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while it isn't a whole lot of money in the things you can buy it is still ridiculously hard to build a nest egg of $1M for the average middle class individual. Take for instance someone who put $1000 monthly inflation adjusted in the Target Date fund FFFFX - Fidelity Freedom 2040.
They started contributing at age 26 in 2001 with the intent to retire at 65 in 2040.
They have been diligently contributing $1K/month inflation adjusted meaning now they are contributing over $1500/month, this is quite a high contribution rate for someone making a middle class income.
YET, they will have a current balance of only $700K, and that is AFTER CONTRIBUTING FOR ALMOST 22 YEARS without fail, month after month.
Now you could argue that they still have 18 years to retire, but in 18 years what would be the state of $1M? They would need $2M then...
And of course, this assumes the entire 22 years of this person's working life is PICTURE PERFECT - no job losses, no unexpected expenses etc. etc. which is highly unrealistic for most people! It also assumes that this person has an idyllic start to their career with a super good well paying job at a young age, and incredible financial acumen to immediately invest in the exact perfect way.
while it isn't a whole lot of money in the things you can buy it is still ridiculously hard to build a nest egg of $1M for the average middle class individual. Take for instance someone who put $1000 monthly inflation adjusted in the Target Date fund FFFFX - Fidelity Freedom 2040.
They started contributing at age 26 in 2001 with the intent to retire at 65 in 2040.
They have been diligently contributing $1K/month inflation adjusted meaning now they are contributing over $1500/month, this is quite a high contribution rate for someone making a middle class income.
YET, they will have a current balance of only $700K, and that is AFTER CONTRIBUTING FOR ALMOST 22 YEARS without fail, month after month.
Now you could argue that they still have 18 years to retire, but in 18 years what would be the state of $1M? They would need $2M then...
And of course, this assumes the entire 22 years of this person's working life is PICTURE PERFECT - no job losses, no unexpected expenses etc. etc. which is highly unrealistic for most people! It also assumes that this person has an idyllic start to their career with a super good well paying job at a young age, and incredible financial acumen to immediately invest in the exact perfect way.
In other words, it’s absolutely outrageous and out of touch with reality for those saying $1 million “isn’t much” these days.
while it isn't a whole lot of money in the things you can buy
A million isn’t a whole lot of money? Can you just give a million away? What about giving it away a few times? It’s not a whole lot so you and most should be able to freely give a million away. Complete nonsense and nothing more than that
True a million isn't a lot these days. Probably would put 40% in stocks, some into emergency and some into Roth IRA and purchase a home outright.
It’s “not a lot” but you hypothetically are going to lock in a cost as big as housing (usually 25%+ of someone’s earnings) and “eliminate” that expense for the next few decades while also having a chunk to lob into the market which goes an absolutely enormous way towards achieving financial independence (by an up front buy instead of DCAing in over decades in a small amount from a paycheck stream) a few decades down the line? Ok then.
I think people have this bizarre concept where money is only “life changing” or “a lot” if it means they can buy a private jet and have a house in Hollywood.
Either that or there’s an abnormally amount of generational type multimillionaires around here…and by that I’d mean more than say $20+ million…because even if you had 5-10 million a million is anywhere from 10-20% of your wealth. Ie material.
Last edited by Thatsright19; 07-04-2022 at 06:29 PM..
Now you could argue that they still have 18 years to retire, but in 18 years what would be the state of $1M? They would need $2M then...
.
Most likely, that $700k will be $2.7 million by then.
I used the same webtool that you linked, but I made some changes. I put in $700k as the starting figure, and I assumed no additional contributions. Assuming things grow in the future at the same rate as the past (yes, no guarantees, but it gives you a rough guess), that $700k alone turns into $2 million.
Assume you can save/invest another $700k over the next 20 years, and there you have a $2.7 million nest egg.
Take out 4%/year in retirement, and that gives you an annual income of $108,000. But, you do not have to pay FICA on that, you do not need to reinvest for retirement so you are cutting your other expenses by $1000/month, and you likely have a home that is mostly or fully paid off.
Even assuming no additional savings or assets, that is not a bad way to retire.
A million isn’t a whole lot of money? Can you just give a million away? What about giving it away a few times? It’s not a whole lot so you and most should be able to freely give a million away. Complete nonsense and nothing more than that
LOL, evidently, you'd be surprised. For some, $1 mil isn't a lot. Besides, once you discover time is more valuable than money, it helps put things in perspective. It doesn't make a bit of difference when you die, if you have 30 cents, or 30 billion. Not one bit.
Let’s call the $1m an after tax sum of $600k for arguments sake.
Since it was free money, and this is just a game, I’ll buy $300k AMZN $150k TSLA and split the remainder between T and VZ or other decent dividend stocks. Assuming I had the money for tomorrow’s market opening.
Then I’ll use $1,000 of my own money to hire a therapist to help me forget about it for a few years, otherwise I’ll lose my mind checking the price every few minutes.
If the game worked out, maybe I have $2m in a few years. Or maybe TSLA bombed out because of production issues, AMZN got pummeled by an antitrust suit, and phones stopped being central to everyone’s lives and I’m left with pennies.
It was fun playing, and maybe I’d need to talk to that therapist for a while longer
LOL, evidently, you'd be surprised. For some, $1 mil isn't a lot. Besides, once you discover time is more valuable than money, it helps put things in perspective. It doesn't make a bit of difference when you die, if you have 30 cents, or 30 billion. Not one bit.
I can make a big difference for your kids. And for many that is a big reason we save more than we need.
LOL, evidently, you'd be surprised. For some, $1 mil isn't a lot. Besides, once you discover time is more valuable than money, it helps put things in perspective. It doesn't make a bit of difference when you die, if you have 30 cents, or 30 billion. Not one bit.
You know what gives you options? Money. And that includes greater ability to do what you want with your time. For some a million isn’t a lot? Okay. For some being married for a 6th time isn’t a lot but for most people it is, just like for most people a million is a lot of money
It seems like there are too many millionaires out there these days and that's the problem. I couldnt live off a million dollars for the rest of my life, but if I won a million bucks today I'd be pretty darn happy and I'd find plenty to do with it.
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