How much savings should one have to retire by 40?
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- I personally calculate with 5% prior to inflation.
Might be too low, but I don’t have many good expectations for the next decade or two. I think we’re going to hit a massive recession soon and there’s no way to go. Europe is in a bad shape, and don’t get me started BRIC.
So whatever is invested in the market right now might tank 50% and will recover more slowly than usually.
Am I very off?
- Facebook public2That's fine to make your own predictions but the data doesnt support it. Past returns do not gaurantee future returns of course but are a good place to start. Personally my rentals pay my living expenses so haven't touched much stock at all and rents tend to rise during recessions. Downturns are normal and fine but if you want to decrease your risk that's fine.
- No, the 4% rules proposes that your money lasts for *at least* 30 years. Big difference.
Keep in mind that the market traditionally runs at 6% YoY (6.7% in the last 45 years) then 4% is a safe draw.
Go online and find any 15 year period since your birth year that the market returns were under 4%.
I’ll wait.Jun 5 1
- At least 30 years when the return rate is 4%
Is not the same as *at 30* years.
Even at 0% return your principal burndown takes 25 years. 19 years with inflation.
For many people, social security even, that and all other defined benefit plans are not a part of the 4% calc.Jun 5 1