Retirement Targets

[dmclone]

Good for you. The first one is the hardest. Took me about 18 years to get there. The second will come much sooner.

That's a mind blowing return. If you put in $21k a year for 18 years with a 10% return, you'd get around $1m.

I'm now seeing the 10% employer match. Wow, that is an amazing match!

 

[Jayshellberg]

Forget to address your forecasting question….If a person saves $20,000 annually and returns 8 percent a year, it would take them 20.5 years to accumulate a million dollars. That assumes they are starting from scratch.

 

[CascadeClone]

A good question in this thread is how long did it take you to accumulate a milli in your 401K or anticipate Me 26-27, another was 18. Some might be able to forecast

All you need is a spreadsheet and a couple assumptions about annual contributions and rate of return.

e.g.
$10,000 per year
at 8% = 29 years
at 10% = 25 years

Same calculations, for the second million:
$10,000 per year
at 8% = 8 years
at 10% = 7 years

Compounding interest (and starting early) is your best friend!

 

[dmclone]

All you need is a spreadsheet and a couple assumptions about annual contributions and rate of return.

e.g.
$10,000 per year
at 8% = 29 years
at 10% = 25 years

Same calculations, for the second million:
$10,000 per year
at 8% = 8 years
at 10% = 7 years

Compounding interest (and starting early) is your best friend!

The tricky thing here is that most people who are working on their second or third million, are closer to retirement age and less likely to invest in securities that will earn 10%. At least that's what I've heard.

 

[1SEIACLONE]

The tricky thing here is that most people who are working on their second or third million, are closer to retirement age and less likely to invest in securities that will earn 10%. At least that's what I've heard.

Very true, as you move to within 3 to 5 years of your retirement date, you should be moving away from the market, and putting money into more secured ways to keep your money safe. At that point you are less worried about accumulating more wealth and should be worried about keeping what you have already made.

When we retired last year we had about 900K in our investments, only about 10% is in stocks, the rest are in zero interest bonds and other items. Between taking 4K a month out of the fund, our IPERS and SS we clear about 11K a month.

 

[dmclone]

Very true, as you move to within 3 to 5 years of your retirement date, you should be moving away from the market, and putting money into more secured ways to keep your money safe. At that point you are less worried about accumulating more wealth and should be worried about keeping what you have already made.

When we retired last year we had about 900K in our investments, only about 10% is in stocks, the rest are in zero interest bonds and other items. Between taking 4K a month out of the fund, our IPERS and SS we clear about 11K a month.

I'm probably 5 years away, but I'm a lot more aggressive. Probably 70/30 stocks/bonds. I may pay the price for that but so far it's worked out ok.

In your case, you've already won so there is no reason to spike the ball.

 

[KnappShack]

The tricky thing here is that most people who are working on their second or third million, are closer to retirement age and less likely to invest in securities that will earn 10%. At least that's what I've heard.

I'm going balls out 100% equities for as long as possible.

There's a number where the retirement $$ becomes high enough to sustain my retirement needs and continue to grow. Thankfully we're right close to that number with some time to go.

My horizon isn't just my life but I want to have some leftover for the kids. My Roth accounts will always be aggressive. I could be talked into a more conservative approach in the traditional, but I've never been a bond guy or a dividend investor.

For me the VTI is "conservative". The last time I spoke to an advisor he didn't have much to add. Said I could consider changing the investment mix 5 years from retirement, but my risk tolerance is high enough where he was cool with the plan.

But to each his own. This group is way ahead of the pack. The median retirement savings numbers are horrifying

 

[Bestaluckcy]

One person has $100,000 invested in the stock market. Another person invests $60,000 in the stock market and $40,000 in fixed income. The stock market declines 50%. If the second person rebalances to his previous high water mark he then has $60,000 in stocks and an additional $10,000 fixed income compared to the $50,000 that the first investor has.

Many ways to get to Rome.

 

[qwerty]

I don’t know about forecasting. I started saving for retirement about 1989. In about 1999 I was forecasting an early, wealthy retirement. Then the dotcomm bubble burst and after a period of recovery, the financial crisis hit and it took a number of years to recover. The bright side is that during those poor performing years, I bought a lot of cheap stock that I’ve ridden up for ten years into retirement. I didn’t retire quite as young as I thought I might, but I exceeded my goal value. The time path was nothing like I thought it would be. I think how long it took someone to get to a million is mostly about when they started.

Well, most people (myself included) is 20+ years to accumulate the first million while you are earning less and living life (family, houses, etc). Once kids gone, house paid, etc. 2nd million was around 5 years, 3rd down to 4 years. Now, it will be flat while drawing in retirement and not adding to pile through earnings until the snowball starts again when SS kicks in and covers half of expenses. Projections are once we get out to 7-8M, it will add another 1M every two years (but by then 1M is equivalent of $4-500k today).

 

[JK4ISU]

The age you start saving, your annual savings rate, and staying disciplined are the keys. Going heavy in equities is also important.

I started saving at age 25 and put away at least 20 percent a year into my 401K, including company match. That fact that my employer matched me dollar for dollar up to 10 percent helped. About ten years into my career, I upped my contributions slightly to hit the maximum allowed the IRS. Additionally, my wife and I have made Roth IRA contributions up to the maximum amounts since 1998.

We managed to save some money in non-qualified accounts, but the vast majority is in tax deterred and tax free accounts.

It really comes down to paying yourself first. View your savings as a mandatory expense, just like a mortgage or car payment. If you have your savings taken directly out of your salary you, will learn to live with what’s left over, trust me. Obviously, this is easier with a 401K. However, you can do the same with a Roth IRA by auto-depositing money into your account each month.

Yes, you’ve outlined the keys to successful retirement saving. My point was about the speed to a million and your ability to forecast when you will hit that (or any) goal. This will be affected by the sequence of returns and the variation in the sequencing make the timing of the goal attainment difficult to forecast.

 

[KnappShack]

Yes, you’ve outlined the keys to successful retirement saving. My point was about the speed to a million and your ability to forecast when you will hit that (or any) goal. This will be affected by the sequence of returns and the variation in the sequencing make the timing of the goal attainment difficult to forecast.

But I'll go out on a limb and say if you're getting a 10% employer match you'll get there a little quicker!

I look forward to seeing all of you ladies and gentlemen at the club as we enjoy our life of leisure

 

[1SEIACLONE]

But I'll go out on a limb and say if you're getting a 10% employer match you'll get there a little quicker!

I look forward to seeing all of you ladies and gentlemen at the club as we enjoy our life of lI will say that there is n

I will add there are few things better in life, than being retired and have the ability to do want you want and not have to worry about where the money is coming from, to pay for it.
Not worrying about money and bills makes life a lot easier on the soul.

 

[August]

Started my 401k in 1988.
First mil in 2013, 25 years.
Second in 2020, 7 years.
Retired in 2024.
Started out putting enough in to get the full company match, back then about 4%. Then when things got better, contributed up to the allowable cap amount. Lesson learned is put in as much as you can. Control your spending, and diversify the investments. I never went over 70/30 on stocks to bonds and stayed the course. Rode out the highs and lows. I thinks it is really the dollar cost averaging approach of a 401k that makes that strategy work.

 

[cyphoon]

Former company I worked for just cut 10 hours out of employees work schedule and quit matching 401k plan.

Brutal if they pay hourly.

H

 

[cyphoon]

Man that sucks, In better news, I just turnered a Milli on my 401K

The cool thing about this milestone is that you now have a fully grown, phantom, mini-you that is earning about $90,000 per year that is totally free of FICA, income, and state tax. Kind of like working two fulltime jobs.

H

 

[KnappShack]

The cool thing about this milestone is that you now have a fully grown, phantom, mini-you that is earning about $90,000 per year that is totally free of FICA, income, and state tax. Kind of like working two fulltime jobs.

H

The Investor Class is the best class.

 

[CascadeClone]

The cool thing about this milestone is that you now have a fully grown, phantom, mini-you that is earning about $90,000 per year that is totally free of FICA, income, and state tax. Kind of like working two fulltime jobs.

H

That's a hell of a neat way to think about it.

 

[ricochet]

I'm probably 5 years away, but I'm a lot more aggressive. Probably 70/30 stocks/bonds. I may pay the price for that but so far it's worked out ok.

In your case, you've already won so there is no reason to spike the ball.

I’m at about 75-25 and ready to retire whenever I feel like it. I’m thinking about backing off a bit but I plan on 30+ years of retirement so 60-40 is the lowest I’d go for probably the next decade or more.

 

[dmclone]

Most 2030 TDF's are 60/40
Most 2040 TDF's are 75/25

Even though I plan on retiring in 2030, I tend to use 2040's for the mix I want.

 

[Jayshellberg]

Lots of discussion about the proper retirement mix between equities and fixed income. Unfortunately, there is no clear cut answer. There are so many factors involved such as your tolerance for risk, withdrawal rate in retirement, amount saved, and your reaction when the inevitable correction occurs.

I have been retired since 2021 and still have 95 percent in equities. Most financial advisors say that I’m nuts. However, my withdrawal rate is only about one percent because I am blessed with a pension. If my withdrawal rate was closer to the norm of four percent instead of one percent, I wouldn’t have such an aggressive allocation. Rather, I would have approximately 5-7 years of annual living expenses in cash and fixed income. Therefore, when a market correction occurs, I wouldn’t have to liquidate stocks to live on.

Sequence of returns risk is a big deal when you’re selling investments, but not when you’re accumulating them. If you are withdrawing four percent right after you retire and a correction occurs, it will have a profound impact on your portfolio. That’s why I have always felt that the risk of a market correction is much greater right after you retire than shortly before you retire. If a correction occurs shortly before you’re planning to retire, you can always work an extra couple years.