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Imagine you had a time machine and with the press
of a button you could transport yourself
to your own 75th birthday.
Assuming you’re still around,
what do you hope to find yourself doing?
Writing your memoirs?
Sailing around the world?
Partying in San Junipero?
Very few of us would answer
“cleaning toilets at a fast-food joint”
or “begging for change on the street.”
No one wants their story to end that way,
yet shockingly few of us
are taking the basic steps to avoid it.
The simple fact is that if we’re lucky to live long enough,
one day we will lose our desire or physical ability
to keep earning a paycheck.
The older we get,
the harder it becomes to maintain a rigid work schedule.
And as modern medicine allows us to live longer and longer,
the time we expect to spend in
retirement might easily pass 30 years.
Think of that for a second.
30 years without income.
So how much would you need
to not spend those years in abject poverty?
Well, that depends on your personal needs,
standard of living, health issues, etc.,
but as a starting point,
the AARP recommends that to replace
a $40,000 per year income for 30 years,
you’ll need to start your retirement with –
take a deep breath –
If that number makes you feel a little dizzy,
Well, you’re not alone.
In one survey,
Americans between 55 and 64 reported
a median retirement savings of $120,000
only 10% of the amount advised by the AARP!
Another survey found that 75 % of Americans
over 40 are behind saving for retirement and
28% over 55 have no retirement savings at all!
There are many factors that contributed to this problem.
For one thing, wage growth declined in the 70s and 80s.
It picked back up in the 90s,
but then the housing boom convinced a lot of Americans
to go into debt to buy overpriced homes,
and, well, we know how that turned out.
We’ve also seen an increase in cultural pressure
to show visual displays of wealth.
A study published in the Quarterly Journal of Economics suggests
that Americans are uniquely concerned
about seeming poor to others,
so they spend a disproportionate amount on things
like shoes, clothes and cars.
It’s been great business for designer labels and advertisers —
not so much for our savings accounts.
changes in government policies have made it easier to not save money.
In the past,
employees were automatically enrolled in “defined benefit plans”,
pre-set funding amounts to match their retirement needs.
Today’s workers have to “opt in” to retirement plans like 401(k)s,
and figure out for themselves how much to set aside.
Furthermore, these plans are often leaky,
meaning you’re allowed to remove funds prematurely,
which makes it easy to steal from your own retirement.
Does all this mean that saving for retirement is hopeless
and you should just blow your extra dough leasing a sports car?
It’s still very possible to save up large amounts
of money on a modest income.
三个特别的因素分别是 好市场 复利和时间
The three special ingredients are Good Markets, Compound Interest, and Time.
To show you how these elements work together,
it’s time to Run The Numbers!
Betty is 30 years old and makes $50,000/yr.
She hasn’t saved a dime for retirement yet,
but this year she’s decided to start.
Between the amount she is going to save into her Roth IRA,
her 401(k) at work, and her 401(k) match,
she’s putting away $625 a month, or $7,500 a year,
That’s 15% of her income–which many experts recommend as agood savings target.
At this rate, by the time she’s 65,
Betty will have personally deposited $262,500
into her retirement account.
but still a long way from the million dollars plus she’ll need to retire.
But now we add our special ingredients!
Over the last 90 years,
the stock market has grown an average of 9.8% per year.
But let’s assume a little less than that, say, 7.5 %
If Betty can put together a decent portfolio,
she can expect her savings to grow by an average of 7.5 % per year.
And as long as Betty doesn’t touch that account,
the dividends and interest she earns
will generate even more dividends and interest!
And over time, her savings doesn’t just increase
in a straight line,
They grow exponentially!
Now, by the time she’s 65,
that $262,500 of her original money
has ballooned to over 1.2 million dollars
Nice job Betty!
A couple things to keep in mind with this scenario.
It’s very likely that goods and services will cost more in the future due to inflation.
However, it’s also very likely
that a 30 year old like Betty will see her salary increase
as she gains more experience and skill.
If she sticks to that same 15 % of her salary,
she can expect to have even more set aside for retirement.
What if you’re older than Betty and getting a late start?
Well, that may mean that you need to set aside more
of your paycheck, say 20 or 25 percent.
Or you may have to wait until your 70’s to retire.
Either of these options is better than doing nothing
or counting on winning the lottery.
There are many other factors that can change your specific situation. Inheritances,
遗产继承 社保 退休金 医疗条件
social security, pensions, medicalconditions.
If you’re not sure where to begin,
you can seek out the help of a financial planner who
is a sworn fiduciary.
They can outline a plan that fits your needs
and show you that preparing for retirement
is not as intimidating as you may think.
You don’t have to be into shuffleboard or bird-watching
to expect a little time off in your golden years.
And some people want to work as long as they can.
But everyone wants the power to decide that for themselves,
especially after a lifetime of hard work.
Of course, if you do manage to get access to a time machine,
you can always fall back on the old “Sports Almanac Retirement Plan.”
And that’s our two cents!
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