That's a mind blowing return. If you put in $21k a year for 18 years with a 10% return, you'd get around $1m.
I'm now seeing the 10% employer match. Wow, that is an amazing match!
Retirement Targets
- Thread starter yowza
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I'm now seeing the 10% employer match. Wow, that is an amazing match!
Forget to address your forecasting question….If a person saves $20,000 annually and returns 8 percent a year, it would take them 20.5 years to accumulate a million dollars. That assumes they are starting from scratch.
All you need is a spreadsheet and a couple assumptions about annual contributions and rate of return.
e.g.
$10,000 per year
at 8% = 29 years
at 10% = 25 years
Same calculations, for the second million:
$10,000 per year
at 8% = 8 years
at 10% = 7 years
Compounding interest (and starting early) is your best friend!
The tricky thing here is that most people who are working on their second or third million, are closer to retirement age and less likely to invest in securities that will earn 10%. At least that's what I've heard.
Very true, as you move to within 3 to 5 years of your retirement date, you should be moving away from the market, and putting money into more secured ways to keep your money safe. At that point you are less worried about accumulating more wealth and should be worried about keeping what you have already made.
When we retired last year we had about 900K in our investments, only about 10% is in stocks, the rest are in zero interest bonds and other items. Between taking 4K a month out of the fund, our IPERS and SS we clear about 11K a month.
I'm probably 5 years away, but I'm a lot more aggressive. Probably 70/30 stocks/bonds. I may pay the price for that but so far it's worked out ok.
In your case, you've already won so there is no reason to spike the ball.
I'm going balls out 100% equities for as long as possible.
There's a number where the retirement $$ becomes high enough to sustain my retirement needs and continue to grow. Thankfully we're right close to that number with some time to go.
My horizon isn't just my life but I want to have some leftover for the kids. My Roth accounts will always be aggressive. I could be talked into a more conservative approach in the traditional, but I've never been a bond guy or a dividend investor.
For me the VTI is "conservative". The last time I spoke to an advisor he didn't have much to add. Said I could consider changing the investment mix 5 years from retirement, but my risk tolerance is high enough where he was cool with the plan.
But to each his own. This group is way ahead of the pack. The median retirement savings numbers are horrifying
One person has $100,000 invested in the stock market. Another person invests $60,000 in the stock market and $40,000 in fixed income. The stock market declines 50%. If the second person rebalances to his previous high water mark he then has $60,000 in stocks and an additional $10,000 fixed income compared to the $50,000 that the first investor has.
Many ways to get to Rome.
Many ways to get to Rome.
Well, most people (myself included) is 20+ years to accumulate the first million while you are earning less and living life (family, houses, etc). Once kids gone, house paid, etc. 2nd million was around 5 years, 3rd down to 4 years. Now, it will be flat while drawing in retirement and not adding to pile through earnings until the snowball starts again when SS kicks in and covers half of expenses. Projections are once we get out to 7-8M, it will add another 1M every two years (but by then 1M is equivalent of $4-500k today).
Yes, you’ve outlined the keys to successful retirement saving. My point was about the speed to a million and your ability to forecast when you will hit that (or any) goal. This will be affected by the sequence of returns and the variation in the sequencing make the timing of the goal attainment difficult to forecast.
But I'll go out on a limb and say if you're getting a 10% employer match you'll get there a little quicker!
I look forward to seeing all of you ladies and gentlemen at the club as we enjoy our life of leisure
I will add there are few things better in life, than being retired and have the ability to do want you want and not have to worry about where the money is coming from, to pay for it.
Not worrying about money and bills makes life a lot easier on the soul.
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Started my 401k in 1988.
First mil in 2013, 25 years.
Second in 2020, 7 years.
Retired in 2024.
Started out putting enough in to get the full company match, back then about 4%. Then when things got better, contributed up to the allowable cap amount. Lesson learned is put in as much as you can. Control your spending, and diversify the investments. I never went over 70/30 on stocks to bonds and stayed the course. Rode out the highs and lows. I thinks it is really the dollar cost averaging approach of a 401k that makes that strategy work.
First mil in 2013, 25 years.
Second in 2020, 7 years.
Retired in 2024.
Started out putting enough in to get the full company match, back then about 4%. Then when things got better, contributed up to the allowable cap amount. Lesson learned is put in as much as you can. Control your spending, and diversify the investments. I never went over 70/30 on stocks to bonds and stayed the course. Rode out the highs and lows. I thinks it is really the dollar cost averaging approach of a 401k that makes that strategy work.
The cool thing about this milestone is that you now have a fully grown, phantom, mini-you that is earning about $90,000 per year that is totally free of FICA, income, and state tax. Kind of like working two fulltime jobs.
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I’m at about 75-25 and ready to retire whenever I feel like it. I’m thinking about backing off a bit but I plan on 30+ years of retirement so 60-40 is the lowest I’d go for probably the next decade or more.
Most 2030 TDF's are 60/40
Most 2040 TDF's are 75/25
Even though I plan on retiring in 2030, I tend to use 2040's for the mix I want.
Most 2040 TDF's are 75/25
Even though I plan on retiring in 2030, I tend to use 2040's for the mix I want.
Lots of discussion about the proper retirement mix between equities and fixed income. Unfortunately, there is no clear cut answer. There are so many factors involved such as your tolerance for risk, withdrawal rate in retirement, amount saved, and your reaction when the inevitable correction occurs.
I have been retired since 2021 and still have 95 percent in equities. Most financial advisors say that I’m nuts. However, my withdrawal rate is only about one percent because I am blessed with a pension. If my withdrawal rate was closer to the norm of four percent instead of one percent, I wouldn’t have such an aggressive allocation. Rather, I would have approximately 5-7 years of annual living expenses in cash and fixed income. Therefore, when a market correction occurs, I wouldn’t have to liquidate stocks to live on.
Sequence of returns risk is a big deal when you’re selling investments, but not when you’re accumulating them. If you are withdrawing four percent right after you retire and a correction occurs, it will have a profound impact on your portfolio. That’s why I have always felt that the risk of a market correction is much greater right after you retire than shortly before you retire. If a correction occurs shortly before you’re planning to retire, you can always work an extra couple years.
I have been retired since 2021 and still have 95 percent in equities. Most financial advisors say that I’m nuts. However, my withdrawal rate is only about one percent because I am blessed with a pension. If my withdrawal rate was closer to the norm of four percent instead of one percent, I wouldn’t have such an aggressive allocation. Rather, I would have approximately 5-7 years of annual living expenses in cash and fixed income. Therefore, when a market correction occurs, I wouldn’t have to liquidate stocks to live on.
Sequence of returns risk is a big deal when you’re selling investments, but not when you’re accumulating them. If you are withdrawing four percent right after you retire and a correction occurs, it will have a profound impact on your portfolio. That’s why I have always felt that the risk of a market correction is much greater right after you retire than shortly before you retire. If a correction occurs shortly before you’re planning to retire, you can always work an extra couple years.
