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So if the person earns $45,000 per year, they would be putting away $1350.00. How long would that take to compound into something meaningful?
As I suspect you already know, it would take a long time, but it would still be a heck of a lot more than most people end up having at retirement, especially at the low end of the income range.
Over 40 years (assuming no pay raises), that would amount to $225,162 assuming a 6% rate of return (which is below the historical long term average). A conservative estimate of the income from that would be about $9,000 a year. Add that to a Social Security check and it's a nice supplement. Increase the rate of return to a more optimistic (but not crazy) 8%, and you end up with $395,356. That translates into an annual income draw of almost $16,000 a year, which would is almost double what the average Social Security check is.
Even that $225k figure is more than a lot of people have saved for retirement in their 60s.
I remember reading an article some years ago that said the #1 way to be financially secure is to get married and then stay married to the same person for the duration. I think that’s a very accurate assessment. It means the costs of life are contained under one roof and the savings from life don’t get splintered off.
In general, I agree. But it really depends who you're married to. If you marry someone who's a financial wreck or emotionally unstable, you may be better off alone. The #1 reason for divorce is fights over money.
Sounds like debtor's prison mentality. How about tiny house with solar and grow your food or raise your food? Teach your own kids to read and be independent, like you. You will be healthier and happier in the long run. Get away from being a slave to all the crap like fees, repairmen, salesmen, taxes and noise.
Agreed.
What SC doesn't want to tell you is he's single with no kids and lives in his own house. Honestly, a house for a single person with no kids is a luxury, not a need.
Gym membership? Optional. Mr. Money Mustache shows how to stay fit without a gym membership:
I live in the SF Bay Area. I make less than 60K. This year I decided to take a year off of aggressive saving. Thanks to that tax cut (which I don't agree with BTW), a raise in July, and pension contribution reduced by 1.26%, I'm finding it easy to save more than 12%. I really don't know how a single person with no kids in a lowish cost area finds it hard to save money.
Anyone can set up their direct deposit to send 3% of their pay to a mutual fund. This would simulate a Roth 401k.
Anyone can, but people just don't. You effectively need to force people to do it. I grit my teeth writing that, but it's what needs to happen if we want people to not be broke or 100% dependent on Social Security in their 60s.
Are you aware that in cultures that have arranged marriages, it usually turns out pretty well for both partners?
Perhaps the reason why more people don't do better in Western cultures is the absurd fairytale romance fluff drilled into us from birth.
A good point. But marrying purely for financial reasons isn't a good idea. Yes, finances must be a factor and discussed prior to marriage. In many Western cultures (especially America), they're not...which is a disaster. Yet at the same time, it's not a good idea to go the opposite extreme and marry only for financial gain.
Spoiler alert: It's because love marriages are based on passion. 40-50% of married couples from the United States or Canada end in divorce. Only 4% of couples in an arranged marriage get divorced.
Correct.
This liberal woman who studied marriage and wrote a book about it came to the same conclusion:
Gilbert: If you look at the history of marriage, anytime you see a conservative culture of arranged marriage being replaced by a more liberal culture of romantic marriage ... you will see divorce rates start to rise immediately.
It turns out that love is a very fragile notion upon which to base a very important and complicated institution. I think most people throughout history would look at the way we choose our marriages today and just think, my God, these people took huge risks. They risk their future, financial stability, property and their heirs on something as fragile and delicate as romantic affection.
It's not that that necessarily means that I advocate a return to arranged marriage, it just helps put in perspective why contemporary western marital arrangements can become so chaotic.
When love dies, and that's the only thing that holds you together, there is nothing to keep the marriage intact.
The first thing that jumped out at me from the study is that they put having a cell phone in the same category as: "housing, food, child care, health care, transportation". REALLY?!
I'll join the chorus to say that cell phones aren't necessarily the big expense people make them out to be. My smart phone was like $122 with tax and a fancy case. My cell phone plan is $30 a month. Big whoop.
And yes, they are a necessity these days. You may not see it as a need because people in your peer/age group don't. But as another poster said, expectations by employers have gone up. It's not fair, but it is what it is. The good news is you don't need to spend a fortune on a phone and it's generally unnecessary for someone with a modest income to do so.
You are right. In the 'old' days, you did not have any index funds/ETFs. No internet to do investment research. You had to rely on a broker and front end mutual funds to get invested.
You paid as much as $79 per trade, and even more if it was a odd lot of shares. You had to physically go into a bank, now there are online banks. That was defintley easier, just do what the broker says and pay him.
Now you can invest easily and cheaply. Get advice over the internet. Move money to the highest paying fund/ETF, savings account. Refinance cheaper with banks competing. Get cheaper insurance with a bit of research.
What makes it difficult now is you have to have $5 coffees. Gym memberships, Iphones, rather than cheap plans, cable TV, spending money to live in the apartment with swimming pools, gyms, etc. And younger kids complain about manual labor.
Young people have it made, but they have been told they are a victim. Now they mope and see the glass half-empty.
A lot of this is true...but there is one glaring exception....the cost of college. It's been exceeding the rate of inflation for like 40 years now. Granted, people are going to have to get wise to borrowing money and aimlessly getting liberal arts degrees. But if I'm honest, I have to admit the cost of being an aimless, clueless young person (like I was) is much higher these days than when I was in college in the late 80s and early 90s.
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