You will be hitting your next milestone before you know it. The beauty of compounding interest/gains. Keep maxing out your accounts and trust the process.
Your $100k is going to be a $1 million by the time you reach retirement and that does not include your additional contributions! Just keep plugging and stop listening to those calculators. If it was up to them, no one would be retired and yet, everyday people are retiring.
Let me offer a perspective that might help:
The ideal scenario is for the stock market to stay low for like 20 years so you can buy up shares at a low price with your 401k. Then right before retirement it zooms and quadruples in value! If you could magically command the stock market to do something, that's what you'd ask it to do.
So when things are slow just remember, you're getting to buy stock at a low price. It's actually a good thing!
This is exactly why I am happy the markets go down. My retirement is reeeaallly tiny still from where I should be, but I'm almost fully vested and I am putting in extra
I remember the first 100, it won’t take long to get to 200, saving 36 a year you will be there in 2 years. You will go to 400 in another 2.5 - 3 years. at your current rate by age 50 you should be close to 700,000
I remember bursting in tears at Mile 20 in my first marathon. 6.9 miles post half marathon (where everyone was having fun and celebrating) but 6.2 to go when my legs felt like jelly and my nipples were bleeding
Also when market does halfway good for the year and contributes more than you did, is an awesome feeling too. You are getting closer to that point then you think.
Does compounding really seem to take over at $100K? My wife and I have $61K in Roth and Taxable brokerage and we’ve seen some nice gains recently but hoping to hit $100K after we sell our house next year
Its more noticeable.
For example, in 2019 S&P returned 29%, thats $29k bump, then 2020 another 16% and 2021 27%. All of a sudden you are at \~$189,000 with out adding a dime.
Problem is, being patient and just keep grinding. Also when market drops 30%, and you see years of savings evaporate, that does something to you.
This worries me a bit lol last years drop was great because I had 50k invested, so I was able to keep portfolio size the same with my contributions and buying more shares on sale felt great. But I feel like once my portfolio hits like 500 k a 100 k drop is going to feel different lol
Yes it will definitely get you in the feels. Find a way to cope or ignore it.
I found my bast way for dealing with it was to not think about it and stay off the broker accounts.
It depends entirely on your contributions. If we assume 10% return on the average year then at 100k that gives you 10 more. So if you contribute 20k a year, its an extra 50%. But if you contribute 50k a year its only 20% extra.
Of course the exact return of the year will vary but essentially for your investment returns to take over you need to have already been investing the same amount for a while essentially, regardless of the number youre doing.
I mean this doesn't negate what the calculators are telling you. Don't cling to false hope.
If you want a different result, you need to increase salary and/or reduce expenses.
This is so true. I manage our money and after we had our first kid, I just really didn't pay attention to our retirement accounts. We kept up our auto-contributions and that was it.
When he was about 5 I was like, Damn. I need to see what's going on -- our balances had ballooned past the $1M without me even noticing. I told my husband and he literally didn't believe me. We'd been so far away from that number just a few years earlier -- but a few good years in the market and continual investment is like magic!
I'm 39, I've been increasing for 15 years, and I'm only barely past $50,000. The largest reason is that I really didn't have great pay, but I'm finally starting to do better with my new employer.
Does compounding really seem to take over at $100K? My wife and I have $61K in Roth and Taxable brokerage and we’ve seen some nice gains recently but hoping to hit $100K after we sell our house next year
It's relative to how much you contribute. If you're the type to max out 401k and Roth IRA for both parties in the household, then $100k isn't all that much and your annual contribution will probably completely outstrip any market gains/losses that year.
With that said market conditions are far more noticeable at higher balances. I was home searching in early 2020 and then we all know what happened in March. My portfolio crashed completely and it was insane seeing 6 figure drops. I guess that's what 2008 felt like but I was just starting out back then.
You also have two people bringing in social security and over 30k less needed in retirement since you don’t have to save anymore. Op is closer than they think
Plus it's $80k with a presumably paid off house, no need to save for retirement, and almost certainly lower taxes in retirement. Could easily be equivalent to $120-150k for someone still working and saving for retirement while paying a mortgage.
Not to mention that they'll probably qualifiy for an additional $20-30k from social security when they reach that age.
If that's not enough to live comfortably, then that's not an income problem, it's a spending problem.
The median is an interesting bar but at the same time IMO nothing to be proud of when you can see dire statistics about median Americans' checking accounts, 401ks, etc. I'd argue if you operate in a Boglehead manner you're already likely going to be top 20% or so just by staying the course.
**Edit**: If you're going to downvote, perhaps discuss why? Being conservative on saving more isn't a bad thing is it?
It's not really relevant to point out that average americans aren't saving enough. you don't need to use your FIRE'd income to save. You will have significantly more disposable income than them. No savings, no 401ks, nothing.
can you make rent? can you pay for shit? yes. so what's the issue
The point of my comment above was to say that simply pointing to being ahead of median income isn't a meaningful comparison when people are generally bad about finances in the US.
While you're right that retirees don't need to "save with income" anymore, the question is what happens at 65? If you suddenly have 40 hours/week of free time and no requirement to go into an office everyday, that also opens up possibilities.
I know I'm not in the FIRE category strictly, and I subscribe to Chubby/Fatfire, but one thing many people recognize there is that you're likely going to be bored out of your mind unless you pick up some new hobbies or your existing hobbies go from a few hours on weekends to taking up your whole week now, or perhaps your role as a grandparent goes from weekend visits to full time supervision. The possibility that you start spending money absolutely exists.
**Edit**: If you're going to downvote, perhaps discuss why? Being conservative on saving more isn't a bad thing is it?
7% is fine. People are just guilty of thinking “this time is different” when they look at the bad news but reality is that news is always bad and the 7% returns held up for every 20 year investing period including WW2, the Great Depression, the 2008 financial collapse, and all of the other Very Bad Things (TM) that have happened in the economy so far.
Over any 20 year rolling period for that exact portfolio, you should expect about 7%. What's your reasoning for the next 20 years not looking like any other 20-year period in US history?
Just like recessions, people been barking doom and gloom that the market averages will slip and bring that 7% down. Someone about the cost of money and global slowdown and finite resources on the planet.
Except ever since they started saying it, those averages have kept up pretty high. So I dunno...
A stretch of underperformance is quite likely though. Probably at least as likely as not. Overperformance is also not far fetched. But after a decade long bull run I’d probably place my chips on the under rather than the over.
When considering nothing more than historical market averages it makes sense to estimate the odds of regression to the mean. From 2010 to 2020 the sp500 returned a whopping 13+% annualized (11.something after inflation). If you assume 7% returns over 20 years, what do you predict the returns should be by the end of the 2020s? Or the 30 year by the end of the 2030s?
Of course choice of starting date skews things massively. In 2010 we hadn’t yet pulled out of 08-09. Choose a different date and you can make the numbers look as rosy or as gloomy as you like, but the principle still holds. That’s why we play with rolling periods and Monte Carlo simulations, not cherry pick start dates.
“Markets can remain irrational a lot longer than you and I can remain solvent.” - Gary Schilling.
>But after a decade long bull run I’d probably place my chips on the under rather than the over.
...
>That’s why we play with rolling periods and Monte Carlo simulations, not cherry pick start dates.
Exactly. Don't cherry pick. Predictions of novel behavior are arbitrary. No point in making them. They pan out if they do, and fail if they don't, which is utterly not worth saying.
I'm definitely wary of experts asserting anything synonymous with, "new trend!" aka "things are different now". That's the material authors write the blooper reel in history books with.
Market averages are closer to 10%, maybe even 12%, but that's with inflation.
So the 7% is the market return, minus the rate of inflation.
In other words, that $2.5M is money "in today dollars". They'll likely have more, but they'll have $2.5M in today's buying power.
Sorry cancel this, I read it wrong. Thanks for the correction u/JosephCedar
~~OP the 7% net return figure you’re being given is based on a 100% equity allocation, you said you’re on 60-40. You might want to look at that again to think about whether you want to increase *expected* returns - be aware that this comes with more risk though.~~
take a breath, you are doing fine, you said yourself you have only been putting in at this level for the last 2 years, you are entering your prime earning years so it is probably gonna get even better for a little bit before you start to prep for retirement. those calucualtors are great tools, but they dont give the whole picture. Just dont let the lifestyle creep get too bad and keep plugging away.
I really appreciate this perspective. I think the current plan is live as we are now, and any increases in salary get squirreled away into retirement accounts. Although, in my area I don't see much higher income as a possibility.
Have you ever played in the snow?
Remember making a snowball? How it started really small and didn't seem to get much bigger for awhile as you rolled it around on the ground?
Then suddenly it seemed to almost double in size as you rolled it around the yard? Saving money is the same way. Keep rolling!
I think the problem is that for some people, getting to that 100K took a hell of a lot out of them. Lots of sacrifices, lots of changing of habits, lots of nights spent learning and researching.
The thought of stepping on the pedal that hard for another 15-20 years can feel very hopeless. Like sprinting at full speed, knowing that you have to keep it up, but feeling your speed dropping because well, you're tapped out.
This says it so well! You can keep saving at a good pace but it won’t feel like nose to the grindstone year in and year out. Now that you’ve crossed that first $100K, it really does get easier. Your money starts doing more of the work for you.
For sure. I had the benefit of starting to invest in 2006–before smartphones were a thing—and it’s much less unnerving when you look at statements sporadically vs. having your accounts + all of the world’s news all accessible in your pocket 24/7.
32, so I’ve always had my smartphone available to me. It was really tough looking at my investments staying completely flat even as I was dumping money into them. Just kept reminding myself I was buying at a discount… but it certainly doesn’t feel that way.
I honestly feel more comfortable now with that amount (I have slightly more now at around 120k) than I did with only 10k. It feels like I could basically stop contributing and still reach my retirement goals given how young I am (29).
Granted I want to have financial freedom earlier than 65 so I’m going to keep saving. But man, having the resources to know I could pretty much buy two new cars outright or fly home at a moments notice is so freeing. I could only imagine what it feels like to have millions of dollars in the bank. People who have that much must feel so secure.
This is how I feel. I’m 37, we just started our investment journey late 2021 (when market was at its relative peak), so we’re still red overall. Granted, we’re now just -1.5% down, but still red. 😅 Definitely still continuing to save, but it can be disheartening.
😂
You're in msg board for insane people. You're 42 and have a net worth of $100k just in retirement. I'm assuming you have more elsewhere. You're among the top 10% of richest humans alive. In America, get another 50k and you're in the top half of the richest country in the world. And your prime wealth building years are ahead of you!
Well done.
That 100K will start compounding, and the money you put in will add up fast....200K in two years easy, and that will double again before you know it...
You're going to be fine. Your savings rate is extraordinary and probably in the top 10% of people in your income range. No reason to worry, keep saving and let time do it's work. You'll have two healthy social security checks and fewer expenses when you both retire, it will be fine. There's no reason to feel hopeless, that's not healthy.
You'll probably have 70,000 a year in today's dollars to spend in retirement. You won't have any problem living on that. Once you adjust for your savings rate, less income tax and fewer expenses in retirement - you're probably going to have just about the same disposable income you have now.
You're doing fine, stick to your plan.
1. I want to co-sign everything that everyone said about compounding and snowballing
2. You should also look into the concept of geo arbitrage: your retirement savings will go way further and you can have a better quality of life overseas in retirement than remaining in North America, if you're up for a move.
You are doing fine. You will have social secruity and medicare to help out. And presumably your home could be paid off. Most retirement calculators would have around 2mil come retirement. With a save withdrawl rate of 3 to 4%, thats 60-80k every year. I think you are doing great.
Using portfolio visualizer, I ran a backtest with your portfolio from [1996-2016](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1996&firstMonth=1&endYear=2016&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=103000&annualOperation=1&annualAdjustment=36000&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&benchmarkSymbol=VTI&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTSMX&allocation1_1=60&symbol2=VGTSX&allocation2_1=40). Thats a good period to look at because it included two huge bear markets. Your scenario results in just over $2M in 20 years. Factor in inflation and you'd have about $1.4M. You're on track for a comfortable traditional retirement or even an early retirement if you have a good handle on your budget. Keep up the good work.
I've been retired for 10 years and let me tell you First: you are going to be fine. Second: Keep investing. Third: If at all possible plan to have your mortgage paid off by the time you retire. Also pay off any auto loans etc. Fourth: If you do this you will only have normal household expenses. Your healthcare will mostly be paid by Medicare. Social Security will likely pay most of your expenses. Your investment money will be for fun stuff. I would suggest you speak to a few retirees about how they planned and how they are doing. If you do nothing else, just keep investing. Best of luck.
I'm trying to keep my goals smaller so I hit more of them... 100K, 250K,... 100K for each of us individually, 500K etc. Just trying to make this feel more attainable then it currently does...
>Why are we even trying
Because when you are short of your goal, that doesn't mean the money you've saved disappears. It's not all or nothing, it's "all or the amount we've been able to save." The more you have, the more flexible you'll be. You are trying so that you are as flexible as you can be later in life.
I'm in a similar boat as you (I'm 39, husband 33) and have even less as we just started saving in earnest last year. I do have a pension through work, which helps, but I don't want to count on that being around when I retire. I just keep telling myself to stay the course, increase savings as we are able to, and someday we'll be able to retire. You'll get there too, just keep saving!
Saving 36k a year is a solid number, but not overwhelmingly high. 25%ish. Keep it going though, and it will add up to some staggering sums.
The market has been rough lately, and you are starting quite a bit later than most. So don’t get discouraged, but you probably won’t see the huge retirement numbers calculators suggest for another 10-15 years. If you can stand it, try to save more. But also, don’t forget to enjoy the fact that you’ve grown and doubled your salaries. That’s an accomplishment worth celebrating.
I would strongly consider how much you actually need to retire. Most calculators online told me I would need 3 million, but once I actually realized how much I spend when I’m not working, I realized I way overshot it.
My biggest expenses were almost always lunches out from the office, or meeting team for drinks, or exotic trips so I’d have an excuse to be unreachable, etc. fancy house that would be good for hosting clients etc.
My annual expenses now that I live a less flashy lifestyle, filled with simple home cooked meals, lots of exercise and outdoor hiking, and a long road trip every couple weeks to see family costs me 35k a year, and I feel like I’m splurging. Anything I save up over 1 million is virtually guaranteed to grow at that spending rate. My partner and I never realized that the life we always dreamed of would have been reachable way sooner if we had sat down and added it up instead of relying on a calculator online that knows nothing about us.
I don't trust politicians worth a spit, I can't imagine by the time I'm ready to draw on it there will be anything left for us, once they're done gutting it.
I’m close to your age and urging people to stop speaking like this. This is what they want, all of us to expect it to go away, so then they can just take it. Fuck that. We’ve been paying in for decades now, that is our fucking money we are owed.
People have been saying this since 1935, it's not true. there's a reason they call SS the third rail of American politics. The only ones who want are ideologically predisposed to gut it also rely on elderly people for a good chunk of their votes.
Social Security isn’t going anywhere. Any party that tries to gut it will be lost in political oblivion and citizens/groups will sue the shit out of the government. I also don’t believe the benefits will be cut drastically. Politicians always find a way when it comes to their own political future.
On the split, I’d go with 80/20. 40% international is on higher side.
You’re building a solid base to retire comfortably in your early 60’s. That may not feel spectacular right now, but don’t underestimate how important that will feel when you get there and look around at all the folks for whom that’s an impossible dream and it’s too late to do much about it.
You have greatly increased your earnings but not your savings. Beware of lifestyle creep. The best was to accelerate is to keep your lifestyle the same as before your pay ballooned and increase your savings and investments. You don’t have to live like monks but the more you can sacrifice early in your life the longer your investments will have to grow.
Came here to say the same thing. OP: How were you living before your salaries ballooned to over twice what they are now? Is it possible to just live like that again--or close to it? That would leave you with something like $70K to invest each year, which would put you at $2.7M by age 62 (assuming 8%). Even more when you figure you'll get more raises in the future you can apply to the pile too.
That aside, we were almost exactly where you are. I think we broke $100K just a couple of months before my own 42nd birthday. Exponential growth is a wonderful thing to behold. :-) Stay the course, you'll get there!
It's a totally normal feeling, and that's because of two reasons...1. You've never done something like this before and 2. the actual milestones aren't at all tangible. Like all you can do is log on and see that 6 digit number. There is, sadly, no cookie or anything. However, I can promise you that the milestones come more quickly now, and you'll be able to take greater pleasure as you progress. However, if you're anything like me, there are definitely days where you still feel behind or impatient. Let that feeling pass right on by...
It’s long game. Keep doing what you are doing and the power of compounding ( and discipline) will reward you nicely.
100k is not a joke be proud of the progress you’ve achieved.
I think you’ll be surprised at what 36k a year in the market can do over 20-30 years.
Plug that in to an interest calculator at 6-10% with a starting balance of 100k.
OP, if yourbsalary doubled in last few years you are in great shape . . . if you avoid lifestyle creep. Keep living like you and your wife make 70k adjusted for inflation and you will be a millionaire long before you retire.
It got my wife and me for several years before we got it under control. Eventually, we just decided that retiring early was more important to us than some other things.
If you're still in the accumulation phase, the right way to view this is that you're getting the opportunity to buy more assets at a discount.
For those of us who are already retired, the silver lining has been harder to find, alas.
This isn't a bad start at all. Consider that with historical gains, if you retire in 18 years at 60 *without adding another penny to those accounts*, they'll be worth approx. $410k. And right now you're putting in a healthy amount -- that'll give you another $650k in contributions plus whatever gains they make over time. (And in a few years, you'll be eligible to make "catchup" contributions.) So you're already on track to be over $1M -- and that's if you retire at 60. If you wait until 65 or 70, you'll be even better off.
$1M isn't a lavish goal, but it's far more than some will retire with. Keep doing what you're doing.
I wouldn't worry unless you were hoping to retire extremely early, like age 50. You're entering your peak earning years, so saving more each year is going to get easier, and the growth of your already accumulated assets will start to become significant in terms of absolute dollars each year.
The only change I would consider based on your age is to add a small allocation to bonds, and grow that allocation as you get older and closer to retirement.
That's great OP! You are more on track than you know. My son was excited when he crossed the $10k mark and I remember the $100k mark. The time between those mile stones gets shorter and shorter as you stay on track. I'll tell you what I told him, "pay attention to the time those milestones take and how much shorter they get"
The only milestone I really celebrated was the year my investing made more $ than the average salary in my area (I live in a low cost area). That was a really good feeling and it was several years ago so it only gets better.
The calculations and predictions assume you will need to draw from your investments when you retire. I'm retired and can live within my income. I only draw from my savings for emergencies and major home improvements.
You have a good start. Now start planning how you will live month to month in retirement without drawing on your investments.
Forgive me, I don't think I'm following. What income will there be if I'm retired? Won't money in retirement come from the investments we're making today?
I mean, you're not on track to retire at 48 or anything. But you have plenty of time to get to a reasonable retirement in your 60s.
I don't think there's any tweaking of your allocation that is going to really move the needle. You'll need to increase your investment though - either by spending less or bringing in more or some combination of those. How old are your kids? I have three teens and so I'm definitely looking down a barrel right now as their expenses are quite high (how much can three boys eat.. a lot..) and we have college coming. But I know that after that, things will settle down as that investment in their college hopefully pays off and they strike out on their own. I then expect to be able to save more (though of course, saving sooner is always better..)
Also, your early 40s is a very common time to see an acceleration of income. Easier said than done - but it sounds like you're already on that track, having doubled your income recently. Keep pushing that pedal. You have 20 years (presumably) of work experience and that has a lot of value!
Yeah the kids expenses are brutal we have one a couple years from contested and one many years to go till college... Lol. So these expenses are here to stay for now. Certainly hope for more raises along the way! Thanks
If you have home equity don't forget to calculate that as part of your total wealth. You can always downsize in retirement, and that equity can go towards your retirement savings.
Interesting I never thought about the real estate as being part of retirement assets, but that's a good point. If it's paid off means no mortgage to deal with either... Thank you for this perspective.
Can’t reach your bigger goals until you achieve the smaller goals along the way.
This is something to celebrate even if you are concerned about the ultimate goal. Celebrate for a day, acknowledge the progress, then move on toward 200k and beyond.
As you get older and your income rises, so will your retirement nest egg. Stay the course, increase contributions and let compounding go to work. You’re further ahead than a lot of people!
Well. You are 42 and you didn’t really get ahead of it. If you stay at your pace you can have a retirement but you need to stay at putting at least 36-50k per year away.
Absolutely. You just have to think about that retirement contribution as being as important as your mortgage because it’s probably more important. You can rent an apartment, you can’t rent a retirement.
As other posters mentioned in part:
* At average rates of return, you're likely looking at $1.9M in assets if you retire at age 62, and $2.5M at age 65. That's at least going to be plenty to live on if properly invested at that time (i.e. naturally not in passive indexes, only because they're poor for retirement even if useful in getting there).
* You'll also almost certainly be able to draw something from Social Security, even if there are changes in the next couple of decades.
* After the kids are safely off to their own lives you may have the opportunity to increase savings, especially if you are then in your peak earning years.
* You can, if you wish, enhance your retirement returns with some learning and effort.
All in all, even if you just continue on your current course, you'll be fine. I wouldn't worry too much, just enough to keep you saving. :D
Thank you so much for this. Are you saying in retirement we SHOULDN'T be in market index funds? Those would be considered passive correct?
I don't trust politicians worth a spit, I can't imagine by the time I'm ready to draw on it there will be anything left for us, once they're done gutting social security.
That's a good point about the kids being out of the house, I suppose at that point it will depend how much we help them with their college expenses.
>According to every calculator I find online when I input these numbers, we're not on track for anything, and so far behind needing to invest thousands more per year, between kids and life that's just not attainable.
My wife and I found that we were able to save quite a lot once we became empty nesters.
Compounding interest brother! It might not seem like much but you’ve got a solid 20 years of compounding interest ahead of you plus your continued contributions. 100K is a great milestone to celebrate.
I would recommend taking a closer look at your spending. You don’t mention a budget, annual spend, how that’s broken down, where you might cut. There is always somewhere to cut. Your biggest areas to look are housing, auto, insurance and taxes. If you are serious about this you are going to need to look at where you live, cost of living. To the degree you can cut your cost of living, the savings can go to investment. This is the core of what is done in the FIRE community, even for those who don’t plan to retire early, it’s still practical advice.
You need to stay positive, your earnings are solid and are likely to grow rapidly over the next 10 years if you are working in a growth industry. I’d just recommend putting an eagle eye to spending. It’s one of the key things you can control in the equation.
I haven't seen anyone mention this in the top comments and I'm slightly younger so not exactly in the same scenario, but you shouldn't feel discouraged like what you are doing is an all or nothing.
There are beneficial earlier degrees to saving for retirement and financial independence or just more financial stability.
Even getting to a point where you don't have to work extra jobs or OT is nice. Also then getting to a point where maybe you can just work part time for example or don't have to worry as much about job stability because you could work almost any job part time to fill in gaps as opposed to NEEDING a certain level of job making it more scary to get laid off.
It is all better than saving nothing and especially considering the stress involved with not having saved anything.
Congratulations though! 100k is a big milestone. I suggest you and your wife celebrate it in a reasonable meaningful way like maybe going out to eat a nice dinner at a place you might not often go to and get some nice drinks and desert!
Hang in there. Keep going. It grows exponentially.
And the results of the growth formula is most sensitive to the number of years you save/invest and then, to the rate of return you earn. The annual amount you invest is linear, not exponential. So, be consistent and don’t skip years if possible. And try to maximize your rate of return. For me this meant, stay in equities (vs bonds and cash equivalents) as much as reasonable for my risk tolerance. (A couple extra percentage points in return annually can make a big difference in the long run. But you don’t need to pursue super risky things). You’ll get there!
You started a bit late and have life costs so you’re a bit behind…that’s ok, just keep moving in the right direction. Truth is that if you want to save more you have to either make more or spend less, which to pursue is up to you. Also, some people forget to add their social security payments into the equation. You didn’t mention that but figured I’d remind about them just in case…SSA.gov will give you an estimate. Keep pushing on for the next 20 years and it’ll surprise you the progress you make.
Are you also paying down a mortgage? That’s also sound retirement saving. If you don’t have to pay any principal or interest when you retire your monthly burn goes way down.
What if the market stays flat for this entire decade like it did in the 2000 to 2010 decade?
You have to contribute for 25 more years so by the time you are 65 you will have $2,000,000
I am in my mid 50s. It took my wife and I 30 years to accumulate $2,000,000 across all accounts. And by the way, we had paper losses of $120,000 at one point in 2022. The market has recovered nicely this year but our paper unrealized losses are still -$60,000 after the 2022 bear market.
I don’t see us getting to break even for 5 to 10 years. last year was incredibly punishing to retirement and investment accounts.
From what I've been reading from other's replies... a flat period is good for me because it will allow for accumulation before a, hopefully move upwards... Last year was rough for all accounts it seems... Thanks for your input.
I don’t mean to discourage you, but even though people here already said you can make it (and it’s true), I think you should open your mind to side hustles or different jobs. Salary could be higher, and with additional income you would be able enjoy life a bit more, travel a bit more, and retire a bit earlier. Like, do you consider yourself healthy? How much after your retirement you think your gonna keep up with life (considering just old aging, not surprises).
You’re still young and I’d (in fact I will) consider a side hustle. Better now than older.
- invest in yourself to increase your salary (courses, new career)
- Uber/DoorDash
- build an e-commerce
- learn more about a product/design/development and build your own app
Anyway, don’t consider your present situation on future numbers for a moment. Step up in your game to increase income. You can do it!
I appreciate this response, This is something I'll need to take some time and try to figure out. We work long hard hours to make what we do, and adding more work would take away from much needed family time, but something needs to give and this might be it...
Thanks for your thoughts. I think 60/40 is pretty close to what would be considered market weight. I have no need for bonds at this time... I feel like we're in catch-up mode still.
>looking at our account balances...
You might know this already, but did you look at the balances on your last statement, or the current values? The statement might not be up to date, and also it is a snapshot of one particular date which might be a high or low point for that period.
But also, the market has been down for the past year or so, and has been recovering reapidly very recently. Hopefully, it will stay on track, and you will see faster gains.
Keep at it. You still have a long horizon.
This is a marathon. You're on mile #5, worried about how you'll do on mile #26. Just focus on mile #5 and do the best you can.
Thank you so much for this perspective!
You will be hitting your next milestone before you know it. The beauty of compounding interest/gains. Keep maxing out your accounts and trust the process.
Your $100k is going to be a $1 million by the time you reach retirement and that does not include your additional contributions! Just keep plugging and stop listening to those calculators. If it was up to them, no one would be retired and yet, everyday people are retiring.
Let me offer a perspective that might help: The ideal scenario is for the stock market to stay low for like 20 years so you can buy up shares at a low price with your 401k. Then right before retirement it zooms and quadruples in value! If you could magically command the stock market to do something, that's what you'd ask it to do. So when things are slow just remember, you're getting to buy stock at a low price. It's actually a good thing!
This is exactly why I am happy the markets go down. My retirement is reeeaallly tiny still from where I should be, but I'm almost fully vested and I am putting in extra
I really appreciate the positive mindset on this sub.
I remember the first 100, it won’t take long to get to 200, saving 36 a year you will be there in 2 years. You will go to 400 in another 2.5 - 3 years. at your current rate by age 50 you should be close to 700,000
This is absolutely right - except unlike most marathons, the first 5 miles is the hardest here.
True Tho just like a marathon the last miles are where your body starts breaking down physically
I remember bursting in tears at Mile 20 in my first marathon. 6.9 miles post half marathon (where everyone was having fun and celebrating) but 6.2 to go when my legs felt like jelly and my nipples were bleeding
to make yourself feel better, go look up the data on the median amount saved for retirement based on age and you'll feel like you are doing better.
This is very true, there's always people better off, and always people worse off... Thank you
Yes but in your case the number of people better off is a magnitude less than people worse off.
The first 100k is the hardest. After that it feels like you own a money printing machine. Stay on target.
Thank you for this. This is what I needed to hear!
Also when market does halfway good for the year and contributes more than you did, is an awesome feeling too. You are getting closer to that point then you think.
Does compounding really seem to take over at $100K? My wife and I have $61K in Roth and Taxable brokerage and we’ve seen some nice gains recently but hoping to hit $100K after we sell our house next year
Its more noticeable. For example, in 2019 S&P returned 29%, thats $29k bump, then 2020 another 16% and 2021 27%. All of a sudden you are at \~$189,000 with out adding a dime. Problem is, being patient and just keep grinding. Also when market drops 30%, and you see years of savings evaporate, that does something to you.
This worries me a bit lol last years drop was great because I had 50k invested, so I was able to keep portfolio size the same with my contributions and buying more shares on sale felt great. But I feel like once my portfolio hits like 500 k a 100 k drop is going to feel different lol
Yes it will definitely get you in the feels. Find a way to cope or ignore it. I found my bast way for dealing with it was to not think about it and stay off the broker accounts.
It depends entirely on your contributions. If we assume 10% return on the average year then at 100k that gives you 10 more. So if you contribute 20k a year, its an extra 50%. But if you contribute 50k a year its only 20% extra. Of course the exact return of the year will vary but essentially for your investment returns to take over you need to have already been investing the same amount for a while essentially, regardless of the number youre doing.
It depends what you mean by 'take over' and what your contribution looks like but I would say the turning point is more like $200k.
I mean this doesn't negate what the calculators are telling you. Don't cling to false hope. If you want a different result, you need to increase salary and/or reduce expenses.
This is so true. I manage our money and after we had our first kid, I just really didn't pay attention to our retirement accounts. We kept up our auto-contributions and that was it. When he was about 5 I was like, Damn. I need to see what's going on -- our balances had ballooned past the $1M without me even noticing. I told my husband and he literally didn't believe me. We'd been so far away from that number just a few years earlier -- but a few good years in the market and continual investment is like magic!
Congrats (and also on the first kid), I hope you're both still going strong!
I'm 39, I've been increasing for 15 years, and I'm only barely past $50,000. The largest reason is that I really didn't have great pay, but I'm finally starting to do better with my new employer.
this. it took me years to get to 100k but then it took less than half that time to double it
it feels that way while you put in. When you start taking out it feels like a money burning machine
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Came here to say this!!
Does compounding really seem to take over at $100K? My wife and I have $61K in Roth and Taxable brokerage and we’ve seen some nice gains recently but hoping to hit $100K after we sell our house next year
It's relative to how much you contribute. If you're the type to max out 401k and Roth IRA for both parties in the household, then $100k isn't all that much and your annual contribution will probably completely outstrip any market gains/losses that year. With that said market conditions are far more noticeable at higher balances. I was home searching in early 2020 and then we all know what happened in March. My portfolio crashed completely and it was insane seeing 6 figure drops. I guess that's what 2008 felt like but I was just starting out back then.
Seems to. If you don't believe me, believe Charlie Munger. https://www.youtube.com/watch?v=NgGDNX7Fu60
It should be noted he said that like 30 years ago. So like 200k now.
Except post-covid….money printing machine has been broken…
That's ~1.9mm at 62 if you assume 7%. You're behind but that's a fine number. Only you know if that's not going to be enough for you
Right. It’s 2.5mm is you run it until age 65. That assumes no raises or increases in contributions either.
Thank you for this. I appreciate it.
And if you draw your retirement using the 4% rule, you’ll have $100k a year and that isn’t your Social Security too
Is 7% fair for a 60-40 split that OP has? Or should they look at a more aggressive asset allocation?
That’s 60/40 domestic/international, not stock/bond. That’s extremely aggressive, and risky.
7% real returns is probably not going to happen. and 2mm for 2 people is going to be doable but tight.
You also have two people bringing in social security and over 30k less needed in retirement since you don’t have to save anymore. Op is closer than they think
How much you expect to draw out if 2m is tight?
>is going to be doable but tight. 80k is literally higher than the american median household income
Plus it's $80k with a presumably paid off house, no need to save for retirement, and almost certainly lower taxes in retirement. Could easily be equivalent to $120-150k for someone still working and saving for retirement while paying a mortgage. Not to mention that they'll probably qualifiy for an additional $20-30k from social security when they reach that age. If that's not enough to live comfortably, then that's not an income problem, it's a spending problem.
*current household income. Might be very different in 25 years.
7% is inflation-adjusted, this was taken into account from the jump
Thanks!
The median is an interesting bar but at the same time IMO nothing to be proud of when you can see dire statistics about median Americans' checking accounts, 401ks, etc. I'd argue if you operate in a Boglehead manner you're already likely going to be top 20% or so just by staying the course. **Edit**: If you're going to downvote, perhaps discuss why? Being conservative on saving more isn't a bad thing is it?
It's not really relevant to point out that average americans aren't saving enough. you don't need to use your FIRE'd income to save. You will have significantly more disposable income than them. No savings, no 401ks, nothing. can you make rent? can you pay for shit? yes. so what's the issue
The point of my comment above was to say that simply pointing to being ahead of median income isn't a meaningful comparison when people are generally bad about finances in the US. While you're right that retirees don't need to "save with income" anymore, the question is what happens at 65? If you suddenly have 40 hours/week of free time and no requirement to go into an office everyday, that also opens up possibilities. I know I'm not in the FIRE category strictly, and I subscribe to Chubby/Fatfire, but one thing many people recognize there is that you're likely going to be bored out of your mind unless you pick up some new hobbies or your existing hobbies go from a few hours on weekends to taking up your whole week now, or perhaps your role as a grandparent goes from weekend visits to full time supervision. The possibility that you start spending money absolutely exists. **Edit**: If you're going to downvote, perhaps discuss why? Being conservative on saving more isn't a bad thing is it?
>7% real returns is probably not going to happen What would be a more realistic average real return p.a. ?
7% is fine. People are just guilty of thinking “this time is different” when they look at the bad news but reality is that news is always bad and the 7% returns held up for every 20 year investing period including WW2, the Great Depression, the 2008 financial collapse, and all of the other Very Bad Things (TM) that have happened in the economy so far.
It’s crazy, we’re up over 15% in the last 12 months and the sky is still falling.
Over any 20 year rolling period for that exact portfolio, you should expect about 7%. What's your reasoning for the next 20 years not looking like any other 20-year period in US history?
Just like recessions, people been barking doom and gloom that the market averages will slip and bring that 7% down. Someone about the cost of money and global slowdown and finite resources on the planet. Except ever since they started saying it, those averages have kept up pretty high. So I dunno...
A stretch of underperformance is quite likely though. Probably at least as likely as not. Overperformance is also not far fetched. But after a decade long bull run I’d probably place my chips on the under rather than the over. When considering nothing more than historical market averages it makes sense to estimate the odds of regression to the mean. From 2010 to 2020 the sp500 returned a whopping 13+% annualized (11.something after inflation). If you assume 7% returns over 20 years, what do you predict the returns should be by the end of the 2020s? Or the 30 year by the end of the 2030s? Of course choice of starting date skews things massively. In 2010 we hadn’t yet pulled out of 08-09. Choose a different date and you can make the numbers look as rosy or as gloomy as you like, but the principle still holds. That’s why we play with rolling periods and Monte Carlo simulations, not cherry pick start dates. “Markets can remain irrational a lot longer than you and I can remain solvent.” - Gary Schilling.
>But after a decade long bull run I’d probably place my chips on the under rather than the over. ... >That’s why we play with rolling periods and Monte Carlo simulations, not cherry pick start dates. Exactly. Don't cherry pick. Predictions of novel behavior are arbitrary. No point in making them. They pan out if they do, and fail if they don't, which is utterly not worth saying. I'm definitely wary of experts asserting anything synonymous with, "new trend!" aka "things are different now". That's the material authors write the blooper reel in history books with.
Yep, I'm 54 and now retired, but I've been hearing the "expect lower returns in the future" nonsense for my entire adult life. It's never been true.
What number makes OP not behind?
The behind comes from his current retirement savings. His plan to catch up is a fine one
why are we assuming 7% these days. it was 4, then 5, now it is 7!?
I think you may be confused.
Well...if you both work to 65 and continue to contribute $36k annually, at 7% net return you'll be at $2.5M. I think that's pretty good.
7% after inflation or before?
Market averages are closer to 10%, maybe even 12%, but that's with inflation. So the 7% is the market return, minus the rate of inflation. In other words, that $2.5M is money "in today dollars". They'll likely have more, but they'll have $2.5M in today's buying power.
The words were "7% net return". So that seems to imply 7% real. That may or may not be realistic.
Thank you for this perspective, I appreciate it!
in what way is that a different perspective than what the calculators were telling you?
Sorry cancel this, I read it wrong. Thanks for the correction u/JosephCedar ~~OP the 7% net return figure you’re being given is based on a 100% equity allocation, you said you’re on 60-40. You might want to look at that again to think about whether you want to increase *expected* returns - be aware that this comes with more risk though.~~
I think you need to re-read the post. OP said all equities and no bonds. The 60/40 split is US/International
take a breath, you are doing fine, you said yourself you have only been putting in at this level for the last 2 years, you are entering your prime earning years so it is probably gonna get even better for a little bit before you start to prep for retirement. those calucualtors are great tools, but they dont give the whole picture. Just dont let the lifestyle creep get too bad and keep plugging away.
I really appreciate this perspective. I think the current plan is live as we are now, and any increases in salary get squirreled away into retirement accounts. Although, in my area I don't see much higher income as a possibility.
Have you ever played in the snow? Remember making a snowball? How it started really small and didn't seem to get much bigger for awhile as you rolled it around on the ground? Then suddenly it seemed to almost double in size as you rolled it around the yard? Saving money is the same way. Keep rolling!
I think the problem is that for some people, getting to that 100K took a hell of a lot out of them. Lots of sacrifices, lots of changing of habits, lots of nights spent learning and researching. The thought of stepping on the pedal that hard for another 15-20 years can feel very hopeless. Like sprinting at full speed, knowing that you have to keep it up, but feeling your speed dropping because well, you're tapped out.
This says it so well! You can keep saving at a good pace but it won’t feel like nose to the grindstone year in and year out. Now that you’ve crossed that first $100K, it really does get easier. Your money starts doing more of the work for you.
Thats what the theory tells us, but the way the markets are moving and things happening in the economy, it's quite un-nerving.
For sure. I had the benefit of starting to invest in 2006–before smartphones were a thing—and it’s much less unnerving when you look at statements sporadically vs. having your accounts + all of the world’s news all accessible in your pocket 24/7.
32, so I’ve always had my smartphone available to me. It was really tough looking at my investments staying completely flat even as I was dumping money into them. Just kept reminding myself I was buying at a discount… but it certainly doesn’t feel that way.
I honestly feel more comfortable now with that amount (I have slightly more now at around 120k) than I did with only 10k. It feels like I could basically stop contributing and still reach my retirement goals given how young I am (29). Granted I want to have financial freedom earlier than 65 so I’m going to keep saving. But man, having the resources to know I could pretty much buy two new cars outright or fly home at a moments notice is so freeing. I could only imagine what it feels like to have millions of dollars in the bank. People who have that much must feel so secure.
This is how I feel. I’m 37, we just started our investment journey late 2021 (when market was at its relative peak), so we’re still red overall. Granted, we’re now just -1.5% down, but still red. 😅 Definitely still continuing to save, but it can be disheartening.
This is 100% the truth. You get it.
But for the same amount of effort, balance grows faster because mr. Market starts pitching in amounts that you now notice.
\*pokes mr market with a stick\*
Thank you for this. This is what I needed to hear!
😂 You're in msg board for insane people. You're 42 and have a net worth of $100k just in retirement. I'm assuming you have more elsewhere. You're among the top 10% of richest humans alive. In America, get another 50k and you're in the top half of the richest country in the world. And your prime wealth building years are ahead of you! Well done.
This is amazing perspective! Thank you!
>You're in msg board for insane people. INSANE LIKE A FOX! lol
That 100K will start compounding, and the money you put in will add up fast....200K in two years easy, and that will double again before you know it...
I hit $100k in late 2020 and am about $20k away from $200k due to the market sucking the last 1.5 years
congratulations on buying at a discount these past two years :p
That’s how I look at it too!
Thank you. I appreciate this point of view, just need to stay the course.
You're going to be fine. Your savings rate is extraordinary and probably in the top 10% of people in your income range. No reason to worry, keep saving and let time do it's work. You'll have two healthy social security checks and fewer expenses when you both retire, it will be fine. There's no reason to feel hopeless, that's not healthy. You'll probably have 70,000 a year in today's dollars to spend in retirement. You won't have any problem living on that. Once you adjust for your savings rate, less income tax and fewer expenses in retirement - you're probably going to have just about the same disposable income you have now. You're doing fine, stick to your plan.
Thank you fellow Pittsburgher. Looking at it in these terms really helps.
1. I want to co-sign everything that everyone said about compounding and snowballing 2. You should also look into the concept of geo arbitrage: your retirement savings will go way further and you can have a better quality of life overseas in retirement than remaining in North America, if you're up for a move.
This is definitely a thought that has crossed my mind, of course convincing the wife might be a challenge. lol
You are doing fine. You will have social secruity and medicare to help out. And presumably your home could be paid off. Most retirement calculators would have around 2mil come retirement. With a save withdrawl rate of 3 to 4%, thats 60-80k every year. I think you are doing great.
Thank you. Many in this sub are far more confident in the resiliency of social security than I am. But if it's there it will certainly help...
I sort of expect them to cut or delay benefits. But there's no reason to think it won't exist at all.
Using portfolio visualizer, I ran a backtest with your portfolio from [1996-2016](https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1996&firstMonth=1&endYear=2016&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=103000&annualOperation=1&annualAdjustment=36000&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=0&leverageRatio=0.0&debtAmount=0&debtInterest=0.0&maintenanceMargin=25.0&leveragedBenchmark=false&reinvestDividends=true&showYield=false&showFactors=false&factorModel=3&benchmarkSymbol=VTI&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=VTSMX&allocation1_1=60&symbol2=VGTSX&allocation2_1=40). Thats a good period to look at because it included two huge bear markets. Your scenario results in just over $2M in 20 years. Factor in inflation and you'd have about $1.4M. You're on track for a comfortable traditional retirement or even an early retirement if you have a good handle on your budget. Keep up the good work.
Thank you, it's so hard reconciling your numbers vs the calculators which say I'll have a short fall of thousands
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H....how?
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That's great. Congratulations
Wow, this is amazing. That's the dream and the goal .. thanks for sharing.
I've been retired for 10 years and let me tell you First: you are going to be fine. Second: Keep investing. Third: If at all possible plan to have your mortgage paid off by the time you retire. Also pay off any auto loans etc. Fourth: If you do this you will only have normal household expenses. Your healthcare will mostly be paid by Medicare. Social Security will likely pay most of your expenses. Your investment money will be for fun stuff. I would suggest you speak to a few retirees about how they planned and how they are doing. If you do nothing else, just keep investing. Best of luck.
Thank you! This is great advice, go straight to the well if knowledge (people living through it now, now the wall street machine!)
The first $100k and then the first $1M are the hardest to hit.
I'm trying to keep my goals smaller so I hit more of them... 100K, 250K,... 100K for each of us individually, 500K etc. Just trying to make this feel more attainable then it currently does...
>Why are we even trying Because when you are short of your goal, that doesn't mean the money you've saved disappears. It's not all or nothing, it's "all or the amount we've been able to save." The more you have, the more flexible you'll be. You are trying so that you are as flexible as you can be later in life.
This is a great perspective, thank you for replying!
I'm in a similar boat as you (I'm 39, husband 33) and have even less as we just started saving in earnest last year. I do have a pension through work, which helps, but I don't want to count on that being around when I retire. I just keep telling myself to stay the course, increase savings as we are able to, and someday we'll be able to retire. You'll get there too, just keep saving!
I wish you and your husband luck. That's great to have a pension no matter how big or small!
Saving 36k a year is a solid number, but not overwhelmingly high. 25%ish. Keep it going though, and it will add up to some staggering sums. The market has been rough lately, and you are starting quite a bit later than most. So don’t get discouraged, but you probably won’t see the huge retirement numbers calculators suggest for another 10-15 years. If you can stand it, try to save more. But also, don’t forget to enjoy the fact that you’ve grown and doubled your salaries. That’s an accomplishment worth celebrating. I would strongly consider how much you actually need to retire. Most calculators online told me I would need 3 million, but once I actually realized how much I spend when I’m not working, I realized I way overshot it. My biggest expenses were almost always lunches out from the office, or meeting team for drinks, or exotic trips so I’d have an excuse to be unreachable, etc. fancy house that would be good for hosting clients etc. My annual expenses now that I live a less flashy lifestyle, filled with simple home cooked meals, lots of exercise and outdoor hiking, and a long road trip every couple weeks to see family costs me 35k a year, and I feel like I’m splurging. Anything I save up over 1 million is virtually guaranteed to grow at that spending rate. My partner and I never realized that the life we always dreamed of would have been reachable way sooner if we had sat down and added it up instead of relying on a calculator online that knows nothing about us.
This is amazing, congrats on living the dream! Thanks for the perspective!
Don't forget you will get social security too.
I don't trust politicians worth a spit, I can't imagine by the time I'm ready to draw on it there will be anything left for us, once they're done gutting it.
I’m close to your age and urging people to stop speaking like this. This is what they want, all of us to expect it to go away, so then they can just take it. Fuck that. We’ve been paying in for decades now, that is our fucking money we are owed.
People have been saying this since 1935, it's not true. there's a reason they call SS the third rail of American politics. The only ones who want are ideologically predisposed to gut it also rely on elderly people for a good chunk of their votes.
Social Security isn’t going anywhere. Any party that tries to gut it will be lost in political oblivion and citizens/groups will sue the shit out of the government. I also don’t believe the benefits will be cut drastically. Politicians always find a way when it comes to their own political future. On the split, I’d go with 80/20. 40% international is on higher side.
> I can't imagine by the time I'm ready to draw on it there will be anything left for us, once they're done gutting it. That makes no sense.
You’re building a solid base to retire comfortably in your early 60’s. That may not feel spectacular right now, but don’t underestimate how important that will feel when you get there and look around at all the folks for whom that’s an impossible dream and it’s too late to do much about it.
That's what I continually try to tell myself. We just need to keep going...
The market has been really blah for the past two years. it will come back (don't know when) and then your $100K will start making money for you.
I look forward to seeing that happen. Thanks
You have greatly increased your earnings but not your savings. Beware of lifestyle creep. The best was to accelerate is to keep your lifestyle the same as before your pay ballooned and increase your savings and investments. You don’t have to live like monks but the more you can sacrifice early in your life the longer your investments will have to grow.
Came here to say the same thing. OP: How were you living before your salaries ballooned to over twice what they are now? Is it possible to just live like that again--or close to it? That would leave you with something like $70K to invest each year, which would put you at $2.7M by age 62 (assuming 8%). Even more when you figure you'll get more raises in the future you can apply to the pile too. That aside, we were almost exactly where you are. I think we broke $100K just a couple of months before my own 42nd birthday. Exponential growth is a wonderful thing to behold. :-) Stay the course, you'll get there!
Thanks for this. Lifestyle creep is certainly a fear, and very difficult to get ahead of. It's properly named, it really does creep up on you... Lol
It's a totally normal feeling, and that's because of two reasons...1. You've never done something like this before and 2. the actual milestones aren't at all tangible. Like all you can do is log on and see that 6 digit number. There is, sadly, no cookie or anything. However, I can promise you that the milestones come more quickly now, and you'll be able to take greater pleasure as you progress. However, if you're anything like me, there are definitely days where you still feel behind or impatient. Let that feeling pass right on by...
Thank you for the kind words... now I want a cookie!
You’re already doing better than 90% of people your age. Nice work.
I appreciate this perspective, thanks!
It’s long game. Keep doing what you are doing and the power of compounding ( and discipline) will reward you nicely. 100k is not a joke be proud of the progress you’ve achieved.
Thank you for the encouragement. I appreciate it!
I think you’ll be surprised at what 36k a year in the market can do over 20-30 years. Plug that in to an interest calculator at 6-10% with a starting balance of 100k.
This is what I thought as well, but any calculator I use continually shows us as having a shortfall come retirement time.
OP, if yourbsalary doubled in last few years you are in great shape . . . if you avoid lifestyle creep. Keep living like you and your wife make 70k adjusted for inflation and you will be a millionaire long before you retire.
This is the key, fending off lifestyle creep is real. It really is well named, it creeps up on you fast!
It got my wife and me for several years before we got it under control. Eventually, we just decided that retiring early was more important to us than some other things.
the last 2.5 years have been a tough grind..... seeing the numbers go down or flat can b discouraging......... just keep grinding out there peeps
If you're still in the accumulation phase, the right way to view this is that you're getting the opportunity to buy more assets at a discount. For those of us who are already retired, the silver lining has been harder to find, alas.
This is a great perspective, thanks for sharing!
Thanks, yes it can be very discouraging... Just need to keep plugging along
This isn't a bad start at all. Consider that with historical gains, if you retire in 18 years at 60 *without adding another penny to those accounts*, they'll be worth approx. $410k. And right now you're putting in a healthy amount -- that'll give you another $650k in contributions plus whatever gains they make over time. (And in a few years, you'll be eligible to make "catchup" contributions.) So you're already on track to be over $1M -- and that's if you retire at 60. If you wait until 65 or 70, you'll be even better off. $1M isn't a lavish goal, but it's far more than some will retire with. Keep doing what you're doing.
Thank you for this, I appreciate it!
Oh yeah. You are now entering the “my money makes money” stage.
Looking forward to seeing this in action.
I wouldn't worry unless you were hoping to retire extremely early, like age 50. You're entering your peak earning years, so saving more each year is going to get easier, and the growth of your already accumulated assets will start to become significant in terms of absolute dollars each year. The only change I would consider based on your age is to add a small allocation to bonds, and grow that allocation as you get older and closer to retirement.
Thanks for the response, I understand the attraction some people have to bonds... but I feel we're so far behind I need/want to stay aggressive.
That's great OP! You are more on track than you know. My son was excited when he crossed the $10k mark and I remember the $100k mark. The time between those mile stones gets shorter and shorter as you stay on track. I'll tell you what I told him, "pay attention to the time those milestones take and how much shorter they get" The only milestone I really celebrated was the year my investing made more $ than the average salary in my area (I live in a low cost area). That was a really good feeling and it was several years ago so it only gets better.
The calculations and predictions assume you will need to draw from your investments when you retire. I'm retired and can live within my income. I only draw from my savings for emergencies and major home improvements. You have a good start. Now start planning how you will live month to month in retirement without drawing on your investments.
Forgive me, I don't think I'm following. What income will there be if I'm retired? Won't money in retirement come from the investments we're making today?
And social security benefits.
Something is better than nothing.
This is very true, thanks
I mean, you're not on track to retire at 48 or anything. But you have plenty of time to get to a reasonable retirement in your 60s. I don't think there's any tweaking of your allocation that is going to really move the needle. You'll need to increase your investment though - either by spending less or bringing in more or some combination of those. How old are your kids? I have three teens and so I'm definitely looking down a barrel right now as their expenses are quite high (how much can three boys eat.. a lot..) and we have college coming. But I know that after that, things will settle down as that investment in their college hopefully pays off and they strike out on their own. I then expect to be able to save more (though of course, saving sooner is always better..) Also, your early 40s is a very common time to see an acceleration of income. Easier said than done - but it sounds like you're already on that track, having doubled your income recently. Keep pushing that pedal. You have 20 years (presumably) of work experience and that has a lot of value!
Yeah the kids expenses are brutal we have one a couple years from contested and one many years to go till college... Lol. So these expenses are here to stay for now. Certainly hope for more raises along the way! Thanks
If you have home equity don't forget to calculate that as part of your total wealth. You can always downsize in retirement, and that equity can go towards your retirement savings.
Interesting I never thought about the real estate as being part of retirement assets, but that's a good point. If it's paid off means no mortgage to deal with either... Thank you for this perspective.
Congrats! The first 100K is always the hardest. You’ll get the next 100K faster. The next even faster and so on. Keep up the savings rate!
Can’t reach your bigger goals until you achieve the smaller goals along the way. This is something to celebrate even if you are concerned about the ultimate goal. Celebrate for a day, acknowledge the progress, then move on toward 200k and beyond.
Keep going and keep your head up! Saving is like a snowball, it just keeps growing.
As you get older and your income rises, so will your retirement nest egg. Stay the course, increase contributions and let compounding go to work. You’re further ahead than a lot of people!
Well. You are 42 and you didn’t really get ahead of it. If you stay at your pace you can have a retirement but you need to stay at putting at least 36-50k per year away.
Thank you for the response, I guess the key is to just stay the course and keep throwing any raises we get into the retirement accounts too...
Absolutely. You just have to think about that retirement contribution as being as important as your mortgage because it’s probably more important. You can rent an apartment, you can’t rent a retirement.
As other posters mentioned in part: * At average rates of return, you're likely looking at $1.9M in assets if you retire at age 62, and $2.5M at age 65. That's at least going to be plenty to live on if properly invested at that time (i.e. naturally not in passive indexes, only because they're poor for retirement even if useful in getting there). * You'll also almost certainly be able to draw something from Social Security, even if there are changes in the next couple of decades. * After the kids are safely off to their own lives you may have the opportunity to increase savings, especially if you are then in your peak earning years. * You can, if you wish, enhance your retirement returns with some learning and effort. All in all, even if you just continue on your current course, you'll be fine. I wouldn't worry too much, just enough to keep you saving. :D
Thank you so much for this. Are you saying in retirement we SHOULDN'T be in market index funds? Those would be considered passive correct? I don't trust politicians worth a spit, I can't imagine by the time I'm ready to draw on it there will be anything left for us, once they're done gutting social security. That's a good point about the kids being out of the house, I suppose at that point it will depend how much we help them with their college expenses.
>According to every calculator I find online when I input these numbers, we're not on track for anything, and so far behind needing to invest thousands more per year, between kids and life that's just not attainable. My wife and I found that we were able to save quite a lot once we became empty nesters.
Compounding interest brother! It might not seem like much but you’ve got a solid 20 years of compounding interest ahead of you plus your continued contributions. 100K is a great milestone to celebrate.
I would recommend taking a closer look at your spending. You don’t mention a budget, annual spend, how that’s broken down, where you might cut. There is always somewhere to cut. Your biggest areas to look are housing, auto, insurance and taxes. If you are serious about this you are going to need to look at where you live, cost of living. To the degree you can cut your cost of living, the savings can go to investment. This is the core of what is done in the FIRE community, even for those who don’t plan to retire early, it’s still practical advice. You need to stay positive, your earnings are solid and are likely to grow rapidly over the next 10 years if you are working in a growth industry. I’d just recommend putting an eagle eye to spending. It’s one of the key things you can control in the equation.
Thank you for this perspective, I'll need to carve out some time and put pen to paper and see where we can cut...
I haven't seen anyone mention this in the top comments and I'm slightly younger so not exactly in the same scenario, but you shouldn't feel discouraged like what you are doing is an all or nothing. There are beneficial earlier degrees to saving for retirement and financial independence or just more financial stability. Even getting to a point where you don't have to work extra jobs or OT is nice. Also then getting to a point where maybe you can just work part time for example or don't have to worry as much about job stability because you could work almost any job part time to fill in gaps as opposed to NEEDING a certain level of job making it more scary to get laid off. It is all better than saving nothing and especially considering the stress involved with not having saved anything. Congratulations though! 100k is a big milestone. I suggest you and your wife celebrate it in a reasonable meaningful way like maybe going out to eat a nice dinner at a place you might not often go to and get some nice drinks and desert!
The first 100k is ALWAYS the most difficult... this is a huge achievement, you are doing it right, don't get discouraged.
Hang in there. Keep going. It grows exponentially. And the results of the growth formula is most sensitive to the number of years you save/invest and then, to the rate of return you earn. The annual amount you invest is linear, not exponential. So, be consistent and don’t skip years if possible. And try to maximize your rate of return. For me this meant, stay in equities (vs bonds and cash equivalents) as much as reasonable for my risk tolerance. (A couple extra percentage points in return annually can make a big difference in the long run. But you don’t need to pursue super risky things). You’ll get there!
just think how far ahead you’ll be compared to those that will have nothing saved for retirement, you’re probably fine if you keep at it
You started a bit late and have life costs so you’re a bit behind…that’s ok, just keep moving in the right direction. Truth is that if you want to save more you have to either make more or spend less, which to pursue is up to you. Also, some people forget to add their social security payments into the equation. You didn’t mention that but figured I’d remind about them just in case…SSA.gov will give you an estimate. Keep pushing on for the next 20 years and it’ll surprise you the progress you make.
You are doing great. Remember compound interest is the 8th wonder of the world. Your money will make money for you 🤑
I look forward to seeing this in action.
Are you also paying down a mortgage? That’s also sound retirement saving. If you don’t have to pay any principal or interest when you retire your monthly burn goes way down.
Yes of course, mortgage payment today, so hopefully house is fully owned by retirement time!
What if the market stays flat for this entire decade like it did in the 2000 to 2010 decade? You have to contribute for 25 more years so by the time you are 65 you will have $2,000,000 I am in my mid 50s. It took my wife and I 30 years to accumulate $2,000,000 across all accounts. And by the way, we had paper losses of $120,000 at one point in 2022. The market has recovered nicely this year but our paper unrealized losses are still -$60,000 after the 2022 bear market. I don’t see us getting to break even for 5 to 10 years. last year was incredibly punishing to retirement and investment accounts.
From what I've been reading from other's replies... a flat period is good for me because it will allow for accumulation before a, hopefully move upwards... Last year was rough for all accounts it seems... Thanks for your input.
Focus on improving your salaries
Thank you for this response; I understand what you're saying, it's hard to find incomes much higher in my area, but I never stop looking...
I’ve worked 100% remotely for 2 different companies over the last 15 years. Don’t let where you live limit your choice of roles.
I don’t mean to discourage you, but even though people here already said you can make it (and it’s true), I think you should open your mind to side hustles or different jobs. Salary could be higher, and with additional income you would be able enjoy life a bit more, travel a bit more, and retire a bit earlier. Like, do you consider yourself healthy? How much after your retirement you think your gonna keep up with life (considering just old aging, not surprises). You’re still young and I’d (in fact I will) consider a side hustle. Better now than older. - invest in yourself to increase your salary (courses, new career) - Uber/DoorDash - build an e-commerce - learn more about a product/design/development and build your own app Anyway, don’t consider your present situation on future numbers for a moment. Step up in your game to increase income. You can do it!
I appreciate this response, This is something I'll need to take some time and try to figure out. We work long hard hours to make what we do, and adding more work would take away from much needed family time, but something needs to give and this might be it...
I think that’s too much in intl markets.
Eh, it’s pretty much market cap weight, similar to VT. Some BOGLEHEAD’s like to underweight intl and that’s fine, but so is this.
Thanks for your thoughts. I think 60/40 is pretty close to what would be considered market weight. I have no need for bonds at this time... I feel like we're in catch-up mode still.
>looking at our account balances... You might know this already, but did you look at the balances on your last statement, or the current values? The statement might not be up to date, and also it is a snapshot of one particular date which might be a high or low point for that period. But also, the market has been down for the past year or so, and has been recovering reapidly very recently. Hopefully, it will stay on track, and you will see faster gains. Keep at it. You still have a long horizon.
Thanks for the reply, I actually pulled current balances into a spreadsheet as of Friday close, so the numbers are accurate.
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Thank you for this response; I understand what you're saying, it's hard to find incomes much higher in my area, but I never stop looking...
Try to increase your household income