30k a year ($15 an hour.) Most people could not come up with $1000 to cover an emergency. A good percent of Americans are poor.

The result is most Americans live pay check to paycheck and have very little saved for retirement and with the average Social Security check being about $1200, many seniors live their final years in poverty.

Anyone on this board, the exception and even though you were low income most of your life, you still saved a good amount of money for retirement? If so, tell us how.
(Above is the original post of this thread in its entirety).

First, thank you for specifying what you mean when you say "low income". That sure helps the discussion, because when people throw out vague terms like "low income" and "filthy rich" without any definitions, it almost guarantees that we will be talking past each other and having semantic arguments.

I agree that "less than $30k a year" is indeed low income; I don't think any one could argue the contrary. Even so, there is some relativity involved.

One frequent poster here has described living in rural Tennessee, a very low cost of living area. I think even there, $30k a year would be low income. In the major metro areas, especially the coastal ones, that income is what I would call super low income. Some people there survive on it, but it takes some real doing and it's difficult to imagine.

The relative paucity of low income (as reasonably defined by you) posters here means that very few people will be able to answer from their own personal experience, so naturally some posters have given examples of people they know.

For 34 years I worked as a public high school teacher in one of the lowest paying school districts of the greater Los Angeles area. Someone posted about a wealthy school district somewhere in Maryland where the median teacher's salary was close to $100k, which seems astronomical to me. When I retired eleven years ago my final salary was $59k and change. Even in many neighboring school districts teachers made $10k to $20k more. So when we say "teacher" there is enormous variability. I considered myself low income, but not poverty income. I have a number of cousins who are/were lawyers, college professors, and upper management, so I was the "poor relation".

But I had no particular trouble saving money to create a safety cushion in addition to my pension because I am frugal by nature. I drove cars such as Ford Escorts (remember those?), etc. The $30k person perhaps would not have a car at all and use public transportation or a bicycle. It's all relative.
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Old 01-12-2017, 07:23 PM
 
Location: SoCal
13,294 posts, read 6,369,679 times
Reputation: 9932
Quote:
Originally Posted by carnivalday View Post
And thats why millions dont do it. Because they tell themselves that they cant. Cant save $100? Then save $50, $25, whatever they can do. The point is to get started and invest consistently, every single month. You say they would then only have $383,000 to retire on. Not enough to retire on? Theres millions who dont have 1/10th of that and are retired. Millions would be THRILLED to have over a quarter of a million in the bank to retire on.

Its all about attitude. If you say you cant do it, then indeed you cant. If you think you can do it, you will.
The venom I received from my post about somebody saved $125k speaks volume. I agree with you, you have to start somewhere.
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Old 01-12-2017, 07:25 PM
 
Location: SoCal
13,294 posts, read 6,369,679 times
Reputation: 9932
Quote:
Originally Posted by freemkt View Post
Where I live, an annual income of $70,000 is needed to buy a SFR. A low income person is SOL.
You can rent a room. You don't need to buy a home.
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Old 01-12-2017, 07:35 PM
 
Location: Los Angeles area
14,018 posts, read 17,759,876 times
Reputation: 32309
Quote:
Originally Posted by NewbieHere View Post
You can rent a room. You don't need to buy a home.
If I recall correctly, that poster does indeed rent a room. He has made hundreds of posts about being a rent slave.
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Old 01-12-2017, 07:46 PM
 
Location: SoCal
13,294 posts, read 6,369,679 times
Reputation: 9932
Quote:
Originally Posted by Escort Rider View Post
If I recall correctly, that poster does indeed rent a room. He has made hundreds of posts about being a rent slave.
Plenty people are rent slave. I know my aunt who lives in SF for years, you can't afford to buy there. That's what I mean, he doesn't have to own a home.
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