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Old 07-27-2012, 07:51 PM   #41
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If you want to make it to $1 million by earning and saving, and you think you can work for 40 years, you'll need annual savings of

$13,260 if you can earn inflation + 3%
,,$6,460 if you can earn inflation + 6%

(Currently, TIPS are at inflation + 0%)

The median income for full-time, year-round workers in 2010 was
$50,360 for men, and
$38,300 for women.

So half the full-time, year-round workers made less than that.

I think $1 million is a challenge for lots of Americans, just because they don't have the income to support that level of saving.
OK so it's impossible. Sorry but a lot of us made it happen with good luck, yes, a favorable market , yes .
Maybe the same situation will present iself again. I started my investment career in the late 70's on an income of less than 10k per year. Wife, I kid and no benefits. Fifteen years later around 1995 I had about 60k for my total fortune.
Now I've somehow got it made. Give me a break. Make your plan and make it work,
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Old 07-27-2012, 08:27 PM   #42
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Quote:
Originally Posted by Independent View Post
If you want to make it to $1 million by earning and saving, and you think you can work for 40 years, you'll need annual savings of

$13,260 if you can earn inflation + 3%
,,$6,460 if you can earn inflation + 6%

(Currently, TIPS are at inflation + 0%)

The median income for full-time, year-round workers in 2010 was
$50,360 for men, and
$38,300 for women.

So half the full-time, year-round workers made less than that.

I think $1 million is a challenge for lots of Americans, just because they don't have the income to support that level of saving.
Historically stocks have returned more than 6% after inflation. Now granted into today's environment that maybe challenging especially with a less aggressive AA.

However even today for more than 1/2 of college graduate who are not un or underemployed (sadly 40%+ are un/underemployed) with a starting salary of 40K and start by saving 10%. That is 4K a year. If do what a lot of us on the forum have done and what books (like Nords) advocate and when they get a raise allocate 1/3 to taxes, 1/3 for spending and save 1/3, but the time their salary hits 50K they will be saving $7,000 a year and well on their way to being a millionaire.


Frankly the key ingredient that is missing is LBYM, but for anybody making the median income by age 30 it isn't hard to become a millionaire by saving ~10-15% of their salary.

Now obviously if you in place with a higher cost of living it is more challenging and for people who's income never gets above 50K and.or raising a large family it may not be possible. But my niece is married to a minister, they live in California and have 3 kids. She is homeschooling them and has some part time work grading essays. They don't make 50K a year and manage to save 10%+ for college and retirement.

So I am with FoxFire here lots of people have done it in the past and people are still doing it today.
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Old 07-27-2012, 11:30 PM   #43
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I would recommend try all three except lottery.

I still have to make M in real estate, as I just started. I already achieved my goal with stock and small biz.
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Old 07-28-2012, 10:17 AM   #44
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Now obviously if you in place with a higher cost of living it is more challenging
Sometimes working in a high cost of living area can help as your pay scale will be higher but only if you control housing expenses.
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Old 07-28-2012, 11:16 AM   #45
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Historically stocks have returned more than 6% after inflation. Now granted into today's environment that maybe challenging especially with a less aggressive AA.

However even today for more than 1/2 of college graduate who are not un or underemployed (sadly 40%+ are un/underemployed) with a starting salary of 40K and start by saving 10%. That is 4K a year. ....
Suppose that 1/2 the young workers have 4 year college degrees and only half of them are getting the higher salaries they expected.
So that's 1/4 of the population that has comfortably above median incomes due to their degrees.
Then there's another 1/4 that get above the median without the college degree.

But if "median" means anything, half the workers earn less than that. I'm thinking about those workers.
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Old 07-28-2012, 12:44 PM   #46
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Here is another way to hit the 1 Million mark, or more. Save 20% of your pay. Been doing it since 18 years old. 48 now, never stopped, never spent it. Make life choices based on not having that money. Don't care where you put it, market or CD's you should be able to retire early.
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Old 07-28-2012, 01:29 PM   #47
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In my case, with both of us working, we got a bit of an advantage. My wife's salary was much less than mine, but it still helps, particularly as she was never a big spender. Our children went to public schools, not expensive private ones. I practiced all the common LBYM manners, such as driving my cars to the ground, cooking and eating at home, etc... But we always took our children on 2 vacation trips a year, until they reached late teenage years and did not want to do with us anymore.

So, we had reasonable income but would still be able to claim some credits for our LBYM efforts, as we know plenty of people who made the same money or more and are still toiling at megacorp.

Though we were always savers, we did not know much about investing. I kept my nose to the grindstone at megacorp, and never kept track of my accounts. Quite a few Sundays found me at the nearby university library researching some papers related to my work (this was pre-internet), instead of reading up on investment topics. If I could live my life over again, I would spend more time caring about my money than my work at megacorp.

By the way, at megacorps, what I have seen was that the people who got more money and retired early were usually not the best technical workers, but rather more financially astute than the latter. I was one of the booksmarts, and should have been a bit more streetsmart. I was lucky to turn out OK.

I agree with Independent that it is not easy for a typical worker with a lower income to get to $1M. It would be late in his life, if he gets there. On the other hand, if the goal is just to retire early, then there are people who manage to do it with less than $1M. One can live a more modest lifestyle, or downshift to a part-time job with less stress for ESR. If the goal is to pursue happiness rather than a certain watermark in one's net worth, then there are many roads one can take.
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Old 07-28-2012, 03:53 PM   #48
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Here is another way to hit the 1 Million mark, or more. Save 20% of your pay. Been doing it since 18 years old. 48 now, never stopped, never spent it. Make life choices based on not having that money. Don't care where you put it, market or CD's you should be able to retire early.
To put it another way, you can't control the market returns you will get, but you can control (up to a point) how much money you save.
TJ
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Old 07-28-2012, 04:52 PM   #49
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Surest way though not the fastest is to work a 9-to-5 job with a megacorp, keep your nose to the grindstone, live LBYM, maxing out 401k, save as much as possible with after-tax money. Invest in stocks.
This is what worked for me, along with having dogs instead of kids.
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Old 07-28-2012, 05:38 PM   #50
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Some people really have no prospects at ever getting to $1M. If you have a limited education and a low income job and no special skills, you may live pretty much month-to-month, and not have any capital to start a business or invest in stocks. These people probably see the lottery as their only chance at $1M, and they may not be wrong.

However, as we all know, that's the worst plan of all. Cutting expenses and putting something away each month to invest or start a business may not get them $1M, but getting halfway there or even less will make for a much better retirement, early or not. It's not an all or nothing deal.
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Old 07-28-2012, 07:05 PM   #51
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Some people really have no prospects at ever getting to $1M. If you have a limited education and a low income job and no special skills, you may live pretty much month-to-month, and not have any capital to start a business or invest in stocks. These people probably see the lottery as their only chance at $1M, and they may not be wrong.

However, as we all know, that's the worst plan of all. Cutting expenses and putting something away each month to invest or start a business may not get them $1M, but getting halfway there or even less will make for a much better retirement, early or not. It's not an all or nothing deal.
There is always the exception. My Father had an Aunt in New York City who copied the 'rich' people she worked for and invested her meager savings in mutual funds. We talking 30's to the 50's. In our family you save before you eat. Social Security plus savings investments allowed her to travel and visit and live a modest but good retirement. When she passed she paid for my Father to take her remains back to Finland and bury them in a family plot. Also left my Father 10-12k? in 1957 $ of mutual funds which he promptly sold and bought a house in the city with sidewalks.

I(age 13) went to the library and found their only book on mutual funds - The Handbook of Mutual Funds or something like that.

heh heh heh -
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Old 07-29-2012, 05:33 AM   #52
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Suppose that 1/2 the young workers have 4 year college degrees and only half of them are getting the higher salaries they expected.
So that's 1/4 of the population that has comfortably above median incomes due to their degrees.
Then there's another 1/4 that get above the median without the college degree.

But if "median" means anything, half the workers earn less than that. I'm thinking about those workers.
Generally people income rises significantly as the age. I forget exact figures but I was surprise how few folks over 45 make below the median income. This makes it much easier to save a higher percent of your income.

Now I agree with you if you never make more than say $12 hour, your chance of saving a million dollars are very slim. Not as bad as hitting the lottery but pretty bad. So maybe the 12% saying playing the lotto are made up of those people stuck in the minimum wages jobs forever.

On the other hand if you have a lifetime of minimum wage jobs you don't need a million bucks to be able to retire.

But at least 1/2 of the population and probably even more could become millionaires if they were good savers, they aren't.
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Old 07-29-2012, 05:57 AM   #53
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So, if I can ask. . .is everyone here a millionaire? Just curious.
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Old 07-29-2012, 06:08 AM   #54
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I'm informed that I made my millions thanks to the government.
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Old 07-29-2012, 07:22 AM   #55
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So, if I can ask. . .is everyone here a millionaire? Just curious.
No. Some are multi-M's, according to prior polls ...
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Old 07-29-2012, 07:48 AM   #56
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Some are 1/2 millionaires, .....their wives just haven't told them yet.
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Old 07-29-2012, 08:31 AM   #57
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I'm informed that I made my millions thanks to the government.
You were not listening. It was just with some assistance from the government, like the Army, Navy, Air Force and Marines, and the fire department, police, roads, sewers, water systems, schools and a few things like that. Other than that and your parents, and maybe your employees if you were a business owner you were on your own.
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Old 07-29-2012, 09:18 AM   #58
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Have met many millionaires in my work. Some had a business, others were high income professionals, ceo's or other high paid employees at mega corps, some real estate, some inherited a lot of money. Typical habits: buying used cars, good clothing that lasted a long time, modest homes, saving and investing, coupon clipping, turning off unused lights, just generally cost and expense control. Classic LBYM.
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Old 07-29-2012, 09:24 AM   #59
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You were not listening. It was just with some assistance from the government, like the Army, Navy, Air Force and Marines, and the fire department, police, roads, sewers, water systems, schools and a few things like that. Other than that and your parents, and maybe your employees if you were a business owner you were on your own.
I know that. I was just being snide.
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Old 07-29-2012, 09:38 AM   #60
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I know that. I was just being snide.
I knew that -- I was too.
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