Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
just did a calculation. After I graduated from college in 1972, I made $10,500. That was good money. I lived on that, bought a used car on that, payed my student loan payments on that.
I'll try not to pile on too much...but I made $1.75 per hour part time in 1975 and $12,000 per year in 1980 with my first real job out of college.
I will say that it's probably possible (but not easy) to have a $1 million saved starting with $12k and ending with $70k for 40+ years with discipline, prudent investments and no major "incidents". But we all know s**t happens and depending upon timing that can be a killer. Someone who saved $2 million under those circumstances is either very lucky or a financial genius!
I remember back in the late 70s I wanted to put some money in a 5 year CD at 14% interest, but my dad thought it was a very bad idea. I think I was right on that call!!!
It depends on the company you worked for.
We had a savings plan where the company matched 1/2 up to 7%. Three years later we got the money. Many were upset when 401(k) plans started because they quit sending the check and it stayed in your account.
For awhile we had an ESOP plan. We got so much stock for every thousand we made that year.
We had a stock bonus plan. If you bought savings bonds through payroll deduction, the company held the bonds for a few years and you got free stock. My mom really made out on that when she worked for that company in the 1940's.
Over time they started their own family of funds, asset and debenture accounts, and a few other things like long term care insurance which I still get a good price on. All through payroll deduction.
Also a decent pension plan. Many people who did not even finish high school had a nice retirement, some were millionaires. It all depends on where and when you worked.
How many people work where there is a 401k match? I certainly never found one.
DH has always had a 401k match, he works for a international corporation. I had profit sharing dumped into my 401k yearly, not as clearcut as a match.
In 1975 starting pay for me in the Midwest was $4.10/hour as an x-ray technologist and when I retired as an MRI/CT technologist in the Northeast I was making $40+/hour.
I know several people who, even though have saved plenty, do not have debt, and are continuing to work. Why? Most of them will "never" have enough money. I call them my Midas friends, because one day they will be sitting counting their money and missed life.
I have been talking to lots of my friends and family who are in their 50s and 60s about two of my favorite topics- money and retirement. Many of them are still working and claim they will keep working FULL TIME until the day they die. I tried to tell them that there are few full time workers in their 70s, 80s and 90s, but they did not believe me.
They said it was impossible for someone who was a middle class person all their life to get enough money together to retire.
This got me thinking. What if someone had started working full time in 1972 at age 22 and turned 66 this year. 44 years of full time work. They started their first job at age 22 at $18,000 a year and made a conservative three percent increase a year. After 44 years of working, their salary is now $67,000 a year. (Which is a three percent increase a year.)
From age 22 they put in 6% of their income into a 401K and increased that amount to link with their 3% salary increase each year. The company matched an additional 3% for a total of 9%. (The average company match)
What would they have if the person would have invested in a fund that matched the S&P 500:
$2,635,483.00 (Over 2 1/2 Million Dollars)
(OK, you say, no one works non stop for that many years, they may have faced layoffs and emergencies. Then lets cut that amount in half to 1.3 million. They can still afford to retire! And that amount does not even consider Social Security and any other savings.)
Were 401Ks even in existence in 1972? I thought they did not start until the late 1970s. And even so, many companies had no 401K until at least 10 years after that.
How many people work where there is a 401k match? I certainly never found one.
Every job I have had, where a 401K was available, (Nuclear Power Plants, Nuclear Services, National Lab) there was a match available. I don't have data, but watercooler conversations indicate to me that a scary %-age of particularly younger employees don't even contribute enough to their 401K to get the match.
The vast majority of my retirement savings is in 401K, and should be at around $1M when I turn 60. I won't be moving in next to the Trumps with that money, but in a reasonable cost of living area combined with a small pension and maybe SS provided it does not collapse before I get there should allow me to stay in my paid-for house and have a decent retirement.
The OP's original assumptions about starting salary and salary progression may be unrealistic, but, the underlying idea that money saved in one's 20's will experience a lot of compounding over 30 to 40 years is sound.
Interesting to me that three job groups that usually retire "well" are teachers, firemen, and cops. I think the common factor is that they have reliable but not too large salaries, generally have to have at least fair intelligence to get into the job, and realize that they will not make "big bucks" some time "later" so they start saving for retirement from the git-go.
I think most people can save enough to have a decent retirement, *if* they use an intelligent approach. Buying expensive toys that depreciate, (cars, boats) or having children, early in life, particularly a lot of children, tend to dissipate the money that needs to be invested rather than spent. Not to mention the "$30K Millionaire" lifestyle that some young dudes pursue lately.
Being able to retire is more about avoiding mistakes than it is about making some "killer" investment. Although anyone who got in on Microsoft, Google, etc. soon after IPO didn't hurt themselves either. The trouble with this last is when you needed to be buying, Microsoft didn't look much different from Wordstar or Wang (Google those last two if you are young enough you don't recognize them...)
1978, my first year out of college, I made $8,000 at a job in New Jersey. I went back to school and got a master's degree. My first job after that, in 1981, in Savannah, Georgia, was $15,400.
Graduated in 1977. First job was in a school making less than 10K, retired at 42K a few years back.
Only able to retire because we bought our first house in 1979 and stayed together tossing plates at each other and rarely eating out or taking vacations
Interesting to me that three job groups that usually retire "well" are teachers, firemen, and cops. I think the common factor is that they have reliable but not too large salaries, generally have to have at least fair intelligence to get into the job, and realize that they will not make "big bucks" some time "later" so they start saving for retirement from the git-go.
Also, those positions almost invariably have a pension attached, depending of course on the years you put in.
Every job I have had, where a 401K was available, (Nuclear Power Plants, Nuclear Services, National Lab) there was a match available. I don't have data, but watercooler conversations indicate to me that a scary %-age of particularly younger employees don't even contribute enough to their 401K to get the match.
The vast majority of my retirement savings is in 401K, and should be at around $1M when I turn 60. I won't be moving in next to the Trumps with that money, but in a reasonable cost of living area combined with a small pension and maybe SS provided it does not collapse before I get there should allow me to stay in my paid-for house and have a decent retirement.
The OP's original assumptions about starting salary and salary progression may be unrealistic, but, the underlying idea that money saved in one's 20's will experience a lot of compounding over 30 to 40 years is sound.
Interesting to me that three job groups that usually retire "well" are teachers, firemen, and cops. I think the common factor is that they have reliable but not too large salaries, generally have to have at least fair intelligence to get into the job, and realize that they will not make "big bucks" some time "later" so they start saving for retirement from the git-go.
I think most people can save enough to have a decent retirement, *if* they use an intelligent approach. Buying expensive toys that depreciate, (cars, boats) or having children, early in life, particularly a lot of children, tend to dissipate the money that needs to be invested rather than spent. Not to mention the "$30K Millionaire" lifestyle that some young dudes pursue lately.
Being able to retire is more about avoiding mistakes than it is about making some "killer" investment. Although anyone who got in on Microsoft, Google, etc. soon after IPO didn't hurt themselves either. The trouble with this last is when you needed to be buying, Microsoft didn't look much different from Wordstar or Wang (Google those last two if you are young enough you don't recognize them...)
Um, something else those 3 jobs you mentioned have. A pension!
I'm not sure what you were thinking because none of this makes any sense. Especially since you claim to be 62+ and would have been working in the 1970s.
First of all, your entire premise/scenario is ridiculous. Someone who made $22k in 1972 would be making a hell of a lot more than $67k in 2016. Are you aware that $22k is the equivalent of over $126k in 2016 dollars? So in your scenario, someone started their first job at the equivalent of a six-figure salary, and then was such a poor performer over the years that their pay has been reduced by about 50% over a 40-year career.
Secondly, $22k was about triple the average salary back then. Relatively few people were making $22k at the time, and those who were certainly were not right out of school at the beginning of their work career.
Finally, 401(k)s did not even exist in 1972. The law that created them did not come into existence until 1978, and even then, such plans did not become common until the mid-1980s.
You have a good memory. My husband and I made a total of $21k/year when we got out of school in 1971. As lawyers in entry level lawyer jobs. We did make a lot more in later years.
I don't know anything about 401(k)s. But - when we both started our own law firms in the late 70's/early 80's - we got qualified pension/profit sharing plans. Great way to sock away a relatively large amount of money when we were young (and before we got used to spending money on the more expensive things in life ). Also - the 80's and 90's were really good years to invest. Was pretty easy to make 10%+/year doing nothing very speculative/risky. Like shooting fish in a barrel. Wish those days would return. But I doubt they will (at least before I die). Robyn
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
). Also - the 80's and 90's were really good years to invest. Was pretty easy to make 10%+/year doing nothing very speculative/risky. Like shooting fish in a barrel. Wish those days would return. But I doubt they will (at least before I die). Robyn