How much saved at 30 to be "done saving"

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SpartanBull
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How much saved at 30 to be "done saving"

Post by SpartanBull »

Hello,
I'm offering out some relatively round numbers here, but bear with me. I will be turning 30 in year 2022. Lets say for the sake of argument, I do not plan on saving another nickel after age 30 (but also don't plan on selling/depleting any of my 3-fund portfolio). All income after that point would cover living expenses with nothing left over. The goal is to have $2,500,000 by age 60 in todays dollars. How much needs to be invested at 30 so that it would grow to roughly that amount by age 60, with no new contributions between 30-60?
Thanks in advance for any help with this question. I'm aware there are online calculators and such, but I'm embarrassed to say I get a little confused by the whole concept of inflation and todays dollars aspect of it. Thanks.
Last edited by SpartanBull on Mon Sep 12, 2016 12:59 pm, edited 1 time in total.
KlangFool
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Re: How much saved at 30 to be "done saving"

Post by KlangFool »

Hi,

Use Excel spreadsheet, assuming everything in REAL term and REAL return rate

=PV(0.01,30,0,-2500000)

0.01 $1,854,807.29
0.015 $1,599,406.07
0.02 $1,380,177.22
0.025 $1,191,856.71
0.03 $1,029,966.90

If you assume 1% REAL RETURN RATE, you need around 1.85 million. If you assume 3% REAL RETURN RATE, you need around $1 million. For planning purposes, I would use 2% as the number.

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crake
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Re: How much saved at 30 to be "done saving"

Post by crake »

S/(1+i)^n = P

S is the final value of your investments.
i is the assumed interest rate.
n is the number of compounding periods
p is the initial value of your investments

For your example S would be 2.5 million, n would be 35 years, and i would be whatever you think a realistic real return in on your investments. If you assume a 7 percent average return and a 2 percent inflation rate n would be 5 percent. Therefore you would need to save:

2500000/(1+.05)^35=P=$453226

I'm not sure if your question is purely academic or if your plan is to actually stop saving at 30. If that is your actual plan I would recommend against it. As your salary rises and you spend more money you will get used to a certain lifestyle. The only way to continue supporting that lifestyle in retirement is if you continue saving money. If you stop saving at 30 you will also be giving up a lot of very valuable tax advantaged savings space.

Edit: I see Klangfool already replied with some more conservative numbers than I posted. Just to put things into perspective from 1950 to 2009 the S&P 500 had a total average return of 11% per year and the real return after inflation was 7% per year. In my opinion it is extremely pessimistic to estimate that in the next 35 years it will only return 2% real but you are free to make estimates based on your own comfort level. 5% real, 2% less than the historical average, is a conservative enough assumption for me.
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amphora
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Re: How much saved at 30 to be "done saving"

Post by amphora »

Depending on your situation, I don't know if your plan is particularly practical. In order to accumulate a big enough nest egg by age 30 you'll need a relatively high income with a high savings rate. After age 30, if you spend all of that high income every year, I doubt you'll be able to sustain that lifestyle even with 4% of 2.5M. I only see the plan as practical if you have some sort of lump sum inheritance or if you are switching from a high paying to a low paying job at age 30.
Silence Dogood
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Re: How much saved at 30 to be "done saving"

Post by Silence Dogood »

It will depend on what the market does from 2022 to 2052, which is completely unknowable. Having said that (assuming a 7% rate of return and not adjusting for inflation):

C = P/e^(rt)

C = 2,500,000/e^[(0.07)(30)]

C = 306,141.07

So you would need $306,141.07 by the time you're 30.
jfave33
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Re: How much saved at 30 to be "done saving"

Post by jfave33 »

At least $1m. The ones above quoting less have unrealistic assumptions.
randomguy
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Re: How much saved at 30 to be "done saving"

Post by randomguy »

crake wrote: Edit: I see Klangfool already replied with some more conservative numbers than I posted. Just to put things into perspective from 1950 to 2009 the S&P 500 had a total average return of 11% per year and the real return after inflation was 7% per year. In my opinion it is extremely pessimistic to estimate that in the next 35 years it will only return 2% real but you are free to make estimates based on your own comfort level. 5% real, 2% less than the historical average, is a conservative enough assumption for me.
The problem is that the average doesn't really matter. You need to decide if you can handle the worse 10% or so of cases. If you look at those including the 20/30s, I think the worst case for stocks is just under 3% real. Now a days a lot of people are taking that worst case and dividing by 2.:) There are a lot of sources saying similiar things (1-3% real from stocks) BUT most of those predications are for 10 years. They don't say what will happen over 20 after that. Maybe the world has changed and the equity premium will be 1/3rd of what it was historically going forward. Or maybe it bounces back. Or heck maybe those predications turn out to be crap (i.e. look at their predications from 2000-2010 for the next 10 years and see how accurate they have been so far) and we keep getting the same 7% real that we gotten for the past 100 years.

You can plug this into firecalc. Historically, 40k of spending in 30 years, 250k today, 30 years of retirement worked 100% of the time with a 75/25 portfolio. Obviously not a lot of 60 year periods out there.
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goingup
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Re: How much saved at 30 to be "done saving"

Post by goingup »

Keep it simple, since this is a WAG about returns over next 30 years.

Save $580K, then over next 30 yrs compound by 5% annually and you'll come close to $2.5m. That doesn't take inflation into account, so what the "real" equivalent is to that I don't know. Use a savings calculator to try different scenarios. https://www.dinkytown.net/java/CompoundSavings.html
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Re: How much saved at 30 to be "done saving"

Post by MichaelRpdx »

If you're going to use the present value calculations provided by others I suggest you inform the assumed growth rate by reading Vanguard's Economic and Investment Outlook. https://personal.vanguard.com/pdf/ISGVEMO_122015.pdf
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randomguy
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Re: How much saved at 30 to be "done saving"

Post by randomguy »

MichaelRpdx wrote:If you're going to use the present value calculations provided by others I suggest you inform the assumed growth rate by reading Vanguard's Economic and Investment Outlook. https://personal.vanguard.com/pdf/ISGVEMO_122015.pdf
I failed to see any 30 year return estimates in there:) Extrapolating 10 year return to 30 year may or may not be a reasonable approach.

One of the places that pops out 30 year estimates is portfolio solutions: https://portfoliosolutions.com/latest-l ... ecast-2016

Places like McKinsey have estimated 4-6% real for stocks.

The about 5% real estimate splits the board. Half of them go, 5% is well below the 7-8% historical numbers so is probably too conservative. The other half goes wow is that super aggressive, I wouldn't plan on more than 1%. Obviously 30 years is a long time for an individual. That is time for a couple market cycles and economic shifts.
Snowjob
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Re: How much saved at 30 to be "done saving"

Post by Snowjob »

I hadn't looked at investing targets this way in a long while so I just ran some numbers for my own situation.

I'm mid 30's and used a 2% growth, no pension and modest social security. I came up with roughly the following for multiples of expense for two scenarios, 1 where I stop working completely and 2 where I just stop saving. Target retirement date was 60 in this example.

Age--Retire--Stop Saving
35-----37.9-----14.4
40-----34.7-----15.9
45-----31.3-----17.5
50-----27.8 -----19.4
55-----25.0-----21.4
60-----23.6-----23.6
JoinToday
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Re: How much saved at 30 to be "done saving"

Post by JoinToday »

randomguy wrote:
Places like McKinsey have estimated 4-6% real for stocks.

The about 5% real estimate splits the board. Half of them go, 5% is well below the 7-8% historical numbers so is probably too conservative. The other half goes wow is that super aggressive, I wouldn't plan on more than 1%. Obviously 30 years is a long time for an individual. That is time for a couple market cycles and economic shifts.
what about bonds? 4% - 6% real return for your portfolio assumes 100% equity.

I am currently 60% equity, 40% bonds. 0% - 2% real for bonds will drag a portfolio return down. I am planning on 0% real for bonds (for worst case planning purposes), and hoping for 1%, maybe 2% (optimistic, not in the short term)
I wish I had learned about index funds 25 years ago
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Re: How much saved at 30 to be "done saving"

Post by MichaelRpdx »

randomguy wrote:
MichaelRpdx wrote:If you're going to use the present value calculations provided by others I suggest you inform the assumed growth rate by reading Vanguard's Economic and Investment Outlook. https://personal.vanguard.com/pdf/ISGVEMO_122015.pdf
I failed to see any 30 year return estimates in there:) Extrapolating 10 year return to 30 year may or may not be a reasonable approach.
That is part of the lesson. :)

Initial conditions have an outsized effect on the end state. If you make it through the first ten years in good shape the rest should follow.
Be Appropriate && Follow Your Curiosity
bigred77
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Re: How much saved at 30 to be "done saving"

Post by bigred77 »

Probably anywhere between $400k (6% real returns) and $1M (3% real returns) depending how much certainty you need.
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SpartanBull
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Re: How much saved at 30 to be "done saving"

Post by SpartanBull »

Purely academic. I don't have any plans to stop saving, however the awareness is being used in the sense of making decisions that balance "earning as much as possible" with overall priorities and happiness. I feel that once that "number" is reached that theoretically reduces the need for saving, that while additional saving is a great cushion...it doesnt need to be priority #1--if that makes sense.
crake wrote:S/(1+i)^n = P

S is the final value of your investments.
i is the assumed interest rate.
n is the number of compounding periods
p is the initial value of your investments

For your example S would be 2.5 million, n would be 35 years, and i would be whatever you think a realistic real return in on your investments. If you assume a 7 percent average return and a 2 percent inflation rate n would be 5 percent. Therefore you would need to save:

2500000/(1+.05)^35=P=$453226

I'm not sure if your question is purely academic or if your plan is to actually stop saving at 30. If that is your actual plan I would recommend against it. As your salary rises and you spend more money you will get used to a certain lifestyle. The only way to continue supporting that lifestyle in retirement is if you continue saving money. If you stop saving at 30 you will also be giving up a lot of very valuable tax advantaged savings space.

Edit: I see Klangfool already replied with some more conservative numbers than I posted. Just to put things into perspective from 1950 to 2009 the S&P 500 had a total average return of 11% per year and the real return after inflation was 7% per year. In my opinion it is extremely pessimistic to estimate that in the next 35 years it will only return 2% real but you are free to make estimates based on your own comfort level. 5% real, 2% less than the historical average, is a conservative enough assumption for me.
am
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Re: How much saved at 30 to be "done saving"

Post by am »

How about at age 40 if goal is to retire 55-60 with 100k income from portfolio?
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randomguy
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Re: How much saved at 30 to be "done saving"

Post by randomguy »

MichaelRpdx wrote:
randomguy wrote:
MichaelRpdx wrote:If you're going to use the present value calculations provided by others I suggest you inform the assumed growth rate by reading Vanguard's Economic and Investment Outlook. https://personal.vanguard.com/pdf/ISGVEMO_122015.pdf
I failed to see any 30 year return estimates in there:) Extrapolating 10 year return to 30 year may or may not be a reasonable approach.
That is part of the lesson. :)

Initial conditions have an outsized effect on the end state. If you make it through the first ten years in good shape the rest should follow.
Who do you think did better: 1970 person (-1.45% CAGR for the first decade) or 1980 person (11.97% CAGR for the first decade)?

1970-1999 8.24% CAGR
1980-2009 7.52% CAGR

Heck the 1929 person (.81% CAGR) did ok (6.68%) over 30 years.

I fail to see an outsized effect of struggling threw the first 10 years on performance:) The lump sum problem is different than the addition/removal of funds problem that people normally talk about. Obviously you would like to time it so you start taking money out during a bull market but that is sort of a different discussion.

The question is always what will a 10 year period of say 2% real say about the next 20 years. Maybe 2% is the new normal. Maybe we bounce back with a decade of 10% to bring the average back close to the historical number. Reality is nobody knows. You have to make guess on how places like Europe, china, and a zillion other economies will perform.
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Re: How much saved at 30 to be "done saving"

Post by bottlecap »

To be safe, I'd say a cool Mil.

Let me know how you do it. I would love to save $1 million in the next 5 or 6 years, too.

JT
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SpartanBull
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Re: How much saved at 30 to be "done saving"

Post by SpartanBull »

Many excellent responses here. FWIW, the "stopping saving after age 30" part is not at all something I would plan on regardless. I love my work. The purpose of the question was more-so to get a concrete idea on savings goals, as up to this point I have mostly viewed it as a nebulous "more is better, just keep going" mindset. My thought is that if you do reach the point where you've saved enough, not that it means one should stop saving, but some of the following benefits are possible
-Less need to take risks in your business,over-expansion, overextending yourself. Etc.
-The freedom to perhaps do work that is more enjoyable/fulfilling, which while still allows you to save and benefit financially, you lose no sleep taking the paycut
Again, really good responses, thanks!
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Re: How much saved at 30 to be "done saving"

Post by Snowjob »

SpartanBull wrote:Many excellent responses here. FWIW, the "stopping saving after age 30" part is not at all something I would plan on regardless. I love my work. The purpose of the question was more-so to get a concrete idea on savings goals, as up to this point I have mostly viewed it as a nebulous "more is better, just keep going" mindset. My thought is that if you do reach the point where you've saved enough, not that it means one should stop saving, but some of the following benefits are possible
-Less need to take risks in your business,over-expansion, overextending yourself. Etc.
-The freedom to perhaps do work that is more enjoyable/fulfilling, which while still allows you to save and benefit financially, you lose no sleep taking the paycut
Again, really good responses, thanks!
Suppose you do hit that number with a reasonable growth rate, maybe you can do this?

Instead of saving X per year, break that up into the following

a, excess payments towards mortgage to reduce current obligations
b, I & EE bonds, to increase liquidity and start building a tax deferred income floor
c, spend some on yourself / family and put the remainder unused into a taxable index fund until
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Re: How much saved at 30 to be "done saving"

Post by crake »

letsgobobby wrote:Crake, do you plan to be 100% S&P 500, forever?
I'm not currently 100% S&P 500 and don't plan on ever being 100% S&P 500. I only used that as an example because we have the most data on it. The OP asked a hypothetical question and I provided a hypothetical answer.

When trying to guess at returns 35 years into the future I don't think it really makes much sense to ponder too hard on what someones AA or glide path is. If someone asked me what I think a 60/40 Stock/Bond portfolio would return on average over 35 years I would say about 5% real and put very large error bars on that prediction. If someone asked me what a 100% stock portfolio would return I would say about 5% real and put very large error bars on that prediction too. Either way it is a very rough guess.

It seems on this forum that it is acceptable to predict that stocks will return 2% real over the next 30 years, 5% below the historical average. However,If someone came along and predicted stocks are going to return 12% real over the next 30 years they get derided as a lunatic(see Dave Ramsey). There are consequences to both over estimating and underestimating returns. If you over estimate you might not be able to live the standard of life you desire in retirement. If you underestimate you might spend years of your life that you don't have to working. It is up to each individual person to balance these consequences as they see fit.
bigred77
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Re: How much saved at 30 to be "done saving"

Post by bigred77 »

crake wrote:
letsgobobby wrote:Crake, do you plan to be 100% S&P 500, forever?
I'm not currently 100% S&P 500 and don't plan on ever being 100% S&P 500. I only used that as an example because we have the most data on it. The OP asked a hypothetical question and I provided a hypothetical answer.

When trying to guess at returns 35 years into the future I don't think it really makes much sense to ponder too hard on what someones AA or glide path is. If someone asked me what I think a 60/40 Stock/Bond portfolio would return on average over 35 years I would say about 5% real and put very large error bars on that prediction. If someone asked me what a 100% stock portfolio would return I would say about 5% real and put very large error bars on that prediction too. Either way it is a very rough guess.

It seems on this forum that it is acceptable to predict that stocks will return 2% real over the next 30 years, 5% below the historical average. However,If someone came along and predicted stocks are going to return 12% real over the next 30 years they get derided as a lunatic(see Dave Ramsey). There are consequences to both over estimating and underestimating returns. If you over estimate you might not be able to live the standard of life you desire in retirement. If you underestimate you might spend years of your life that you don't have to working. It is up to each individual person to balance these consequences as they see fit.
I thought this was an excellent post.

I'll say it again, those predicting US equities will return 1%-2% real over the next 30 years are predicting the singly worst 30 year period in US financial history. Could it happen? Definitely. Is it likely? No.
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Re: How much saved at 30 to be "done saving"

Post by ubermax »

Silence Dogood wrote:It will depend on what the market does from 2022 to 2052, which is completely unknowable. Having said that (assuming a 7% rate of return and not adjusting for inflation):

C = P/e^(rt)
Don't know too many investment vehicles that credit interest instantaneously ; seems to me that Crake's expression above is fine and reflects more common practice , my opinion .
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fblade007
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Re: How much saved at 30 to be "done saving"

Post by fblade007 »

I am always confused on this forum because 99% here swears on statistics and historical models (just like firecalc) for asset allocation and glide paths pasting many many links to Vanguard but when it comes to rates of return you think the worse. All mathematical models have variables.

Isn't the whole purpose of a 3 fund portfolio to take the emotions out of it ? Then why not just go with the 200 year average of 10% ? Everything else is a guess. Lets say 10% CARG or 7% real with 3% inflation for dreaming purposes.
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Re: How much saved at 30 to be "done saving"

Post by randomguy »

fblade007 wrote:I am always confused on this forum because 99% here swears on statistics and historical models (just like firecalc) for asset allocation and glide paths pasting many many links to Vanguard but when it comes to rates of return you think the worse. All mathematical models have variables.

Isn't the whole purpose of a 3 fund portfolio to take the emotions out of it ? Then why not just go with the 200 year average of 10% ? Everything else is a guess. Lets say 10% CARG or 7% real with 3% inflation for dreaming purposes.
And what happens if instead of getting average returns you get below average? Assuming average (~10%) and getting the worst 30 year (6%) would leave you with a pretty big shortfall. Averages are good when you have multiple plays. When you have only one chance, you need to consider the distributions also since you can't get to the average.
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Re: How much saved at 30 to be "done saving"

Post by whodidntante »

At an early age I had a knack for making a decent income. Nothing crazy but more than my peers. My father was an entrepreneur and usually had a couple of businesses going. Even before I was college educated, I had business sense and I was willing to lose everything if it meant a shot at making good money. I was also hard working and could generate money for things that others would look over. So I was able to earn a surprising amount of money at an early age.

I liked stocks, and once bought I never seemed to sell them. I decided to buy different investments over the years, but that money never left the stock market.

I learned how to use a financial calculator and I remember running the numbers after I had been working in my post college "real job" for a while. I used my current investments as PV and assuming the returns of "good growth stock mutual funds" that would surely return 12% each year, as suggested by some idiot on the radio. It showed I was going to be rich. Really rich. I remember telling my mother that I had saved for retirement. Yes, past tense.

Just in case, I continued putting money away. It turns out that was a very good idea. I suggest you do the same. You don't know what the market is going to do, and you might have a divorce, or some other very large bill that you do not foresee.
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Re: How much saved at 30 to be "done saving"

Post by fblade007 »

randomguy wrote: And what happens if instead of getting average returns you get below average? Assuming average (~10%) and getting the worst 30 year (6%) would leave you with a pretty big shortfall. Averages are good when you have multiple plays. When you have only one chance, you need to consider the distributions also since you can't get to the average.
I agree with what you are saying, but it also works the other way around. You might save extra hard and give up on things and end up with 7% in stead of 2%. And those years will be lost not matter how much saving you have. I am not saying the 7% real is an achievable target but I am also not saying the 2% is too conservative. I just use an average which makes me feel most comfortable and let that be 7%. Just to clarify, If i can save an extra 5K a year I will still do it no matter what the % return I predict. I think that's the key aspect. I am not bound by my prediction, it's merely a tool to come up with goals and targets .. for what it's worth if might even give me an incentive to save more if I don't make the 7% to still hit my target.

Averages only work in the long run -- no one knows if a 30 year is long enough period but hey we have to start somewhere ;). If we achieve Hyperloop that may totally change the job market all over the world, if we cure cancer we all get to live to be 100 years old and so on. We as a human race are capable of so many things and resolving so many challenges, I put my money on that and not on a poor 2% average per year. My glass is half full :))
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Re: How much saved at 30 to be "done saving"

Post by tibbitts »

fblade007 wrote:I am always confused on this forum because 99% here swears on statistics and historical models (just like firecalc) for asset allocation and glide paths pasting many many links to Vanguard but when it comes to rates of return you think the worse. All mathematical models have variables.

Isn't the whole purpose of a 3 fund portfolio to take the emotions out of it ? Then why not just go with the 200 year average of 10% ? Everything else is a guess. Lets say 10% CARG or 7% real with 3% inflation for dreaming purposes.
A shockingly high percentage of people here have thrown conventional AA out the window in reaction to low interest rates, so your premise is completely wrong. I'm probably the only straggler left with roughly age-in-bonds, although I'm really just guessing at that percentage, since I'm using VG's web tools to guesstimate it. But I just use that AA because I don't know of anything better. I don't swear by statistics or historical models. In fact I think they're almost completely useless for investing.

So getting back to the OP: to have 2.5MM years from now, start with 2.5MM today and hope you get lucky.
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Re: How much saved at 30 to be "done saving"

Post by Grt2bOutdoors »

Read the book - Unveiling the Retirement Myth - Jim Otar, apparently there is another thread on Recommended books to read and the link to the 587 page (i kid you not!) pdf book is there. The other book - The Great Depression, A Diary by Benjamin Roth. The first book talks about how thinking about averages can cost you dearly when attempting to calculate your retirement portfolio outcome, the second will give you a first hand look of how bad things really were right after the great stock market crash. As "whodidntainte" said, keep saving/investing because you don't know what lurks behind door number 2 or what curveball is going to be thrown at you at age 50. While it usually takes a pattern of little mistakes to severely impact you, occasionally catastrophic events beyond your control can occur - take action now to avoid it by conserving more now.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Re: How much saved at 30 to be "done saving"

Post by fblade007 »

tibbitts wrote: So getting back to the OP: to have 2.5MM years from now, start with 2.5MM today and hope you get lucky.
This actually made me LOL :sharebeer
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Re: How much saved at 30 to be "done saving"

Post by blu9535 »

bigred77 wrote:
crake wrote:
letsgobobby wrote:Crake, do you plan to be 100% S&P 500, forever?
I'm not currently 100% S&P 500 and don't plan on ever being 100% S&P 500. I only used that as an example because we have the most data on it. The OP asked a hypothetical question and I provided a hypothetical answer.

When trying to guess at returns 35 years into the future I don't think it really makes much sense to ponder too hard on what someones AA or glide path is. If someone asked me what I think a 60/40 Stock/Bond portfolio would return on average over 35 years I would say about 5% real and put very large error bars on that prediction. If someone asked me what a 100% stock portfolio would return I would say about 5% real and put very large error bars on that prediction too. Either way it is a very rough guess.

It seems on this forum that it is acceptable to predict that stocks will return 2% real over the next 30 years, 5% below the historical average. However,If someone came along and predicted stocks are going to return 12% real over the next 30 years they get derided as a lunatic(see Dave Ramsey). There are consequences to both over estimating and underestimating returns. If you over estimate you might not be able to live the standard of life you desire in retirement. If you underestimate you might spend years of your life that you don't have to working. It is up to each individual person to balance these consequences as they see fit.
I thought this was an excellent post.

I'll say it again, those predicting US equities will return 1%-2% real over the next 30 years are predicting the singly worst 30 year period in US financial history. Could it happen? Definitely. Is it likely? No.
Since we are talking about US-based markets, when people predict that future returns will be significantly lower than historical returns, it always sounds to me to be like a bet on the decline of America.
randomguy
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Joined: Wed Sep 17, 2014 9:00 am

Re: How much saved at 30 to be "done saving"

Post by randomguy »

fblade007 wrote:
randomguy wrote: And what happens if instead of getting average returns you get below average? Assuming average (~10%) and getting the worst 30 year (6%) would leave you with a pretty big shortfall. Averages are good when you have multiple plays. When you have only one chance, you need to consider the distributions also since you can't get to the average.
I agree with what you are saying, but it also works the other way around. You might save extra hard and give up on things and end up with 7% in stead of 2%. And those years will be lost not matter how much saving you have. I am not saying the 7% real is an achievable target but I am also not saying the 2% is too conservative. I just use an average which makes me feel most comfortable and let that be 7%. Just to clarify, If i can save an extra 5K a year I will still do it no matter what the % return I predict. I think that's the key aspect. I am not bound by my prediction, it's merely a tool to come up with goals and targets .. for what it's worth if might even give me an incentive to save more if I don't make the 7% to still hit my target.

Averages only work in the long run -- no one knows if a 30 year is long enough period but hey we have to start somewhere ;). If we achieve Hyperloop that may totally change the job market all over the world, if we cure cancer we all get to live to be 100 years old and so on. We as a human race are capable of so many things and resolving so many challenges, I put my money on that and not on a poor 2% average per year. My glass is half full :))
We know 30 years (or even 50) isn't long enough to get to the historical averages. Getting 3% real or 9% real over 30 years are both possible outcomes. You have to pick which one worries you more.

In the end, it doesn't matter. You picking 7% and me picking 2% isn't going to change the reality of what the market gives. Personally I plan on 5% and hope for 7%. If I get 3%, I am eating more rice and beans. Get 9% and I fly first class.:)
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