Did I do my math wrong?

Discussion in 'The Lounge' started by ninja08hippie, Jul 23, 2013.

  1. ninja08hippie

    ninja08hippie Official SF Hugger
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    I was in a meeting about retirement today, a guy from a bank was giving a pitch for a 401k. He claimed that if someone my age starts now, by the time I retire it'll be worth between 1 and 5 million dollars.

    In a room full of engineers, it frightened me that I was the only person who was like wtf. I had done the math before the meeting, taking into consideration the devaluing of money based on the fairly constant rate of inflation and I came up with a much different number.

    I came up with a minimum to retire of 25 million with an upper bound (due to varying rate of inflation) of 50 million. I had that 2 million is enough to retire on now, not in 40 years. Did I do the math wrong or an 401ks complete scams?
     
  2. boobjob

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    They make money for brokers and fund managers.
     
  3. backcheck64

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    It's all a scam. 401s are based on the stock market, which is rather shaky. And take Detroit for example. All of those people had "pensions" which are now gone. As unions are destroyed, more and more people are getting screwed by corporations. I've resigned to the fact I'll be working to the day I die. That's why we travel now. Studies show those that retire early, die early.
     
  4. ninja08hippie

    ninja08hippie Official SF Hugger
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    In case you are curious, here are my calculations.

    Current minimum retirement: 1 million

    40 years from now:
    4% inflation, assume we will eventually have socialized medicine: 5 million
    5% inflation, socialized: 8 million
    6% inflation, socialized: 10 million
    4% inflation, capitalist medicine (cost rises 2x inflation): 24 million
    5% inflation, capitalist medicine: 45 million
    6% inflation, capitalist medicine: 93 million
    4% inflation, capitalist medicine (cost rises 3x inflation): 93 million
    5% inflation, capitalist medicine: 268 million
    6% inflation, capitalist medicine: 750 million

    That's minimum, for a comfortable retirement, double each number.
     
  5. acemike

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    I just plan on working until I drop dead....and then 5 years after that....
     
  6. backcheck64

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    Well aren't you just a breath of fresh air LOL. Are you figuring a retirement age of 65 or what the republicans are pushing 70. And as far as socialized medicine, are you talking single payer which is what we need, or Obamacare which will be gutted the second the republicans get enough control...and back to capitalist medicine. Are you also basing those costs on a healthy lifestyle without obesity and the problems associated or your average Walmart shopper?
     
  7. backcheck64

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    Not enough, republicans want you working 12yrs past death...and for half of minimum wage and a 60hr week...but you'll be replaced by east Indians for 1/3 of minimum and an 80hr week.
     
  8. acemike

    acemike Member

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    There you go.....I didn't know you had to work 12 years after death....Back to the Ole' drawing board
     
  9. ninja08hippie

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    I was figuring a retirement age of 70. For socialized medicine, I was assuming eventually we get real health care like the other developed countries.

    We are currently already dealing with the obesity and smoking problems. We are currently at 5x inflation, which will push retirement minimum to 7.5 billion. 3x is hoping that someone figures out how to make capitalist medicine actually stabilize.
     
    #9 ninja08hippie, Jul 23, 2013
    Last edited: Jul 23, 2013
  10. backcheck64

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    Most of the population want's to retire at 65 or sooner (what, you think this is Europe?). We will never get the healthcare of Canada or Europe, that's a given, we'll be lucky to get a bandaid. The obesity problem is growing at a huge rate, smoking has dropped some, but the type 2 diabetes, hypertension, cancer, and the other multitude of problems due to the crap diets and inactivity of the population will only continue to get worse and drive healthcare problems. Basicly, I think you're being rather optimistic on your figures. If the republicans get their way, we'll have the healthcare of India...wait, they are already ahead of us.
     
  11. ninja08hippie

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    I probably won't retire in the United States. The government hates people who retire, our last GOP presidential candidate called them freeloaders. But hopefully, if I can save 20 million up, I will be able to retire in Canada or Europe where cost of living is increasing at a slower rate.
     
  12. Essene

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    Anything's possible; but I doubt you'd break 2 mil with an IRA account.

    I mean you could be one of those gents who gets dealt a very good hand.

    What's bad is when you get stock options/investment opportunities and the stock goes belly-up (like AT&T/Bell Labs did).
     
  13. ninja08hippie

    ninja08hippie Official SF Hugger
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    Yeah, I do not consider stocks to be a sound investment unless you have a huge amount of capital to start with.
     
  14. diehard

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    Any kind of investment is a gamble. I'm 34 and plan to retire at 50. I have 401s, a Roth, and other investments. You should never invest what you can't afford to lose. I started saving at a young age, and live below my means.

    That said a broker is salesman and gives you best case examples where I prepare for the worst. You could turn your investment into a million bucks or you could spend a buck on a lottery ticket and will a million. More than likely you wind up with modest growth, but don't put all your eggs in one basket. I'm three years from owning my house, have land bought ( not making any more dirt), even gold in a safe. You just have to decide how you want to go about it. No, I'm not from money. Put myself thru a two year school and got an associates degree at 19.

    Basically, save. And not all in one spot. Don't depend on others to do it for you. Yes stocks, bonds can lose money but how much money do people blow on things that give no return? Its just a balance act between want and needs, and save or spend
     
  15. ninja08hippie

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    Yeah, I know that, I just can't see any way it's even possible for anyone except the superwealthy to afford any kind of retirement at all. I don't even make a million a year, how could I possibly grow a retirement fund big enough :(
     
  16. diehard

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    Didn't mean to come off as a smart ass. Any savings is better than nothing. One thing we did last year was to round up everything we took out of checking. Like if I used the debit card for gas, and spent 35. I recorded 40. 500 bucks in a year, and put it in regular savings. Not much but it adds up
     
  17. backcheck64

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    That's all well and good until the economy tanks. We had a good nestegg going, until the crash of 2008. Being in construction, we took a HUGE hit. We had to use our retirement to eat and pay immediate bills. After 3 yrs, and that was cutting back to absolute minimums, no eating out, no buying anything we didn't absolutely have to have, only buying clothes for the kids because they outgrew something, we depleted our retirement. Don't be too sure of your investments. With companies cutting any kind of benefits, cities and most likely a state or two going bankrupt and all those people loosing pensions and such....we are headed down a very dark path.
     
  18. etaf

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    I planned to retire around 60ish (56 now ) BUT at 49 made redundant
    found a contract for 6mths after 9 months - then a perm job for 18mths - company went bust and closed down
    then out of work for a year and then a few months contracting and now out of work again
    so nothing added for retirement and redundancy money gone as out of work - cant even get cleaning and shelf filling locally
    was offered £7 and hour in london part time - but the fares to london worked out 3/4 of the pay before tax .....

    so my retire plan now is , i have no idea , plan all gone to hell now
    only good thing was the redundancy paid off the mortgage, so at least we shouldnt lose the house

    sorry for the doom and gloom , but i really feel for the young uns trying to plan now with the poor policies available now
     
  19. minskminx

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    I don't see much point in making plans. Many people thought they had a plan and something happened and that plan was gone and they lost lots.

    I spend my money and enjoy it, the future is not ours to know and if it was would you want to?

    My one plan is this - I keep enough money to pay 6 months rent and bills in a savings account. That way if something happens I have enough money to give me time to find a millionaire to marry! :)
     
  20. backcheck64

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    People that retire early tend to die early. My father just retired at 73...well, he still sees a couple of patience, they freaked out when he told them he was closing the office. To look at them, you'd guess maybe early 60s. He'll continue seeing them for another year or two. It was hard on him to retire. My grandfather died shortly after he was forced to retire. I don't particularly want to retire early.

    And Minsk has a point. With this economy and the treat of republicans, I don't see much point in planning to far ahead. We've already burned through our retirement with this last crash. And with the threat of cancer from everything you do or eat, who knows how long you're gonna last. Live for the day, worry about tomorrow, tomorrow.