Or, it could be fixed expense like overspending on the house that couldn't be cut. That is the number one expense in most people annual expense.Seems a little negative. Even if a person is spending the rest of it that doesn’t mean those are all fixed expenses that can’t be cut if lost income occurs. Maybe it is on travel. Also, moreover, the OP sounds like they were talking about investing 20% each pay period into a retirement plan and weren’t necessarily ruling out setting aside money for other things like an emergency and expense fund from remaining take home pay. In that context 20% can indeed be rather significant over 30 years. Results will vary but average case is likely decent.OP,
It is very simple.
A) If someone is saving 20% of gross income and assuming 30% taxes, the person is saving 20%/50% = 40% of their annual expense every year.
B) Every year, the person is saving 4.8 months of expense.
C) If the person is unlucky and unemployed in any of the multiple recessions across 20+ years, the person will be wiped out.
D) In 20 years, the person only save 20 X 0.4 = 8 years of expense of the person is fully employed continuously.
KlangFool
Then there is also the possibility of an employer match and maybe a basic contribution to the plan as well.
KlangFool
Statistics: Posted by KlangFool — Wed May 01, 2024 6:36 am — Replies 76 — Views 5400