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Here's a link that purports to show median household income by year. In 1974, the nomial median household income was $9780, or an inflation-adjusted $47,019. As of 2012, the nominal median was $49,486 or $51,017 inflation adjusted. The inflation-adjusted median has been falling since 1996 or so.
I don't really feel like mathing it out to determine what the nominal and inflation-adjusted income will be 40 years from now, but a difference is ~$4k over 40 years says actual purchasing power is fairly stable.
His post said nothing about household income so that's why I inquired. HH income is certainly a different beast than income
Probably just lazy phrasing coupled with the differing societal expectations of 1974; even in major publications, the distinction between household and individual income is often unclear.
Congrats on your accomplishment. I'm not saying it can't be done, I'm saying that it isn't practical for the majority.
I wasn't looking for congratulations. I contend that it IS possible for the majority. Not everyone, but the majority. But saving has to be your priority. You have to understand that once you get beyond the very basic necessities, each additional unit of consumption adds less and less to your happiness & well being.
Quote:
Originally Posted by LBTRS
I'm an HR Director and hire for a living...the majority of 18 year olds are making $8/hour. There isn't a lot left over after you live off of that especially when you're only getting part time hours. Can it be done? Sure it can for someone that is focused and has circumstances that make it possible.
I wasn't doing it when I was 18, either. I didn't get started until I was 26 and I had student loan debt, too. Part of that is an education problem. But the information is much more prevalent today than when I was 18.
Quote:
Originally Posted by LBTRS
There are not a lot of opportunities out there for 18 year olds these days. I have 30 year olds competing for jobs that used to be held by 18 year olds.
Times were somewhat better when I was 18, but not by that much. People always look to the past as if there was some magic golden age when everything was easier. It wasn't. I get it. Not everyone can get started at 18, but a lot of people can. And they still don't.
How many 18 year olds spent money on the following:
--Tattoos
--Cigarettes
--Alcohol
--recreational drugs
--$4 Coffees at Starbucks
--Eating out
^^This is your investment money right here.
The Amana Funds let you open an IRA with $100 and you can make additional contributions in $25 increments. They're ok, funds, too.
Another criticism I have of the plan is that it assumes the earner's income is steady and increases linearly every year.
I have about as stable a job as anyone can possibly get. I'm in my 30s and can afford to put away amounts like $5700 per year (that is approximately what I save now). However, my income will not rise enough for me to afford the $20,000 a year the plan calls for by the time I hit my 50s. I could maybe afford 12-15K a year by that point, but ~10K is more realistic. $20K a year would be about half my net income in my early 50s, assuming I stay in my current job. I hate to break this to the OP, but most jobs are not giving raises commensurate with inflation.
It's another one of those things that would require me to give up pretty much everything - no vacations, live in a starter house my whole life, etc...
Another criticism I have of the plan is that it assumes the earner's income is steady and increases linearly every year.
I have about as stable a job as anyone can possibly get. I'm in my 30s and can afford to put away amounts like $5700 per year (that is approximately what I save now). However, my income will not rise enough for me to afford the $20,000 a year the plan calls for by the time I hit my 50s. I could maybe afford 12-15K a year by that point, but ~10K is more realistic. $20K a year would be about half my net income in my early 50s, assuming I stay in my current job. I hate to break this to the OP, but most jobs are not giving raises commensurate with inflation.
It's another one of those things that would require me to give up pretty much everything - no vacations, live in a starter house my whole life, etc...
I'm in the same boat in that regard. The main thing is to just get started. So what if you never save 20K per year. What actually matters is your after tax savings rate. You don't need $10M if you only spend 40k per year. Very conservatively, 10M generates 300K per year. If you're just conservative and not very conservative, you can take out $400K the first year. Even with 50 years of inflation, most people won't need that much.
I'm in the same boat in that regard. The main thing is to just get started. So what if you never save 20K per year. What actually matters is your after tax savings rate. You don't need $10M if you only spend 40k per year. Very conservatively, 10M generates 300K per year. If you're just conservative and not very conservative, you can take out $400K the first year. Even with 50 years of inflation, most people won't need that much.
If meeting the goals of the plan isn't important... then the plan itself isn't important.
If I told you that you should be saving $1m per year, you'd laugh, and say that's not possible. And statistically speaking ,you'd assume since you can't reach $1m, then you shouldn't save at all. THat's just human nature.
The reality is that all dollar figure savings goals are meaningless. They ignore COL in your area as well as your own ability to live frugally.
No one has ever said $10M is the number to shoot for(at least no one I've ever read).
That said, "get started" is nice... but meaningless. The guy who puts away $5/week got started. He's not going anywhere... but he got started. The important thing is not to just get started. It's to figure out what your needs will likely be, and figure out how to save to meet those needs.
Another criticism I have of the plan is that it assumes the earner's income is steady and increases linearly every year.
I have about as stable a job as anyone can possibly get. I'm in my 30s and can afford to put away amounts like $5700 per year (that is approximately what I save now). However, my income will not rise enough for me to afford the $20,000 a year the plan calls for by the time I hit my 50s. I could maybe afford 12-15K a year by that point, but ~10K is more realistic. $20K a year would be about half my net income in my early 50s, assuming I stay in my current job. I hate to break this to the OP, but most jobs are not giving raises commensurate with inflation.
It's another one of those things that would require me to give up pretty much everything - no vacations, live in a starter house my whole life, etc...
I'd challenge to work towards growing your income and annual savings. In 15+ years you should be able to more than double your annual savings. As earnings grow it becomes easier and easier to save more even though a lot of people don't. 1000.00 means a lot more to someone earning 30,000 than one earning 60,000
If meeting the goals of the plan isn't important... then the plan itself isn't important.
If I told you that you should be saving $1m per year, you'd laugh, and say that's not possible. And statistically speaking ,you'd assume since you can't reach $1m, then you shouldn't save at all. THat's just human nature.
The reality is that all dollar figure savings goals are meaningless. They ignore COL in your area as well as your own ability to live frugally.
No one has ever said $10M is the number to shoot for(at least no one I've ever read).
That said, "get started" is nice... but meaningless. The guy who puts away $5/week got started. He's not going anywhere... but he got started. The important thing is not to just get started. It's to figure out what your needs will likely be, and figure out how to save to meet those needs.
Dollar based savings goals aren't meaningless and don't ignore COL. Dollar based is the easiest way to measure things both in terms of current savings and projected need. My wife and I have a goal of 10mm and we are ahead of pace it accomplish the goal. Getting started is important even though the 5.00 is meaningless but the action and formation of different routines/habits is important
No one has ever said $10M is the number to shoot for(at least no one I've ever read).
I stopped at 73/$10mil because I know of someone who recently retired from working full time at that age. She could have stopped working at 67 but says she would have been bored silly. The Dow Jones also rose from 10,000 to 18,000 during that time which worked out perfectly.
Conversely, a 401k could be chopped in half immediately upon retiring with some bad timing. (2007-2009 anyone?) That should make for a valid reason to overshoot one's retirement goal.
Also, in 50 years it will be trillionaires making the news, not billionaires. We're only a few years away from athletes and musicians being worth over a billion dollars. $10mil won't seem like such an extravagant figure in 2065.
If meeting the goals of the plan isn't important... then the plan itself isn't important.
If I told you that you should be saving $1m per year, you'd laugh, and say that's not possible. And statistically speaking ,you'd assume since you can't reach $1m, then you shouldn't save at all. THat's just human nature.
The reality is that all dollar figure savings goals are meaningless. They ignore COL in your area as well as your own ability to live frugally.
No one has ever said $10M is the number to shoot for(at least no one I've ever read).
That said, "get started" is nice... but meaningless. The guy who puts away $5/week got started. He's not going anywhere... but he got started. The important thing is not to just get started. It's to figure out what your needs will likely be, and figure out how to save to meet those needs.
too many variables.
If we were in 2010, you'd estimate gas prcies to be $5/gallon, not half of that.
We are all moderately fit or some even superhero fit right now, but accidents and weird medical complications do happen, costs for healthcare are dynamic.
If you can take care of the cost of housing by eliminating it by retirement, and investing to increase your wealth you're on the right track.
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