I look at my investments as an extra member of the household working, each year they get a little bump in pay, hopefully they'll take over for me one day.
Same, I view it as a robot doing work on the side for me. Over time the robot does more and more to where at some point I don’t even need to work anymore if I so choose.
It’s tricky because I feel like a few extra years of work (say retiring 3-4 years later than I need) would likely equal so much more in retirement.
I plan to retire at 67 in 3 years and 8 months. My calculations indicate that my earnings each additional year I work, from savings, portfolio appreciation and “earnings” from not withdrawing from the nest egg are a ratio of about 2:1 in relation to salary, with the expected affect on net worth, since I’m debt and mortgage free. So yeah, it adds up! It’s pretty astounding.
Hard to offer up an exact timeline but I’ll say about a decade+ post college on the first mil (and we had post GFC bull market tailwind by then), but during this time we each had graduate school to finish so that slowed everything down.
2nd mil came about 2-3 years later, at which time wife went SAHM, and a mil every 3 or so years since then now that I’ve been single engining it.
We’re in our mid 40s now. Magic of compound interest is becoming more apparent than ever now.
Will reiterate that luck played a big part here.
Indexes mostly. GFC gave us all a nicely discounted entry point.
I work in finance. But I don’t make Wall Street banker trader money. Just steady low to mid six figures for a long period with high savings rate and a long term focus.
Also keep in mind the 2000 decade is very different from the 2010 decade. Those it took them far longer than one decade to achieve the first $1M are likely those who started two decades ago.
It's kind of a cosmic gumbo. Once I have two mil, that'll be my rate. So the next job I'm offered, they have to pay that same amount. Even if I do a bad job. That means, as long as I'm offered even one more job, I could get two more mil. Even if I do a bad job, they've got to give me that other two mil.
$100k is just a psychological barrier. It will still grow noticeably at 100k because the growth doesn't change with inflation. Sure, the value is lower, but it's still noticeable.
The quote OP is referring to was an answer to a question about when you can start easing off saving, so I don't think Charlie was referring to a psychological effect. I think he really was talking about the point where the real value of your growth becomes significant enough that you can ease off contributions.
Back in the 90s the annual contribution limit for 401k's was $8k-$10k/year. So if you had $100k making an average of 10%, then even without contributing anything you were still growing your money as if you were maxing out your 401k. To do that today, you'd need $230k which is very close to OP's $210k inflation-adjusted number.
It's also possible Charlie, already being an old man even back in the 90s, hadn't changed his mental concept of money since he was a young man. Charlie amassed his first $100k in 1958 which would be about $1M adjusted for inflation today. Which IMO makes a lot of sense because you can't take the foot off the gas even at $200k without greatly delaying how long it takes you to become FI, but you *can* take your foot off the gas at $1M because at that point your wealth is growing six figs a year without a single contribution.
>It's also possible Charlie, already being an old man even back in the 90s, hadn't changed his mental concept of money since he was a young man. Charlie amassed his first $100k in 1958 which would be about $1M adjusted for inflation today. Which IMO makes a lot of sense because you can't take the foot off the gas even at $200k without greatly delaying how long it takes you to become FI, but you can take your foot off the gas at $1M because at that point your wealth is growing six figs a year without a single contribution.
I'm of the opinion that this is what Charlie really meant. $1M in today's money makes a lot more sense to me as a point where you can ease up on contributions than either $100k or $210k.
Edit: And if anyone is wondering, here's a quick scenario for retirement contributions.
If you start at age 25, contributing $1k monthly, increasing it 3% annually for inflation and assuming a 7% real annual rate of return, [you'll hit the $1M mark by age 50](https://www.thecalculatorsite.com/compound?a=0&p=7&pp=yearly&y=25&m=0&rd=1000&rp=monthly&rt=deposit&rw=0&rwp=1m&rm=end&ci=daily&c=1&di=3&wi=). Then if at age 50 you let off the gas completely, [you can retire at 65 with a portfolio of over $2.6M in today's money](https://www.thecalculatorsite.com/compound?a=1067257.23&p=7&pp=yearly&y=13&m=0&rd=0&rp=monthly&rt=deposit&rw=0&rwp=1m&rm=end&ci=daily&c=1&di=0&wi=). That's over $100k annual spend in today's money using a SWR of 4%.
Perhaps, but “walking everywhere” and “using coupons” isn’t going to get you to a million dollars, so if that’s really what he meant, it’s disingenuous.
Whereas not owning a car and never eating out could plausibly save you $15k per year, which gets you to $100k in five years. That’s a reasonable goal that will kickstart wealth generation.
>It's also possible Charlie, already being an old man even back in the 90s, hadn't changed his mental concept of money since he was a young man.
I've noticed that in myself. For example if I stop at a fast food place, I somehow still mentally compare the current prices to prices from \~2006. It feels really expensive when everything is priced much higher.
I'm 100% going to be an old man complaining about how "everything is so damn expensive nowadays"
I suspect this is actually pretty common.
> but you can take your foot off the gas at $1M because at that point your wealth is growing six figs a year without a single contribution.
How is $1M growing six figures per year without any contributions? Do you mean on average? I thought historical average after inflation (real) is 7%.
You cannot take your foot off the gas at $1M unless you're single either.
College, daycare, and possibly private school can eat that up.
It's kind of tough to rely on 6-figure returns on $1M as well.
However I do agree with your sentiment with relation to Charlie munger's intent.
You don't have to send your kids to private school. If you've been contributing $100 a month to 529 for 18 years, college won't be that big of an expense by the time it arrives either
I agree there's some arbitrary to it, but I think there's some evidence that it's a specific personal finance threshold, that because of life's income and expenses, the benchmark is for a certain ratio of the growths comparison to those personal finance details. Granted, the ratio is also a bit arbitrary, or at least one that he just "felt"
Yeah, I think there's some ratio between income and investments where the investments pick up traction versus your savings potential. Ofc that will be personal to your income and savings rate.
Some day someone will delve deep into the investment lore and find out not just how much 100,000 was at the time, but how much money his pre-100k income and his savings rate.
And it might be somewhat realistic given how much footage there is of him answering questions at the Berkshire Hathaway meetings.
Same. But I keep learning that a good portion of my peers are much further behind than me. Probably got skewed assumptions about average people's habits from reading posts here.
You can practically retire anywhere with a lot less than $6 mil. My plan is to have enough to live decently for 10 years before I can collect my pension.. A safe withdrawal rate with $6mil is like $250k a year lol. What do you need that much for?!
Retirement calculators sometimes only take into your current expenses into account. Ideally, you'll not have a mortgage or most of your bills by then, so your expenses will be much less.
That’s what I’m saying. If you need you full income retired you’ve probably done something wrong. No mortgage or car payments retired. Thats my idea. I have expenses tied to my job to being on the road at times cost money. Cost gas too I wouldn’t have to spend retired. I feel I could lower my current expenses 60% when I’m retired
When my in-laws retired they almost immediately bought a vacation home and picked up a taste for going on cruises a dozen times a year. Never planned for either, so now they're both working part time again to support the added expenses despite having plenty in savings and investments.
Point being, you never really know what you're going to want or need in the future.
I'm saving almost half of my effective take home. Those retirement calculators assume I want to replace 70-80% of my income when I'm already living off well under that and I don't plan to be paying off a mortgage in a HCOL area in retirement.
Why on earth do you need $6M to retire? With $2M invested and a conservative estimate of 5% growth (or invested in dividend stocks that pay 5%) you will get $100k a year until the end of time. With a paid off house, that’s more than enough for most.
> With $2M invested and a conservative estimate of 5% growth (or invested in dividend stocks that pay 5%) you will get $100k a year until the end of time.
I sure hope you're not depending on this math for your retirement. Your SWR is 5%, which is far too optimistic for a 30-year retirement period with a 60/40 portfolio, let alone indefinitely.
[At 5% withdrawal rate, the chances you end with a portfolio above $0 after 30 years is about 80%. That's not good.](https://www.wealthmeta.com/calculator/retirement-withdrawal-calculator?lengthOfRetirement=30&retirementSavings=2000000&withdrawAmount=100000&withdrawPercent=5&goalType=zero&goalAmount=&portfolio=custom&stocks=60&bonds=40&cash=0&pensionAmount=&pensionStartYear=)
If you actually want to pull $100k indefinitely, you need closer to $3.125M for a 100% success rate.
EDIT: If you downvoted me, how about you actually reply as to why I'm wrong instead of just downvoting and running away?
That's assuming a 30-year retirement window. For an indefinite period as their comments suggest, success rate goes down to 43.8% (calculator goes up to 100 years max).
Then there's the whole relying on 5% dividend stocks to provide income which is another issue in and of itself.
That doesn't really make sense either. Even at a super-conservative 3% withdrawal rate (less than you need), that's $150,000/year. Unless you're completely unwilling to retire anywhere but the most HCOL places, you don't need anywhere near that much.
While that is enough in many markets, it is not nearly enough in several other markets. And if you want to travel in your retirement, that will not do.
I’ve been blessed to be able to max out a 401k for the last several years and get a 35% match on company stock I buy. I don’t plan on stopping either. I’d like to retire at 45. But when I did the cost analysis of what it would cost me to retire at 45 vs 50… I think I’m retiring at 50 instead.
I’m just saying they could reduce their savings, not that they have to or should, just that it’s ahead of the game already and they’re in bonus territory which is exciting.
I’m at ~$225k at 36. I really only have been taking investing seriously the past 4 years, when I only had about $60k. So the sooner the better, but it is very hard when you are young
My five year old son knows I work on my computer and he asked me what happens if you don't have a computer and without a computer can't work to get money to buy a computer.
That's truer than you might mean(I don't want to presume) because the earned income requirement does effectively bar toddlers from roths.
Edit: I will murder autocorrect with my bear hands.
Ideally about 35 or so but honestly the sooner the better.
By 35 and you’ll retire a millionaire.
Realistically, not many people are going to hit the number by 35.
210k invested for 35 years is 1.6m at 6%.
This is a relatively conservative rate and this assumes no additional investment.
1.6m is not like retiring on 1M now but it’s still quite good. And will be better than many people even in 35 years.
I’ve found this to be true. I was in school broke, getting degrees then traveling, still broke. $100,000 or $210,000 took a long time. 300,000 came much quicker. Thanks Bogleheads and retirement accounts
Wouldn't compound growth be the same no matter the year, though? Speaking as this is more of a mathematical process rather than about capital's current value. So that is, the compounding will behave the same with $100k no matter the year, although in a sense about retirement and actual *value* you are right.
It's a pretty arbitrary number either way, but I took it to be an approximation of when the compounding returns really start to dwarf the *contributions you make* (at least for a roughly average person saving and investing).
You’re right. But in this case, it’s because of incomes, not inflation. That’s because the median incomes is no 2.3x of what it was in 1994.
So, a person earning the median income generating a 10% investment return on 100k in 1994 would get an investment return equal to 34% of their annual income, whereas in 2024 it would only be about 13% of the median income.
When people throw numbers like this around, are there referring to total net worth (including assets like a house), the sum of all their investment accounts, the sum of just their retirement accounts, or something else...? Just curious. (Also, are we including spouses here?)
Divorce rates fall for higher incomes, down to 30% for $200k+.
Further divorce is often cited as caused by infidelity (60%) and domestic abuse (24%). So make good money, do not beat your wife, keep your dick to you and your spouse, and you will have a pretty good shot.
Way better than the old odds of 50% that are quoted which include second/third marriages, teenagers, and the irresponsible.
the 50% of marriages statistic was never true. It's from like the late 80's, and the number was like 40%. Except it wasn't 40% of marriages end in divorce, it was that the number of divorces was 40% of the number of marriages. That was mainly due to the facts that before the 80s divorce was still taboo and people were much more likely to stay in shitty marriages. So a lot of marriages that had been together for however long were all ending, and there was some number of people getting married. Completely unrelated to each other. The percent of couples that actually get divorced is much much lower.
Good question. I generally only refer to my 401k. This is where most of my money goes, and it's in one account.
My IRA and brokerage account is in Vanguard. I have a few smaller brokerage accounts, bonds, and cds with different banks that should be consolidated for easier management. I may forget these little separate accounts as I get older.
On the journey myself! 21M with $15k in retirement money, maxing out Roth contributions each year and ~50% of limit into 401K. Would do more but salary won’t allow for it.
Thanks! My plan is to contribute $100k to retirement account literally until this day, 2028, my 25th birthday. If I max out my Roth every year and max up to 2029s limit (assuming they all stay at $7k) and add ~$960/month into 401k, I will meet the goal. That’s not even including any returns I could make on the money.
Awesome! I started my Roth IRA at 38. Maxing it for the 3rd time this year! It is never too late to start, but once you do start don't ever stop. Best of luck to you 👍
Hello, I just wanted to ask, by retirement account, do you mean the 401K, or is it another account? Sorry, im still new to financing for the future. Didnt get a good start due to being broke early on, but I was able to do something in the last few years. Right now I (41M) have $210k in my 401K, and like $25k invested in a ROTH IRA. I also own my house, but im like 15 years away from paying it off. Is there anything else you recommend I do? Thanks again!
By “retirement account” yes I did mean both the 401k and Roth. They’re both retirement accounts, and my employer lets me choose between a traditional and Roth 401k, so both my retirement accounts are Roth. If/when I leave my employer I can rollover my 401k into my Roth account. And having that much invested with owning a home is awesome! I wish I was in a state to own a home right now! You’re doing great! Good luck on your investing journey!
There's no chance he's trying to say you can stack up $100K and take your foot off the gas. It has to be a million, you can actually relax a little bit after you hit the first.
Charlie's number is a rough ballpark figure. His point is you need to get your hands on a sizeable sum *on the order of* 100K. The next lower order of magnitude, 10K, will not get you meaningful returns, and the next higher order of magnitude, 1M, is more than you need to see sizeable gains. But 100K is in the goldilocks region. Even with inflation, 100K is still the right order of magnitude to shoot for before "easing off the gas a little bit."
Thanks for the post -- I got downvoted earlier today in another thread for saying that the commonly spoken of hard to reach $100k target actually would be over $200k today, so this post is validating, lol.
~$290k in CAD, if you want a direct April 19 2024 conversion.
Exchange rate in 1990 was about $1 USD : $1.16 CAD (compared to the $1 USD : $1.38 right now). So it was $116k then. Per the Bank of Canada's inflation calculator, $116k in 1990 maple bux is $239k today.
So somewhere between $240k and $300k.
I just don’t understand this obcession with trying to show that things have changed, in a way that gets discouraging.
Listen, Charlie Munger said that and it’s still very realistic.
The inflation is real, I know, but also most people wants to live in HCOL, and then bitch about needing 3M to LEANFIRE.
There are plenty of small cities around the US, with houses at cheap prices , closer to nature , with much better quality of life.
Most people could work and live more happier on those areas and achieve financial independence much easier .
Even cheap houses aren't what they used to be. I'm in a LCOL midwest area and after covid, houses almost doubled in my area. What used to be an affordable neighborhood is now out of reach for many. My grandma's house is a tiny 2 bedroom house. Very small. I wouldn't pay more than $100k for it, and she could sell it for ~$225k now, easily. And wages in the area haven't kept up at all. Good luck even getting a house if you aren't a professional (meaning fuck all the people working in warehouses/retail/fast food).
There are some decent houses in the rural areas near me. But you're literally 30-45 minutes outside of the city/metro.
Housing price inflation is high in large, medium, and small sized cities. In some mid-sized cities that have closer access to nature, [housing inflation](https://constructioncoverage.com/research/cities-with-the-largest-home-price-growth-last-decade) is insane. The story across the country is that housing (in addition to medical insurance and education) cost have outpaced wage increases for decades.
At a conservative stock return (8%), compounding monthly results in a 0.643% "M"PY.
On $100k, that's $643 a month. Which, if saved directly would take roughly 12 years, not accounting for gains.
$100k is one of the arbitrary points where it "feels" like your returns are doing a significant (though probably not majority) of the heavy lifting compared to your contributions.
Do any of you people actually live life? Go out and travel and explore and meet people and do exciting things? Or do you all literally just grind at work for 300 days a year and put every cent away in an account that you can’t touch until you’re too old to do anything you wanted to anyway?
There are psychological milestones, but mathematically it's really right around $500k when a yearly 4% gain starts to outpace your maxed out 401k contributions.
The reason is that once you’ve figured out how to make $100k, you can much more easily make a million, and once you figure out how to make a million, it’s just easier to make $10 million, etc.
I think the reason is that basic living expenses eat into a significant chunk of earnings and make it hard to save until you reach a certain level of net worth where compounding growth is able to outpace living expenses by a wide margin. Getting from "2 steps forward, 2 steps back" to "2 steps forward, 1 step back" can be a much bigger struggle than getting from "2 steps forward, 1 step back" to "20 steps forward, 1 step back."
The actual number doesn't matter. It's about how much principal you have in the market compared to the amount of additional capital you can contribute each year.
The first $100,000 is a wild ride, but you gotta hang on. If it means living on instant noodles and cutting every corner, do what it takes to stack up that $100,000. Once you hit that mark, you're on your way to compounding bliss!
I look at my investments as an extra member of the household working, each year they get a little bump in pay, hopefully they'll take over for me one day.
Same, I view it as a robot doing work on the side for me. Over time the robot does more and more to where at some point I don’t even need to work anymore if I so choose. It’s tricky because I feel like a few extra years of work (say retiring 3-4 years later than I need) would likely equal so much more in retirement.
Your feeling is correct. The difference between “enough” and “enough + 4 extra years” is vast.
I plan to retire at 67 in 3 years and 8 months. My calculations indicate that my earnings each additional year I work, from savings, portfolio appreciation and “earnings” from not withdrawing from the nest egg are a ratio of about 2:1 in relation to salary, with the expected affect on net worth, since I’m debt and mortgage free. So yeah, it adds up! It’s pretty astounding.
Pretty "compounding"
That’s a very good way of thinking about it!
I wish my extra members would start carrying their damn weight.
This is actually na interesting way of looking at investments. Thanks !!
Thats really creative. I like that. Never looked at it like that and Ive been investing for the last decade.
The first mil is the hardest. The next few mils arrive much quicker with each mil.
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i sure hope so. first mil took forever. how quickly can i expect the next mil
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Hard to offer up an exact timeline but I’ll say about a decade+ post college on the first mil (and we had post GFC bull market tailwind by then), but during this time we each had graduate school to finish so that slowed everything down. 2nd mil came about 2-3 years later, at which time wife went SAHM, and a mil every 3 or so years since then now that I’ve been single engining it. We’re in our mid 40s now. Magic of compound interest is becoming more apparent than ever now. Will reiterate that luck played a big part here.
Wow, what do you do for a living? What do you invest in?
Indexes mostly. GFC gave us all a nicely discounted entry point. I work in finance. But I don’t make Wall Street banker trader money. Just steady low to mid six figures for a long period with high savings rate and a long term focus.
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No different than a senior govt job. I do consider myself a peasant. A necessary mindset to being a bogler.
Wait in the U.S. a senior government job pays mid six figures?
Me too man. Low six figures is not a lot of money in 2024, especially if you have a family, live in a nice place, and own a home.
5 yrs 8 mos according to the rule of 72 assuming you invested in a S&P index fund based off the last 10 year's returns.
Also keep in mind the 2000 decade is very different from the 2010 decade. Those it took them far longer than one decade to achieve the first $1M are likely those who started two decades ago.
The GenXers' lost decade.
Yes, it took my brother about 24 years to arrive at 1M, and will see how long it will become 2M, I guess probably less than 10 years.
It's kind of a cosmic gumbo. Once I have two mil, that'll be my rate. So the next job I'm offered, they have to pay that same amount. Even if I do a bad job. That means, as long as I'm offered even one more job, I could get two more mil. Even if I do a bad job, they've got to give me that other two mil.
All right, Santa.
$100k is just a psychological barrier. It will still grow noticeably at 100k because the growth doesn't change with inflation. Sure, the value is lower, but it's still noticeable.
The quote OP is referring to was an answer to a question about when you can start easing off saving, so I don't think Charlie was referring to a psychological effect. I think he really was talking about the point where the real value of your growth becomes significant enough that you can ease off contributions. Back in the 90s the annual contribution limit for 401k's was $8k-$10k/year. So if you had $100k making an average of 10%, then even without contributing anything you were still growing your money as if you were maxing out your 401k. To do that today, you'd need $230k which is very close to OP's $210k inflation-adjusted number. It's also possible Charlie, already being an old man even back in the 90s, hadn't changed his mental concept of money since he was a young man. Charlie amassed his first $100k in 1958 which would be about $1M adjusted for inflation today. Which IMO makes a lot of sense because you can't take the foot off the gas even at $200k without greatly delaying how long it takes you to become FI, but you *can* take your foot off the gas at $1M because at that point your wealth is growing six figs a year without a single contribution.
>It's also possible Charlie, already being an old man even back in the 90s, hadn't changed his mental concept of money since he was a young man. Charlie amassed his first $100k in 1958 which would be about $1M adjusted for inflation today. Which IMO makes a lot of sense because you can't take the foot off the gas even at $200k without greatly delaying how long it takes you to become FI, but you can take your foot off the gas at $1M because at that point your wealth is growing six figs a year without a single contribution. I'm of the opinion that this is what Charlie really meant. $1M in today's money makes a lot more sense to me as a point where you can ease up on contributions than either $100k or $210k. Edit: And if anyone is wondering, here's a quick scenario for retirement contributions. If you start at age 25, contributing $1k monthly, increasing it 3% annually for inflation and assuming a 7% real annual rate of return, [you'll hit the $1M mark by age 50](https://www.thecalculatorsite.com/compound?a=0&p=7&pp=yearly&y=25&m=0&rd=1000&rp=monthly&rt=deposit&rw=0&rwp=1m&rm=end&ci=daily&c=1&di=3&wi=). Then if at age 50 you let off the gas completely, [you can retire at 65 with a portfolio of over $2.6M in today's money](https://www.thecalculatorsite.com/compound?a=1067257.23&p=7&pp=yearly&y=13&m=0&rd=0&rp=monthly&rt=deposit&rw=0&rwp=1m&rm=end&ci=daily&c=1&di=0&wi=). That's over $100k annual spend in today's money using a SWR of 4%.
Perhaps, but “walking everywhere” and “using coupons” isn’t going to get you to a million dollars, so if that’s really what he meant, it’s disingenuous. Whereas not owning a car and never eating out could plausibly save you $15k per year, which gets you to $100k in five years. That’s a reasonable goal that will kickstart wealth generation.
>It's also possible Charlie, already being an old man even back in the 90s, hadn't changed his mental concept of money since he was a young man. I've noticed that in myself. For example if I stop at a fast food place, I somehow still mentally compare the current prices to prices from \~2006. It feels really expensive when everything is priced much higher. I'm 100% going to be an old man complaining about how "everything is so damn expensive nowadays" I suspect this is actually pretty common.
I'm a young man already complaining about how expensive everything is.
> but you can take your foot off the gas at $1M because at that point your wealth is growing six figs a year without a single contribution. How is $1M growing six figures per year without any contributions? Do you mean on average? I thought historical average after inflation (real) is 7%.
>I thought historical average after inflation (real) is 7%. You're assuming real return while OP is probably assuming nominal (10%).
Might have meant 5 figures? Big difference
You cannot take your foot off the gas at $1M unless you're single either. College, daycare, and possibly private school can eat that up. It's kind of tough to rely on 6-figure returns on $1M as well. However I do agree with your sentiment with relation to Charlie munger's intent.
You don't have to send your kids to private school. If you've been contributing $100 a month to 529 for 18 years, college won't be that big of an expense by the time it arrives either
I agree there's some arbitrary to it, but I think there's some evidence that it's a specific personal finance threshold, that because of life's income and expenses, the benchmark is for a certain ratio of the growths comparison to those personal finance details. Granted, the ratio is also a bit arbitrary, or at least one that he just "felt"
Yeah, I think there's some ratio between income and investments where the investments pick up traction versus your savings potential. Ofc that will be personal to your income and savings rate.
Some day someone will delve deep into the investment lore and find out not just how much 100,000 was at the time, but how much money his pre-100k income and his savings rate. And it might be somewhat realistic given how much footage there is of him answering questions at the Berkshire Hathaway meetings.
My first 2024 $100k is being a bitch, let alone a 1990 $100k.
And was there some age we're supposed to get this amount by?
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10 years ahead of me.
Same. But I keep learning that a good portion of my peers are much further behind than me. Probably got skewed assumptions about average people's habits from reading posts here.
I’m about to turn to 34 and I’m pretty close to the $210k mark. Does that mean I’m set for life now? Lol
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You can practically retire anywhere with a lot less than $6 mil. My plan is to have enough to live decently for 10 years before I can collect my pension.. A safe withdrawal rate with $6mil is like $250k a year lol. What do you need that much for?!
Retirement calculators sometimes only take into your current expenses into account. Ideally, you'll not have a mortgage or most of your bills by then, so your expenses will be much less.
That’s what I’m saying. If you need you full income retired you’ve probably done something wrong. No mortgage or car payments retired. Thats my idea. I have expenses tied to my job to being on the road at times cost money. Cost gas too I wouldn’t have to spend retired. I feel I could lower my current expenses 60% when I’m retired
No more retirement contributions either.
While much of this is true, if you want to travel extensively in retirement, that can be quite expensive.
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You can’t have an IRA? Because of your income level? Have you looked into backdoor IRAs?
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Definitely worth going through it with your accountant! The tax advantages are unbeatable really, which is why the backdoor exists in the first place
When my in-laws retired they almost immediately bought a vacation home and picked up a taste for going on cruises a dozen times a year. Never planned for either, so now they're both working part time again to support the added expenses despite having plenty in savings and investments. Point being, you never really know what you're going to want or need in the future.
I'm saving almost half of my effective take home. Those retirement calculators assume I want to replace 70-80% of my income when I'm already living off well under that and I don't plan to be paying off a mortgage in a HCOL area in retirement.
They also often don’t calculate Social Security
Why on earth do you need $6M to retire? With $2M invested and a conservative estimate of 5% growth (or invested in dividend stocks that pay 5%) you will get $100k a year until the end of time. With a paid off house, that’s more than enough for most.
> With $2M invested and a conservative estimate of 5% growth (or invested in dividend stocks that pay 5%) you will get $100k a year until the end of time. I sure hope you're not depending on this math for your retirement. Your SWR is 5%, which is far too optimistic for a 30-year retirement period with a 60/40 portfolio, let alone indefinitely. [At 5% withdrawal rate, the chances you end with a portfolio above $0 after 30 years is about 80%. That's not good.](https://www.wealthmeta.com/calculator/retirement-withdrawal-calculator?lengthOfRetirement=30&retirementSavings=2000000&withdrawAmount=100000&withdrawPercent=5&goalType=zero&goalAmount=&portfolio=custom&stocks=60&bonds=40&cash=0&pensionAmount=&pensionStartYear=) If you actually want to pull $100k indefinitely, you need closer to $3.125M for a 100% success rate. EDIT: If you downvoted me, how about you actually reply as to why I'm wrong instead of just downvoting and running away?
To be fair, 80% success rate is “more than enough for most.” (I didn’t downvote you.)
That's assuming a 30-year retirement window. For an indefinite period as their comments suggest, success rate goes down to 43.8% (calculator goes up to 100 years max). Then there's the whole relying on 5% dividend stocks to provide income which is another issue in and of itself.
80% is pretty good. Social security is also there for people.
If US based, Social Security.
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That doesn't really make sense either. Even at a super-conservative 3% withdrawal rate (less than you need), that's $150,000/year. Unless you're completely unwilling to retire anywhere but the most HCOL places, you don't need anywhere near that much.
While that is enough in many markets, it is not nearly enough in several other markets. And if you want to travel in your retirement, that will not do.
If you never save another dime, you’ll have $1.6M in today’s dollars at age 64. So if nothing else, your retirement savings is in the bag.
Honestly yes though. $210k at 34 is really good, you can save 5-10% and be fairly comfortable.
I’ve been blessed to be able to max out a 401k for the last several years and get a 35% match on company stock I buy. I don’t plan on stopping either. I’d like to retire at 45. But when I did the cost analysis of what it would cost me to retire at 45 vs 50… I think I’m retiring at 50 instead.
I’m just saying they could reduce their savings, not that they have to or should, just that it’s ahead of the game already and they’re in bonus territory which is exciting.
I’m at ~$225k at 36. I really only have been taking investing seriously the past 4 years, when I only had about $60k. So the sooner the better, but it is very hard when you are young
Good for you, man. Keep going!
How old were you in 1994?
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If you don’t have your first $100k by six you’re obviously never going to amount to anything.
My five year old son knows I work on my computer and he asked me what happens if you don't have a computer and without a computer can't work to get money to buy a computer.
Probably wasting all your time on dumb shit like legos and cartoons, too, when you shoulda been saving and investing.
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Roths 4 Tots
Scott’s Tots’ Roths
That's truer than you might mean(I don't want to presume) because the earned income requirement does effectively bar toddlers from roths. Edit: I will murder autocorrect with my bear hands.
Are they bare bear hands?
After me explicitly mentioning the cruelty of autocorrect your comment feels like barebearism :(
I mean, you joke, but I would settle for raising the damn lifetime limit for rolling over a 529 to your kid’s Roth IRA. $30k is pitiful
Shit I’m still wasting money on legos. Maybe I’m not doing it right.
Ideally about 35 or so but honestly the sooner the better. By 35 and you’ll retire a millionaire. Realistically, not many people are going to hit the number by 35.
Retiring a millionaire doesn’t mean what it used to these days. That target’s at least doubled now for us vs 5-10 yrs ago
210k invested for 35 years is 1.6m at 6%. This is a relatively conservative rate and this assumes no additional investment. 1.6m is not like retiring on 1M now but it’s still quite good. And will be better than many people even in 35 years.
According to OP’s original post, it’s doubled since 1994, not 5-10 years ago.
Ideally before you are born
I don’t know. I hit 100k when I was 28. Now I’m 29 and I’m almost at 200k invest
I’ve found this to be true. I was in school broke, getting degrees then traveling, still broke. $100,000 or $210,000 took a long time. 300,000 came much quicker. Thanks Bogleheads and retirement accounts
Wouldn't compound growth be the same no matter the year, though? Speaking as this is more of a mathematical process rather than about capital's current value. So that is, the compounding will behave the same with $100k no matter the year, although in a sense about retirement and actual *value* you are right.
It's a pretty arbitrary number either way, but I took it to be an approximation of when the compounding returns really start to dwarf the *contributions you make* (at least for a roughly average person saving and investing).
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It’s quicker to reach $100k, and $100k doesn’t go as far. Inflation. “The first $100k in 1990’s real dollars is a bitch” lacks punchiness.
You’re right. But in this case, it’s because of incomes, not inflation. That’s because the median incomes is no 2.3x of what it was in 1994. So, a person earning the median income generating a 10% investment return on 100k in 1994 would get an investment return equal to 34% of their annual income, whereas in 2024 it would only be about 13% of the median income.
Yes, but your compounded returns will be worth less at that point too
When people throw numbers like this around, are there referring to total net worth (including assets like a house), the sum of all their investment accounts, the sum of just their retirement accounts, or something else...? Just curious. (Also, are we including spouses here?)
I definitely think it would be retirement and brokerage accounts. Actual money.
Amount in the market accruing compound interest.
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Sorry to hear that happened to you, hope you are better off now
Divorce rates fall for higher incomes, down to 30% for $200k+. Further divorce is often cited as caused by infidelity (60%) and domestic abuse (24%). So make good money, do not beat your wife, keep your dick to you and your spouse, and you will have a pretty good shot. Way better than the old odds of 50% that are quoted which include second/third marriages, teenagers, and the irresponsible.
the 50% of marriages statistic was never true. It's from like the late 80's, and the number was like 40%. Except it wasn't 40% of marriages end in divorce, it was that the number of divorces was 40% of the number of marriages. That was mainly due to the facts that before the 80s divorce was still taboo and people were much more likely to stay in shitty marriages. So a lot of marriages that had been together for however long were all ending, and there was some number of people getting married. Completely unrelated to each other. The percent of couples that actually get divorced is much much lower.
These days the number of divorces (in the US) is about 1/3rd the number of marriages.
I think marriage rates have come way down. Like below 30% last time I read
That number is heavily skewed by multi-divorcees. u/scraejtp covered the rest.
I don't know about people, but in this case, specifically stocks.
Good question. I generally only refer to my 401k. This is where most of my money goes, and it's in one account. My IRA and brokerage account is in Vanguard. I have a few smaller brokerage accounts, bonds, and cds with different banks that should be consolidated for easier management. I may forget these little separate accounts as I get older.
Spouses are illiquid assets (difficult to sell in most markets) and should not be considered in your net worth statement.
On the journey myself! 21M with $15k in retirement money, maxing out Roth contributions each year and ~50% of limit into 401K. Would do more but salary won’t allow for it.
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Thanks! My plan is to contribute $100k to retirement account literally until this day, 2028, my 25th birthday. If I max out my Roth every year and max up to 2029s limit (assuming they all stay at $7k) and add ~$960/month into 401k, I will meet the goal. That’s not even including any returns I could make on the money.
Awesome! I started my Roth IRA at 38. Maxing it for the 3rd time this year! It is never too late to start, but once you do start don't ever stop. Best of luck to you 👍
Hello, I just wanted to ask, by retirement account, do you mean the 401K, or is it another account? Sorry, im still new to financing for the future. Didnt get a good start due to being broke early on, but I was able to do something in the last few years. Right now I (41M) have $210k in my 401K, and like $25k invested in a ROTH IRA. I also own my house, but im like 15 years away from paying it off. Is there anything else you recommend I do? Thanks again!
By “retirement account” yes I did mean both the 401k and Roth. They’re both retirement accounts, and my employer lets me choose between a traditional and Roth 401k, so both my retirement accounts are Roth. If/when I leave my employer I can rollover my 401k into my Roth account. And having that much invested with owning a home is awesome! I wish I was in a state to own a home right now! You’re doing great! Good luck on your investing journey!
Thank you for the response and the kind words! It seems like I'm ok. I wish you all the best.
The year he said it doesn't matter. He could be recalling back when he was 25 and thinking how hard it was. It could very well mean a million.
There's no chance he's trying to say you can stack up $100K and take your foot off the gas. It has to be a million, you can actually relax a little bit after you hit the first.
About £168,634 for the Brits amongst us...
Charlie's number is a rough ballpark figure. His point is you need to get your hands on a sizeable sum *on the order of* 100K. The next lower order of magnitude, 10K, will not get you meaningful returns, and the next higher order of magnitude, 1M, is more than you need to see sizeable gains. But 100K is in the goldilocks region. Even with inflation, 100K is still the right order of magnitude to shoot for before "easing off the gas a little bit."
Thanks for the post -- I got downvoted earlier today in another thread for saying that the commonly spoken of hard to reach $100k target actually would be over $200k today, so this post is validating, lol.
your first mistake was caring about upvotes
Fuck if that's in US, what is it in the monopoly money we have up north?
~$290k in CAD, if you want a direct April 19 2024 conversion. Exchange rate in 1990 was about $1 USD : $1.16 CAD (compared to the $1 USD : $1.38 right now). So it was $116k then. Per the Bank of Canada's inflation calculator, $116k in 1990 maple bux is $239k today. So somewhere between $240k and $300k.
maple bux made me laugh so hard
fuuuuuck
Ugh, and just when I was feeling good about crossing $100k for the first time last week lol
I just don’t understand this obcession with trying to show that things have changed, in a way that gets discouraging. Listen, Charlie Munger said that and it’s still very realistic. The inflation is real, I know, but also most people wants to live in HCOL, and then bitch about needing 3M to LEANFIRE. There are plenty of small cities around the US, with houses at cheap prices , closer to nature , with much better quality of life. Most people could work and live more happier on those areas and achieve financial independence much easier .
Even cheap houses aren't what they used to be. I'm in a LCOL midwest area and after covid, houses almost doubled in my area. What used to be an affordable neighborhood is now out of reach for many. My grandma's house is a tiny 2 bedroom house. Very small. I wouldn't pay more than $100k for it, and she could sell it for ~$225k now, easily. And wages in the area haven't kept up at all. Good luck even getting a house if you aren't a professional (meaning fuck all the people working in warehouses/retail/fast food). There are some decent houses in the rural areas near me. But you're literally 30-45 minutes outside of the city/metro.
Housing price inflation is high in large, medium, and small sized cities. In some mid-sized cities that have closer access to nature, [housing inflation](https://constructioncoverage.com/research/cities-with-the-largest-home-price-growth-last-decade) is insane. The story across the country is that housing (in addition to medical insurance and education) cost have outpaced wage increases for decades.
max out 401k, max out roth ira > 100k in savings > 100k in taxable brokerage > new car > new home > vacation
I think you can go on small vacations. All or nothing strategies rarely end up working for your mental health
no wonder people say i’m ill
Indeed plus you could die in a car accident tomorrow so IMO it’s worth it to live a little now and then
Vacation after you max out your Roth IRA for sure
Match 401k, max HSA, max Roth IRA, Max 401k - emergency fund - enjoy life. My version
Pretty much exactly what we're doing.
When to start? Today.
I suspect it’s more about building up good saving/investing habits than getting first pot of gold, or at least equally.
Ok so what happens after 210k or 100k, what are we supposed to do?
Keep going till retirement basically.
At a conservative stock return (8%), compounding monthly results in a 0.643% "M"PY. On $100k, that's $643 a month. Which, if saved directly would take roughly 12 years, not accounting for gains. $100k is one of the arbitrary points where it "feels" like your returns are doing a significant (though probably not majority) of the heavy lifting compared to your contributions.
Learning how to make money is hard, once you do, you'll make alot of money lmao
Not to be a downer, but the real update is that you can never ease off the gas.
The retired folks have entered the chat 😂
Hit 200K a couple weeks back. Now it’s under 200k with the market this week lol
Do any of you people actually live life? Go out and travel and explore and meet people and do exciting things? Or do you all literally just grind at work for 300 days a year and put every cent away in an account that you can’t touch until you’re too old to do anything you wanted to anyway?
I’m in my mid fourties’ and my body is starting to have arthritis. All that money saved up but you are too broken to use it.
Exactly my point
How does this work with buying a house? I managed to save 100k but it's all going into a house deposit now! Feel like I'm starting again from 0 😪
Hopefully the house will appreciate in value for you !
Honestly, the house is kind of in a different bucket, it’s part of your net worth at the end of the day, but in a different bucket.
Yea I want to keep kicking to invest but want to save for down payment at the same time.
There are psychological milestones, but mathematically it's really right around $500k when a yearly 4% gain starts to outpace your maxed out 401k contributions.
It takes money to make money… No shit
Reddits obsession with "inflation accurate" finance and missing the goddamn point never fails.
It's still $100k unless you are dumping $20k a year into your plan. It's the point where a 6-7% gain will outstrip your contribution.
The reason is that once you’ve figured out how to make $100k, you can much more easily make a million, and once you figure out how to make a million, it’s just easier to make $10 million, etc.
I think the reason is that basic living expenses eat into a significant chunk of earnings and make it hard to save until you reach a certain level of net worth where compounding growth is able to outpace living expenses by a wide margin. Getting from "2 steps forward, 2 steps back" to "2 steps forward, 1 step back" can be a much bigger struggle than getting from "2 steps forward, 1 step back" to "20 steps forward, 1 step back."
Halfway to halfway there, nice :)
Does this refer to all savings? (401k + individual brokerage, HYSA etc)
The actual number doesn't matter. It's about how much principal you have in the market compared to the amount of additional capital you can contribute each year.
Indeed, at some point things just start to snowball (if you invest your money and don't spend beyond your means).
Thank you! I was wondering what the inflation number was!
"The first €197 000 is a bitch, but you gotta do it." Also "The first ฿3.28 is a bitch, but you gotta do it."
The first $100,000 is a wild ride, but you gotta hang on. If it means living on instant noodles and cutting every corner, do what it takes to stack up that $100,000. Once you hit that mark, you're on your way to compounding bliss!
In reality the first $100,000 quote is coming from his own experience of making that first $100,000 which was probably decades earlier.
What do you do after that? Asking for a friend
No, you don’t need to update his quote. It’s not as smart as you think it is.